Indian aluminum growth story is just getting unfolded - Mr Roongta

 

 

Q - What made you switch tracks to aluminum?

 

 

A - I spent 38 years of my professional life in steel. Meeting the challenges of SAIL's transformation and putting it on a high growth path was an experience to cherish. Aluminum is the metal of the present as well as future. I found it challenging to be able to steer Vedanta's 2.5 million tonne per annum fully integrated aluminum facilities along with power generation capacity of 6,000 MW.

 

 

Q - Is Vedanta planning new investments in aluminum?

 

 

A - Vedanta's largest Greenfield investment here has been in the aluminum sector. Jharsuguda is being developed as an aluminum and power hub. We are putting up a new smelter of 1.25 million tonne per annum capacity in Jharsuguda and another smelter of 0.325 million tonne per annum at BALCO. Once commissioned both these smelters will produce around 2.5 million tonne per annum of aluminum.

 

 

Q - How do you asses the current policy making scenario?

 

 

A - There is a general consensus that Indian economy is in need of fresh reforms to sustain the growth momentum. In the metals and power space, and other sectors as well, issues relating to coal availability and regulatory issues pertaining to environment and forest clearances etc remain a big challenge. The state of aluminum industry is a case in point. Aluminum production hinges on backward linkages to bauxite and coal. India is home to one of largest reserves of coal and high-grade bauxite in the world. It can certainly be at the bottom of the cost curve of global producers. The country should realize this potential and can become a global hub for aluminum.

 

 

Q - Environmental issues have affected some of your projects. Your views?

 

 

A - Economic growth and environment protection must go hand in hand. We accord the highest priority to issues related with environment, social and human rights and endeavor to adopt the world's best practices. Our Lanjigarh alumina refinery is the first zero discharge refinery in the country, with lower energy and water use than the world average. Clearly, international benchmarks are the driving force behind all our endeavors.

 

 

Q - What is the status of your power projects?

 

 

A - Power plants with combined capacity of 3,615 MW at Jharsuguda are our largest capacity at a single location. At BALCO, we have 810 MW captive power plants that are operational and a further capacity of 1,200 MW is getting ready. The first of 4 x 300 MW power unit would go on stream in Q4 FY 2012 and other units will be commissioned thereafter. At Talwandi in Punjab, construction is on to set up a super critical plant of 1,980 MW capacity which will be fully operational in 2014. This will add a capacity of about 8,000 MW, besides 847 MW in other group companies including 273 MW of wind energy.

 

 

Q - What is your outlook for bauxite, a key resource for the aluminum industry?

 

 

A - India is home to some of the world's best bauxite deposits in Odisha. As a policy, the country should harness this advantage by encouraging value addition in its vicinity with resultant industrial, economic and all round development of backward areas. This will also reduce the overload on Indian Railways and roads, as it will cut down expensive logistics. We are hopeful that Orissa Mining Corporation will adhere to its commitment and provide us with the required mine, as substantial downstream investments have been undertaken.

 

 

Q - What is the scope of growth for aluminum in India?

 

 

A - India's aluminum growth story is just getting unfolded with per capita consumption at just 1.3 kilogram compared with 14 kilogram in China. At present, the power sector consumes a major share of aluminum but as the economy grows, consumption in transportation, construction, consumer durables and packaging segments will grow faster. What is important is that the aluminum Vedanta produces has to be further processed into end products. Thus there is potential for a few hundred new entrepreneurs to set up downstream industries. Vedanta doesn't intend to enter this segment but would like to facilitate new entrepreneurs to set up units.

 

 

Q - Is the worldwide decline in metal prices affecting your profit margin?

 

 

A - Metal prices including aluminum were somewhat depressed in the later half of CY 2011 which did affect profit. There has, however been some recovery in 2012. China remains a major force in the world space and with Chinese economy still growing and demand on the rise in other emerging markets, global demand should grow well.

 

 

Q - What are the prospects for aluminum prices?

 

 

A - We see better prospects in the coming months. Both China and Europe are bottoming out and are unable to maintain their production levels, given the rising costs and non availability of raw materials. The demand from the infrastructure segment will also see a rise in Asia. By March 2012 we expect London Metal Exchange prices at USD 2,300 to USD 2,400.