Novalis plans new investments in Brazil

US-based aluminum rolled products maker Novelis (NYSE: NVL) will invest US$400mn in Brazil to raise production capacity to meet the expected increase in domestic consumption to 4.5Mt/y by 2025, senior VP and president of Novelis South America, Marco Palmieri, said at the V international aluminum congress held in São Paulo.

"The industry also needs to be alert to primary aluminum supply. Big industrial players can ensure it by increasing recycling in their plants. However, the small manufacturing industry may have trouble obtaining it," Palmieri said.

To reach the projected growth, the sector will require substantial investments in the period - more than 63bn reais (US$33.9bn) - to expand the entire local aluminum transformation chain, both primary and recycled, according to national aluminum association Abal.

"Current consumption is predominantly cast aluminum, with a small percentage in rolled aluminum. In Europe, rolled aluminum is widely used on car bodies and we are talking with the government to increase its use in Brazil," US-based aluminum producer Alcoa's (NYSE: AA) Latin America and Caribbean CEO Franklin Feder said at the congress.

WORLD PLAYER

"Brazil has all the conditions to become a world player in the aluminum industry," Norway-based Norsk Hydro's majority-owned Albras' CEO, Luis Jorge Nunes said.

"The country has the third largest bauxite reserves, world class industrial processing plants and hydropower plants all over its territory," the CEO said, adding: "That's why Norsk sees Brazil as the new frontier for its aluminum business."

DOMESTIC CONSUMPTION

Brazil's domestic aluminum consumption increased 1.2% in the first quarter this year compared to 1Q11, according to Abal.

The association is expecting domestic aluminum consumption to rise by an average of 8.9%/y in the 2012-25 period.