Business Standard
Nalco yet to consider Vedanta's offer to buy alumina at a premium
Edited by : AL CIRCLE
2 min read
After its alumina refinery at Lanjigarh was shut due to lack of bauxite, now operations at Vedanta’s aluminium smelter in Odisha have been hit by shortage of alumina. Time and again, Vedanta Aluminium Limited (VAL) has asked National Aluminium Company Limited ( Nalco), which has surplus alumina, to sell it the commodity at a premium, but in vain.
B L Bagra, director (finance) of Nalco, confirmed VAL had offered to pay a premium over Nalco’s export price. However, he added the company’s strategy was to export alumina. Others said Nalco’s move was triggered by the company’s reluctance to encourage competition. Nalco and VAL are competitors; both manufacture and sell aluminium.
Speaking to Business Standard, a VAL official said the company was ready to offer a premium of 7-10 per cent to Nalco for alumina. “Because we are a domestic buyer, Nalco would have been saved from various logistical issues and expenses. We are ready to take alumina from its refinery, not the Vizag port,” he said.
The matter will now be taken up by the Nalco board at the end of January.
Currently, capacity utilisation at Vedanta’s aluminium refinery is 5,00,000 tonnes. On condition of anonymity, a company official said, “We require one million tonnes of alumina for this capacity. Earlier, half of this was sourced from the Lanjigarh refinery, while the rest was imported. Now, we are sourcing it fully through imports from countries such as Australia, Canada and South Africa.”
State-owned aluminium maker Nalco has about 9,00,000 tonnes of surplus alumina, which it exports. If Nalco agrees to sell alumina to VAL, the Vedanta Resources associate company would save on the transportation and port charges it pays for imported alumina. Nalco, too, would gain due to the premium over its export price.
Currently, India is an aluminium-surplus market. While about 80 per cent the aluminium is consumed locally, the rest is exported. Industry sources say the Indian aluminium market is growing 10 per cent a year and in four to five years, demand is expected to match supply.
B L Bagra, director (finance) of Nalco, confirmed VAL had offered to pay a premium over Nalco’s export price. However, he added the company’s strategy was to export alumina. Others said Nalco’s move was triggered by the company’s reluctance to encourage competition. Nalco and VAL are competitors; both manufacture and sell aluminium.
Speaking to Business Standard, a VAL official said the company was ready to offer a premium of 7-10 per cent to Nalco for alumina. “Because we are a domestic buyer, Nalco would have been saved from various logistical issues and expenses. We are ready to take alumina from its refinery, not the Vizag port,” he said.
The matter will now be taken up by the Nalco board at the end of January.
Currently, capacity utilisation at Vedanta’s aluminium refinery is 5,00,000 tonnes. On condition of anonymity, a company official said, “We require one million tonnes of alumina for this capacity. Earlier, half of this was sourced from the Lanjigarh refinery, while the rest was imported. Now, we are sourcing it fully through imports from countries such as Australia, Canada and South Africa.”
State-owned aluminium maker Nalco has about 9,00,000 tonnes of surplus alumina, which it exports. If Nalco agrees to sell alumina to VAL, the Vedanta Resources associate company would save on the transportation and port charges it pays for imported alumina. Nalco, too, would gain due to the premium over its export price.
Currently, India is an aluminium-surplus market. While about 80 per cent the aluminium is consumed locally, the rest is exported. Industry sources say the Indian aluminium market is growing 10 per cent a year and in four to five years, demand is expected to match supply.
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