National Aluminum Plans $9.5 Billion Expansion Investments in India and Abroad

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Researched by Industrial Info Resources (Sugar Land, Texas)--The National Aluminum Company (BOM:532234) (Bhubaneswar, Orissa), India's second-largest aluminum producer, has announced plans to invest $9.5 billion in several expansion projects in India and abroad over the next five years. These include power and smelter projects in Indonesia, Iran and South Africa, and proposed greenfield and brownfield projects in India.

Early this year, National Aluminum entered into an agreement with Indonesia to build a 500,000-ton-per-year greenfield smelter project and a 1,250-megawatt captive power plant in the South Sumatra province with a total investment of $3.5 billion. The company will also set up a 310,000-ton-per-year smelter in Iran. It is pursuing opportunities to set up a smelter plant and captive power project in South Africa with an investment of $4 billion. It is also eyeing investment opportunities in smelters in the Congo and Tajikistan where hydropower is abundant and inexpensive.

The company's domestic plans include a proposed $1.75 billion mine and refinery complex in Visakhapatnam, Andhra Pradesh. The bauxite mines will have a capacity of 4.2 million tons per year, and the refinery will have a capacity of 1.4 million tons per year. The company is in talks with the state government pertaining to the memorandum of understanding for the project. It will invest $4.1 billion to set up a smelter and power project in Jharsuguda, Orissa. It has also entered into a joint venture with Orissa Industrial Infrastructure Development Corporation to construct an aluminum park in Angul. It will develop a cement project at the power plant in Angul with an investment of $75 million. The company has entered into an agreement with Bharat Earth Movers Limited (Bangalore, Karnataka) for joint development and production of aluminum rail wagons. National Aluminum will supply aluminum extrusions for the project procured from third-party conversion of billets and ingots.

India's aluminum industry is highly concentrated with only five plants accounting for the total production capacity of 1.2 million tons per year. India's per-capita consumption of aluminum is a mere 0.8 kilograms (kg), which is less than 10 times the global average and in sharp contrast to the consumption patterns in the U.S., Japan and Europe, which have per-capita consumptions of 25 kg, 19 kg and 10 kg, respectively. India's aluminum industry is expected to grow at an annual rate of 9%.

India has 2.3 billion tons of bauxite reserves, the fourth largest in the world. The production of bauxite is expected to reach 23 million tons per year by 2010. The central and eastern states of Chattisgarh, Jharkhand and Orissa account for most of the country's mineral deposits, with Orissa having the largest reserves of bauxite in the country. The state recently discovered a new bauxite reserve at the Ushabali plateau in the Kandhamal district. A preliminary study conducted by India's Directorate of Geology & Mining indicated that the deposit contains nearly 8 million tons of bauxite.

Although India accounts for 7.5% of the world's total bauxite deposits, the total aluminum production capacity in the country is only 3% of the world's total capacity. The power sector consumes 35% of the total aluminum produced domestically, and the transportation sector accounts for 21% of the consumption. With the boom in consumer durables and construction sectors, the demand for aluminum is expected to surge.

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