Indian aluminium firms enjoy certain advantages in bauxite sourcing, transfer

To maintain the mammoth aluminium trade, China is required to import big portions of bauxite and likewise smelter feedstock alumina.

By Kunal Bose

Not like aluminium smelters in West Asia benefiting from use of price efficient pure gasoline and those in Europe and Canada from hydro energy, manufacturing of the white metallic in India relies completely on comparatively dearer coal-fired electrical energy. However when it comes to availability of bauxite sources with excessive alumina content material, this nation enjoys a singular benefit over most different manufacturing centres. Take China, the world’s largest producer of aluminium with a share of 56.67% of the worldwide output of 64.76 million tonnes (mt) in 2020 when its consumption of 37.77 mt was 60.14% of the world complete of 62.80 mt. To maintain the mammoth aluminium trade, China is required to import big portions of bauxite and likewise smelter feedstock alumina.

Even whereas China mined about 70 mt of bauxite final yr, it was required to import 112 mt of the mineral to have the ability to make 73 mt of alumina. This, nevertheless, was not sufficient to satisfy smelters’ full necessities of the intermediate chemical alumina main the nation to import 3.84 mt. Clampdown on unlawful mining, deteriorating high quality of native ore and compulsion to limit mining associated air pollution will perennially depart China as a really large importer of bauxite. That is the rationale why China is investing closely in mines and infrastructure improvement in Guinea, which owns in extra of 1 / 4 of worldwide bauxite reserves and most of that’s extremely alumina wealthy.

As towards what obtains in China, India bauxite ore although not in the identical class as Guinean ore has not stopped Hindalco subsidiary Utkal Alumina Worldwide (UAI) and the federal government owned National Aluminium Company (NALCO) from discovering locations among the many world’s lowest price producers of alumina. Their possession of bauxite deposits within the hills of Baphlimali and Panchpatmali, respectively which might be to final over 25 years, the price efficient and surroundings pleasant system to switch ore from mines to refineries via single flight multi-curve conveyors and periodic technological interventions to enhance Bayer’s course of know-how in use in refineries are the explanations for very low alumina manufacturing price.

Nevertheless, although Vedanta will match its two Indian friends when it comes to refinery operational effectivity it loses out on general refining price for its very excessive degree of dependence on exterior sources for alumina. Towards UAI and NALCO securing all of the bauxite from its personal mines, captive ore provide within the case of Vedanta is lower than 10%. The distinction in Vedanta’s 2020 alumina manufacturing price of $235 a tonne and NALCO’s $178 a tonne can be bridgeable solely when the previous begins drawing 100% bauxite ore from captive mines.

Vedanta Aluminium CEO Rahul Sharma regrets that regardless of reforms introduced in via the 2015 Mines and Minerals (Growth and Regulation) Modification Act, not a single bauxite deposit has come below the hammer in final six years. Throughout this era, the nation, in accordance with Sharma, spent Rs 5,300 crore ($765 million) for bauxite imports.

On the identical time, Sharma is hopeful that “primarily based on the progress of exploration, the federal government can be ready to public sale seven to 10 mines, every containing deposits between 100 mt and 150 mt, within the New Yr. Now we have just lately introduced our mega alumina refinery capability enlargement programme and, due to this fact, Vedanta’s starvation for bauxite is a lot extra heightened. Towards this background, count on us to position sturdy bids in any respect auctions.”

As it could occur, the one just lately accomplished enlargement by the use of UAI including 500,000 tonnes to turn out to be a 2 mt refinery and alumina capability development proposed by Vedanta and NALCO at their current websites are all in Odisha. That is appropriately. The japanese coastal state alone holds 51% of the nation’s bauxite sources of three,897 mt. Furthermore, Odisha is holding the second largest coal sources among the many states subsequent solely to Jharkhand.

NALCO, in accordance with chairman Sridhar Patra, has within the post-second Covid wave has given an additional push to make sure that the lengthy talked about 1 mt fifth stream turns into a part of the two.275 mt working alumina refinery at Damanjodi by the second quarter of 2023-24. The problem for the corporate is to make up for the time misplaced since March 2020 following the outbreak of Covid-19. Within the meantime, Vedanta is to increase its Lanjigarh refinery by 3 mt to five mt to make it one of many world’s largest single location alumina complexes.

Being a PSU, NALCO enjoys authorities largesse by the use of allotment of bauxite and coal deposits infrequently. Like New Delhi allotted a 110 mt superior high quality bauxite deposit at Pottangi to the corporate to run the fifth stream of Damonjodi refinery. The plan is to synchronise the commissioning of the fifth refinery stream and ore extraction from Pottangi. Conscious that mine openings are a time-consuming proposition involving hosts of regulatory clearances and work slippages, Patra has a contingency plan in place readying a mine within the south block of Panchpatmali to care for ore necessities of refinery enlargement within the pipeline until the mineral begins popping out of Pottangi. Not solely are NALCO and Vedanta to construct new alumina refining capability, they’re additionally to increase smelters in downstream.

Sharma says Vedanta will make Jharsuguda a 2 mt smelter from its current capability of 1.6 mt via brownfield enlargement. Much more formidable is to additional increase BALCO capability to 1 mt from 570,000 tonnes within the subsequent 24 months. Not like a few of his predecessors, Patra doesn’t imagine in going to city to announce any enlargement earlier than authorities and board clearances. What, nevertheless, could be stated is that NALCO is actively contemplating creation of brownfield smelting capability of 500,000 at Angul the place it runs a 460,000 tonne plant.

(A former FT correspondent, the writer is now India correspondent for Euro Cash publication Steel Market Journal)