Nalco bets on long-term raw-material supply for stable alumina & aluminium operations

2019-12-02

Nov. 30, 2019 - The Navratna CPSE under the Ministry of Mines, National Aluminium Company, is aiming to extend the longevity of its alumina refining and aluminium smelting operations, and therefore, trying to bank on long-term raw material security.

According to a report, Nalco wants to commence the operations of its second bauxite mining lease of Pottangi in 2023, which will feed its fifth stream of alumina refinery at Damanjodi currently under expansion. The Pottangi mining lease and the Panchpatmalli mines have balance deposits of around 160 million tonnes together and are expected to offer ample bauxite to ensure the refinery operations for the next 25 to 30 years.

Beside bauxite, Nalco also aims to begin mining from its captive Utkal-D coal block from the calendar year 2020, which is estimated to cut down the aluminium production cost by 25 per cent.

Nalco’s chairman and managing director Dr Tapan Kumar Chand said, “The gram sabha for the Pottangi mine operations has been held. DGPS (Differential Global Positioning Survey) for the mine is also completed. We have public hearing scheduled on December 17. The mining plan has been approved by IBM (Indian Bureau of Mines). We aim to open this mine in 2023. With an annual capacity of three million tonne per annum (mtpa), it will feed the fifth stream of our refinery.”

Nalco is also reportedly investing INR 5,600 crore on adding a fifth stream of one million tonne capacity to its alumina refinery at Damanjodi in south China. Work on side grading and soil testing has already started. At present, Nalco operates the refinery at more than its normative capacity of 2.1 mtpa.

In Q2 FY20, Nalco reported that it faced a loss of INR 28 crore, attributing to unforeseen expenses of INR 23 crore towards electricity dispute and INR 145 crore incurred for power and fuel purchase costs. Nonetheless, the company could manage to register a profit of INR 1732 crore in H1 FY20 when competitors faced erosion of profits. That was primarily because of the strategy to sell almost the whole of surplus alumina in export markets.

In Q4 FY20, the aluminium prices as well as the alumina prices are expected to gain strength, according to Mr Chand. While aluminium prices are expected to rise to $1800-1850, alumina prices are forecast to be in the range of $300-350 per tonne.