Hindalco bets big on Utkal & Mahan plants to raise output

Aluminium contributes nearly 75% to company’s profit

Hindalco Industries will be producing around 3 million tonnes of alumina and 1 million tonne of aluminium from 2014, as production from the company’s Mahan and Utkal Alumina will come on-stream.

Mahan aluminium smelter, in Madhya Pradesh, is under commissioning and trial production has started. This project includes a smelter-power plant complex, comprising of 359 kilo tonnes per annum aluminium smelter and a 900 mega watt captive thermal power plant. The project has access to the Mahan coal block through a joint venture with Essar Power. Hindalco holds a share of about 3.6 million tonnes per annum in the coal block. Mahan coal block has received stage 1 clearance from Ministry of Environment and Forests and is awaiting stage two clearances.

At present, the company produces around 1.5 million tonnes of alumina and around 0.6 million tonnes of aluminium.

“We are ramping up our production and are hopeful of getting stage two clearance of Mahan coal block within the next couple of months,” said Debashish Bhattacharya, managing director at Hindalco Industries.

Further, the company is also ramping up production of Utkal Alumina project that would produce 1.5 million tonnes of alumina per annum.

The Utkal Alumina project, in Odhisa, is a 1.5 million tonnes refinery with captive bauxite resources of 200 million tonnes. The output from UAIL would be sufficient to feed alumina to the Mahan and the Aditya Smelters, said Bhattacharya.

However, the company may not be able to enjoy the benefits of their production ramp-up in the near-term due to the current slowdown in demand and as the company has not yet got the final clearances for the coal block which is a crucial raw material for the Mahan smelter.

In the long term, aluminium demand continues to remain strong with global aluminium consumption expected to increase at a compound annual growth rate (CAGR) of 6 per cent over next five years, the company said in its annual report.

Aluminium contributes nearly 75 per cent to Hindalco’s net profit and 35 per cent to its net sales, whereas copper contributes 25 per cent to profit and 65 per cent to revenue.