ALUMINIUM INDUSTRY IN INDIA

Background

The aluminium industry is the largest non-ferrous metal industry in the world economy. Since its
industrial production, demand for aluminum has been continuously increasing and its
application has extended to variety of economic sectors. The production of the primary aluminium from
bauxite is electricity intensive process and consumes majority of the energy
used in the sector.
Global Aluminium Industry

Global Production

Global production of primary aluminium rose 2005 to 2011.Primary aluminium production is
concentrated in relatively few countries.
The top five producers China, Russia, Canada, the United States, and Australia.
Figure-1








Aluminium Producing Countries

The ore of the metal i.e. bauxite generally occurs in the tropical and sub-tropical areas of earth. It
32
34
37
38
36
39
41
0
5
10
15
20
25
30
35
40
45
2005 2006 2007 2008 2009 2010 2011
Global production aluminium (MT)
Global production aluminium
(MT)
is present in almost all continents except Antarctica with the estimated deposits of 65 billion
tons. The major producers of primary aluminium in the world are:


United States of America . Norway
Russia . South Africa
Canada .Venezuela
European Union .Bahrain
China . United Arab Emirates
Australia . India
Brazil .New Zealand
Global Consumption

Asia has shown the largest annual increase in consumption of primary aluminium, driven largely
by the increased industrial consumption especially in China and India. Global consumption
increased by 8.2% in 2006 and touched 34.7 MT. In 2007, the corresponding figures were 10%
and 37.8 MT respectively. Globally, newer packaging applications and increased aluminium
usage in automobiles and electronics is expected to keep the demand growth ever increasing for
aluminium. Asia will continue to be the high consumption growth area led by China and India,
Which is expected to continue to register a double-digit growth rate for India in aluminium
Production in 2050.

Figure-2







N.AMERICA
23%
ASIA
45%
AFRICA
1%
OCEANIA
1%
S.AMERICA
4%
OTHER EURO
4%
EU
22%
Percentage of global consumption
Top Global Companies in Primary Aluminium

The top global companies in Primary Aluminium are

1. ALCOA
2. RUSAL
3. ALCAN
4. HYDRO
5. BHP Billiton
6. CHALCO
7. DUBALCO
Indian Aluminium Industry

The Indian aluminium sector is primarily run by large integrated players such as Hindalco and
National Aluminium Company (Nalco). Other producers of primary aluminium include Indian
Aluminium (Indal), now merged with Hindalco, Madras Aluminium (Malco) and Bharat
Aluminium (Balco) the erstwhile PSUs, which have been acquired by Sterlite Industries.
Consequently, mainly there are only three primary metal producers in the sector namely Balco
(Vedanta), National Aluminium Company (Nalco) and Hindalco (Aditya Birla Group).


Production of Aluminium
Name of the company Aluminium Production

2009-10 2010-11 2011-12(upto
December,2011)
provisional
NALCO 4,31,448 4,43,600 3,09,017
HINDALCO 5,55,404 5,43,670 4,31,757
VEDENTA GROUP 5,37,508 6,42,249 4,98,498
Total 15,24,400 16,29,519 12,39,272



SALES FIGURE OF ALUMINIUM
Items 2009-10 2010-11 2011-12
Domestic Sales 1158964 1319431 990959
Export Sales 372801 297155 233275
Total Sales 1531765 1616586 1224234

NALCO
HINDALCO
VEDENTA GROUP
Total
431488
555404
537508
1524400
443600
543670
642249
1629519
309017
431757
498498
1239272
Aluminium Production
2011-12(upto December,2011) provisional 2010-11 2009-10




The price of aluminium fixed by the primary producers is generally aligned to the London
Metal Exchange (LME) prices. During financial year 2010-11, the average LME Aluminium price was
USD 2257.34 per MT which was around 21% higher than the average LME aluminium price of USD
1865.71 per MT during 2009-10. During 2011-12 (up to December, 2011), the LME aluminium prices
fell from a high of USD 2772 during April, 2011 to USD 1945 during December, 2011 and the average
LME price during this period is USD 2364.35 per MT. Analysts cited the euro zone crisis and Chinas
economic slowdown having impact on demand growth and weakening aluminium prices that have
declined below many producers breakeven level. However, downside potential is likely to remain limited
because even at current price level, over 30% of world producers are operating at a cost level above the
LME price with 70% of these producers based in China. Downward movement of aluminium prices
increased inflow of metal into LME warehouses and stocks rose from 4.6 million tons during April, 2011
to 4.9 million tons at the end of December, 2011.








2009-10
2010-11
2011-12
1158964
1319431
990959
372801
297155
233275
1531765
1616586
1224234
SALES FIGURE OF ALUMINIUM

Total Sales Export Sales Domestic Sales
CONSUMPTION

In advanced economies, aluminium is increasingly replacing wood and steel in building
sector. Aluminium cans and containers are used extensively world over. Aluminium is also the ideal
packaging material for pharmaceuticals and processed foods.

In India, aluminium was consumed mainly in the electrical sector (48%), followed by transport sector
(15%), construction (13%), consumer durables (7%), machinery & equipment (7%), packaging (4%) and
others (6%). The per capita consumption of aluminium in India is among the lowest in the world with
only 1.3 kg as compared to world average of 12-15 kg.

Alumina is produced from bauxite. About one tonne of alumina is produced from three tonnes of
bauxite and about one tonne of aluminium from two tonnes of alumina.





INDUSTRY PROCESS AND TECHNOLOGY

The aluminium industry consists of four subsectors:
Bauxite mining
Alumina refinery
Primary aluminium smelting
scrap recycling and secondary aluminium refinery each having their own distinguished
characteristics, production processes, technologies, resources and energy demand:
Electrical Sector
48%
Transport
15%
Construction
13%
Consumer Durables
7%
Machinery and
equipment
7%
Packaging
4%
Others
6%
Consumption Percentage


Benefits of Aluminum Products in Use
Transport
i) 15 million tons of aluminum used in transport applications cars, buses, trucks, trains and ships can
save up to 300 million tones of CO2 and 100 billion liters of crude oil over the vehicles operating life.
ii). The use of one kg of aluminum replacing heavier materials in a car or light truck can save a net of 20
kg of CO2 over the life of the vehicle.
iii. This figure is even higher for more weight sensitive applications (for instance, up to 80
kg CO2 saved per kg of aluminum used in trains and ships).
iv. In 90s, the average passenger car contained between 40 and 80 kg aluminum; but
today, the average is between 120 and 150 kg.
v. While today aluminum accounts for less than 10% of a cars total weight it represents
up to 50% of the total material scraps value.
vi. As car manufacturers have sought to improve fuel efficiency, the use of aluminum has
grown every year for the past 30 years.
vii. The aluminum industry supports global university research in recycling, vehicle light
weighting and improvements in alloy properties.

Building & Construction
i. Aluminum is durable and corrosion resistant, hence reducing maintenance over time.
ii. Aluminums unmatched recyclability is user friendly and gives architects a key
sustainability design tool.
iii. Most energy efficient buildings start with aluminum. Aluminum components and
designs optimize natural lighting and shade and enhance energy management and support
designs that make the most of the physical environment.
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iv. Globally, buildings contain some 200 million tones of aluminum, which will be
available for recycling by future generations time after time - an energy bank for future
generations.
v. The metals inherent strength allows aluminum window and curtain wall frames to be
very narrow, maximizing solar gains for given outer dimensions.
vi. Aluminums high strength-to-weight ratio makes it possible to design light structures
with exceptional stability.
Packaging
i. Aluminum packaging (its unique combination of properties) contributes to the efficient
fabrication, distribution, storage, retailing and other end usage of products.
ii. The aluminum beverage can is one of the most sustainable packaging solutions available,
because it not only protects its contents but is cost-effective and can be recycled after use.
iii. Aluminum foil serves as a lightest complete barrier material in a packaging composite.
iv. According to sources 30% of the food in developing countries perishes due to the lack of
packaging. But aluminum has the best barrier options to keep food and drinks fresh and
safe and to avoid loss. Moreover it guarantees a longer shelf-life, contributing to the
sustainability of food and drinks products.
v. Aluminum due to its inertness helps to reduce the impact of used packaging. It is light
and minimizes packaging volumes within cheaper limits.
vi. Special packaging by maintaining sterile conditions of pharmaceuticals and other medical
sensitive products protects during transportation and storage until use. The high economic
value of used aluminum packaging serves as an incentive for continuous improvement in
recycling process.
vii. Studies have documented that the aluminum cans are the most recycled beverage
container in the world and most aluminum foil applications are fully recyclable


FUTURE OUTLOOK
The total production capacity of aluminum in India has increased from 1.08 million tons in 2006-07
to1.86 million tones in 2010-11.The production of primary aluminum in India was estimated 1.62 million
tons in 2010-11 whereas the consumption during 2009-2010 was 1.59 million tones, representing a Per
Capita consumption of about 1.3 kg which was in the range of 0.5 kg about a decade back.


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2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
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Production
Consumption
3.19
96.81
Bauxite in %
India
Rest World
India occupies 6th place in the world with a share of 3.19% of world reserves of bauxite. Odisha
and Andhra Pradesh account for more than 90% of countrys metallurgical grade resources. While
gibbsite bauxite resources in the world are depleting, vast gibbsite deposits in India assume particular
interest because of its ease in processing. Since gibbsite bauxite processing has specific advantage of low
energy consumption, the alumina refineries enjoy sustainable comparative cost advantage. It is projected
that aluminum production capacity in India at the end of the 12th Plan Period viz, 2016-17 would be
about 4.7 million tones .This would require about 9.2 million tons of alumina. So, if all the announced
alumina capacity additions fructify, India would be surplus in alumina and would be a significant player
in alumina trade. To produce 13.3 million tons of alumina at the end of the 12th Plan period, the bauxite
requirement would be about 40 million tones. The Report of the Sub Group for the 12
th
Plan Period has
recommended that all efforts should be directed towards ensuring bauxite availability to the alumina
refineries.