Aluminum producer Novelis expanding capacity

Novelis Inc, which recycles beverage cans to make aluminum products, is expanding its sheet metal capacity to handle an expected increase in worldwide demand from automakers, the company said on Thursday.

Novelis said it will build a new plant in North America to increase total North American aluminum capacity by 20 percent, and is expanding its plant in Brazil to increase aluminum production for cans.

The company estimates capital expenditure of $550 million to $600 million in fiscal 2012, and a total of about $1.5 billion in the next three years.

"Over the next five years, we expect the global automotive sector to grow more than 25 percent, electronics to grow 10 to 15 percent, and can demand to remain solid, up 4 to 5 percent annually," Chief Executive Officer Philip Martens told Wall Street analysts on a conference call.

The expansion plans came as Novelis reported fiscal fourth-quarter profit of $50 million on a 22 percent rise in sales to $3 billion. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the full fiscal year rose 42 percent to a record $1.07 billion. Novelis is a subsidiary of India's HindalCo Industries Ltd (HALC.BO: Quote).

In an interview with Reuters in March, Martens said aluminum demand, especially in the auto industry, was nearing pre-recession levels.

On Thursday the company said it will spend $200 million to build the new North American plant. The plant will boost total annual North American aluminum capacity by 200,000 tonnes, to 1.36 million tonnes.

The facility is expected to come online in 24 to 30 months, a Novelis spokeswoman said. The site of the plant has not yet been determined, she said.

Novelis is spending $300 million to expand its Pinda mill in Brazil to produce an extra 220,000 tonnes of sheet aluminum for cans. That will bring total production in Brazil to 650,000 tonnes.