Indian aluminium industry re-aligns its focus on downstream manufacturing

Indian aluminium industry is finally aligning itself with the global trend of downstream integration. For the 4.129 million tpy-capacity primary aluminium industry which happens to be blessed with the proximity to one of the world’s richest bauxite reserves- the principle ore for aluminium extraction, downstream aluminium production has always remained a lesser priority. But now in the face of challenges arising from various fronts like power and logistics cost escalation, losing out to cheap exports in terms of market share, and not-so-conducive government duty structure, it is realizing the importance of spreading its wings farther.

Major primary aluminium producers are showing interest in setting up industrial parks for aluminium-processing units either within their existing smelter complexes or on lands adjacent to their smelters.

Vedanta Aluminium, which owns an aluminium smelter with a capacity of 1.75 million-tpy at Jharsuguda in Orissa and 600,000-tpy at Korba in Chhattisgarh, is investing heavily to build industrial parks for hosting small- and medium-sized units manufacturing aluminium extrusions and fabricated aluminium products.

The State-owned National Aluminium Company (Nalco), too, is giving high priority to building such industrial parks comprising SMEs that will add value to the primary metal it produces. Nalco has already gotten the ball rolling at Angul in Odisha for the first phase of an industrial park.

The company has roped in Orissa state agency Industrial Infrastructure Development Corporation (IIDCO) as a majority partner. The partnership in the special purpose vehicle (SPV) is created to ensure that the project does not suffer from unnecessary procedural delays in securing clearances from the state government.

While addressing an industry congregation at the national seminar - 'Aluminium - The Strategic Metal' last month, Satish Pai, Deputy Managing Director of Hindalco Industries Ltd. had said that Indian aluminium industry should start making more investments in the downstream sector now, as increase in the downstream production was critical for meeting India’s growing aluminium demand, which is presently met through mainly imports.