Aluminium giant Rusal plans big unit in Gujarat

Moscow-based United Company Rusal （UC Rusal）, the world’s biggest aluminium and alumina producer, has tied up with Mumbai-based Gujarat Foils to make inroads into the 1.5 million tonne per annum （mtpa） aluminium industry in the country.

On its part, Gujarat Foils, an aluminium foil manufacturing company which enjoys close to 40% market share in India, is also looking at backward integration into aluminium production through this joint venture.

“We are a knowledge-driven company and do not have the wherewithal, especially in terms of cash, to set up a huge plant and manufacture aluminium on our own,” said Vimal Kumar Somani, managing director and chief executive officer （CEO） of Gujarat Foils.

As a result, the company has tied up with the Russian giant to submit an expression of interest （EOI） to the Gujarat government for setting up an aluminium plant.

Gujarat Mineral Development Corporation （GMDC） has invited EOI from various interested companies to set up a 1 mtpa alumina refinery and 0.5 mtpa of aluminium smelter in Kutch.

“The project will accrue a total investment of Rs14,000 crore,” Somani said, adding, Gujarat Foils is currently working on the finer details of the joint venture with Rusal.

“This is a big upside for us as the mine from where the project will meet its bauxite requirement is one where Rusal had been doing its research work for the last 7-8 years and this gives them a lot of understanding of the quality of the mine,” said Somani.

Bauxite for the project will be supplied from one of GMDC’s mine.

Though a small player in the aluminium space, Gujarat Foils accounts for a foil capacity of 17,000 tonnes per annum out of the country’s total foil capacity of 45,000 tonnes. Aluminium foils, as the name suggests, are mainly used in manufacturing sheets for covering food and as pharmaceutical and wine bottle caps.

According to a May 2010 report by ICRA Management Services, around six tonnes of bauxite ore are required to produce one tonne of aluminium. Bauxite ore is the main raw material used to produce aluminium and approximately 95% of the world’s bauxite production is processed into aluminium. Aluminium oxide, also known as alumina, is the main component of bauxite. Generally, the bauxite ore contains 40% alumina, which is then refined to extract alumina. Aluminium is produced from this alumina through chemical reactions.

It is used in a variety of products such as air conditioners, refrigerators, aircraft （structures and engines）, automotive （body parts and engines）, bridges, food containers, drink cans, cooking and packaging foils, window and door frames for buildings, electric cables and transformers.

The report said aluminium production in India, mainly dominated by three big players —- Hindalco, Vedanta Resources and Nalco —- increased by 14% to an estimated 1.48 mtpa in 2009, primarily because of the commencement of production by Vedanta and recovery in demand.