India Aims To Raise Aluminum Output To 5 Million Tons By 2015

DSC09135

NEW DELHI -(Dow Jones)- India aims to raise its aluminum production by nearly four times to 5 million metric tons by 2015, in line with an expected demand surge due to higher vehicle sales and a boom in housing construction, Mines Minister B.K. Handique said Wednesday.

India currently produces 1.3 million tons of 3003 aluminum plate annually, which is enough to meet the local demand except for some specialised grades of the base metal and scraps. It imports 350,000-500,000 tons of these special grades and scraps annually, including alloys that are needed by industries such as automobile, defense and aerospace.

“We strongly believe that 5 million tons aluminum production will be achieved by 2015 and the Indian aluminum industry will be among the top three producers,” Handique said at a conference.

Low production costs and vast reserves of bauxite–the ore needed to make aluminum–are tempting local companies to increase their output in the country. Indian companies such as Hindalco Industries Ltd., Vedanta Aluminium Ltd. and state-run National Aluminium Co. have lined up investments totaling around INR1.2 trillion to expand their local production capacities over the next four-five years.

Vedanta Aluminium plans to raise its production capacity to 2.5 million tons from around 500,000 tons by the end of the fiscal year through March 2014, while Hindalco intends to raise output to 1.8 million tons from 600,000 tons by the same year.

National Aluminium has expanded its capacity to 460,000 tons a year from 345,000 tons last December, and plans to add another 575,000 tons of alumina capacity by the end of January, Chairman A.K. Srivastava said on the sidelines of the conference.

India’s 5083 aluminum pipe demand grew by a compounded 12% since 2003 through the fiscal year ended March 31, 2010, and is likely to further increase this fiscal year, industry participants said on the sidelines of the conference.

Industry officials said that speedy clearances for mining and land acquisition are crucial to expanding aluminum production.

India will struggle to achieve the 2015 production target unless the government helps to remove procedural bottlenecks and “reduces opposition from social activists,” Mukesh Kumar, president of Vedanta’s alumina refinery in Orissa state, told Dow Jones Newswires.

In October, India’s Ministry of Environment and Forests refused permission for the expansion of Vedanta Aluminium’s alumina refinery in Orissa’s Lanjigarh town, citing environmental violations.

The Indian unit of the London-based metals conglomerate Vedanta Resources PLC had sought permission to raise the production capacity of the refinery to 6 million metric tons a year from 1 million tons.

Delayed project work of other metal companies such as South Korea’s POSCO due to local protests against land acquisition as well as slow environment clearances have also raised concerns among potential investors.

Posted in Industry.