Nalco hopes for profitability from aluminium operations by FY19 end
2017-03-17 18:23:47 [Print]
BEIJING (Asian Metal) 17 Mar 17 - National Aluminium Company (Nalco) eyes profitability from its aluminium business towards the end of 2018-19 after the commencement of coal mining from its captive Utkal D coal block.
According to TK Chand, chairman cum managing director of Nalco, the aluminium business will be more profitable as the power cost will plunge with the commencement of coal production from Utkal-D and Utkal-E blocks.
Power cost accounts for 40% of aluminium production. Despite being the lowest cost producer of alumina in the world, steep power cost was constraining Nalco's ability to be cost effective in aluminium production. Nalco's production cost of the hot metal is around $1,450 per tonne, but its private sector rival Vedanta records aluminium production cost of $1,429 per tonne on average with its Jharsuguda smelter posting even a lower production cost of $1,388 per tonne. Nalco’s production cost of aluminium metal will decrease by Rs 500 per tonne with coal supplies from its captive block.
Nalco is expanding its aluminium production through both, brownfield and greenfield routes. At its existing smelter with a nameplate capacity of 0.46 million tonne per annum (mtpa) at Angul, Nalco is adding 0.5 million tonne capacity per year. The navratna company is also going for a new greenfield aluminium smelting unit at Kamakhyanagar in Dhenkanal district. The smelter with a proposed capacity of 0.6 mtpa is being pursued at an investment of Rs 12,000 crore.
With the aim of securing power supplies for the smelter, Nalco has inked a joint venture agreement with NTPC Ltd for a coal-fired power project with a capacity of 2,400 Mw with an investment of Rs 14,000 crore. The location for this power plant is Gajmara, some 45 km from Kamakhyanagar, the site of the proposed smelting unit. Nalco has agreed to buy 80% of the power from the 2,400 Mw project.
Currently, alumina, mainly alumina exports have been the key driver of its profitability for Nalco. Nalco, which registered export earnings of Rs 2,200 crore from alumina exports last year, produces about two million tonnes of alumina per year with nearly 50% exported. But, with Nalco opting for more value addition, its focus would be on conserving more alumina and limiting exports. In 2017-18, Nalco has aimed to increase aluminium output by 12%.
According to TK Chand, chairman cum managing director of Nalco, the aluminium business will be more profitable as the power cost will plunge with the commencement of coal production from Utkal-D and Utkal-E blocks.
Power cost accounts for 40% of aluminium production. Despite being the lowest cost producer of alumina in the world, steep power cost was constraining Nalco's ability to be cost effective in aluminium production. Nalco's production cost of the hot metal is around $1,450 per tonne, but its private sector rival Vedanta records aluminium production cost of $1,429 per tonne on average with its Jharsuguda smelter posting even a lower production cost of $1,388 per tonne. Nalco’s production cost of aluminium metal will decrease by Rs 500 per tonne with coal supplies from its captive block.
Nalco is expanding its aluminium production through both, brownfield and greenfield routes. At its existing smelter with a nameplate capacity of 0.46 million tonne per annum (mtpa) at Angul, Nalco is adding 0.5 million tonne capacity per year. The navratna company is also going for a new greenfield aluminium smelting unit at Kamakhyanagar in Dhenkanal district. The smelter with a proposed capacity of 0.6 mtpa is being pursued at an investment of Rs 12,000 crore.
With the aim of securing power supplies for the smelter, Nalco has inked a joint venture agreement with NTPC Ltd for a coal-fired power project with a capacity of 2,400 Mw with an investment of Rs 14,000 crore. The location for this power plant is Gajmara, some 45 km from Kamakhyanagar, the site of the proposed smelting unit. Nalco has agreed to buy 80% of the power from the 2,400 Mw project.
Currently, alumina, mainly alumina exports have been the key driver of its profitability for Nalco. Nalco, which registered export earnings of Rs 2,200 crore from alumina exports last year, produces about two million tonnes of alumina per year with nearly 50% exported. But, with Nalco opting for more value addition, its focus would be on conserving more alumina and limiting exports. In 2017-18, Nalco has aimed to increase aluminium output by 12%.
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