Earlier, Hindalco said it would build a 0.36 million tonnes aluminium smelter along with a 1 million tonne alumina refinery. The revised plan includes a 0.72-million tonnes smelter to be completed in phases. The company has applied to the state government for approval.
Company officials didn't comment on the issue.
Hindalco has been pursuing a clear strategy of dominating the primary aluminium space through its operations in India while allowing its international subsidiary, Novelis, to focus on making high value products.
Vedanta Aluminium, which had to earlier scale down its refinery expansion plans after the government shot down the proposal on environmental grounds, is now going full steam in Odisha after it received shareholder approval for a mega merger that brings together all metal operations of the group. Vedanta Aluminium has also acquired a 25% stake in a bauxite mine promoted by engineering major Larsen & Toubro to lower its production cost.
"More than anything else, it would be interesting to see Hindalco's plans on bauxite and coal linkages for the project," said Jagdish Agarwal, senior research analyst with Emkay Global. "Currently their bauxite supplies are in line with a 360,000-tonnes smelter. Coal is also a major issue," he added.
Hindalco has captive bauxite mines in Jharkhand, Chhattisgarh, Maharashtra and Odisha and the alumina refineries - which refine bauxite into alumina - are located at Belgaum in Karnataka, Muri in Jharkhand and Renukoot in Uttar Pradesh.
In an earlier interaction, Hindalco managing director Debu Bhattacharya told ET that the company has tied up its coal requirements through long -term supply pacts with foreign coal miners. "Coal is not available locally and we do not want to take any chances as the group is settting up 5 large projects in the metals space," he added. The central government is close to according environmental approval for the group's Mahan coal project which will smoothen supplies of the mineral for the group.
Indian aluminum producers are among the lowest cost producers of the white metal in the world, due to availability of high quality bauxite, relatively low energy cost, thanks to captive power, and cheaper labour. The average cost of production for an Indian integrated aluminum maker is about $1,700 a tonne, which is at least $300 lower than the global average.
Smelters in Europe and the US have to grapple with high electricity charges - vital in an aluminum smelter and accounting for about 40% of the total cost - and slow demand. Recently, large global players such as Alcoa decided to close down about 12% of their total smelting capacity to address rising costs.
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