VEDANTA ON TRACK TO BE INDIA’S LARGEST ALUMINIUM MAKER

The Anil Agarwal-owned Vedanta is poised to overtake the Aditya Birla Group as the largest producer of aluminium in the country in the current fiscal year.

Vedanta, which produced 0.96 million tonnes (mt) of aluminium across its two facilities in Odisha and Chhattisgarh in FY17, is on course to clock an annual output of 1.6 mt in FY18.

Against this, the combined capacity of Aditya Aluminium and Hindalco, subsidiaries of the Aditya Birla Group, across four locations in Odisha, Madhya Pradesh and Uttar Pradesh, would be 1.3 mt. The group, as a whole, produced 1.26 mt of aluminium in FY17.

The other major producer of aluminium, the public sector National Aluminium Company (Nalco), would be in the third spot with an annual capacity of 0.42 mt.

“As a group, we will be producing 1.6 mt of aluminium in FY18, which is 66 per cent higher than last year’s output of 0.96 million tonne,” said Abhijit Pati, chief executive office (Aluminium and Power Division), Vedanta Ltd.

The major boost to the aluminium output by the company has come from its Jharsuguda facility in Odisha which is in expansion mode. The Jharsuguda smelter is expected to produce 1.1 mt and the Balco plant in Chhattisgarh 0.56 mt in FY18. The Jharsuguda unit produced 0.76 mt of aluminium last fiscal year.

“Four new lines of production are being readied at the Jharsuguda facility out of which work on two-and-ahalf lines are already over. The rest of the work will be completed by this year. So the exit capacity at Jharsuguda in March, 2018 is expected to be 1.4 mt,” Pati said.

The company had built two smelters at Jharsuguda with an investment of ~25,000 crore and combined capacity of 1.75 mt, representing the largest single-location aluminium facility in the world.

Though its smaller smelter of 0.5 mt was running for some time, the larger one with capacity of 1.25 mt and special economic zone status was largely idle because of a dispute with the electricity authorities over drawing power from the company’s captive power plant (CPP), raw material (alumina) supply constraints and overall market glut.

The resolution of the dispute with the state government over access to CPP power and strengthening of LME (London Metal Exchange) prices for aluminium has aided the company in unleashing the idle capacity and scaling up production.

With the company’s Lanjigarh alumina factory languishing from a raw material crunch following denial of bauxite mining on the Niyamgiri hills by the Centre, that unit has been compelled to run on low capacity on imported bauxite. As a result, the Jharsuguda smelter is unable to source sufficient alumina, the feedstock for aluminium, in-house.

The company is importing 60-65 per cent of its alumina requirement from different countries. But with the LME metal prices remaining robust, scaling up aluminium production based on imported alumina will be viable, Pati said, adding LME aluminium prices have been hovering over $2,000 a tonne for the past six months and are expected to remain in the range of $2,000-2,200 for at least the next two years. Aluminium demand in the country is growing at a rate of 7.5 per cent, outpacing the five per cent growth in world demand.

Pati said, with the Balco unit going for capacity addition of 0.42 mt and the Jharsuguda unit achieving rated capacity of 1.75 mt, Vedanta would account for more than half the country’s aluminium production a couple of years down the line.