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Business Line : Companies News : 'India's aluminium growth story is just getting unfolded'
India is home to one of largest reserves of coal and high-grade bauxite in the world. It can certainly be at the bottom of the cost curve of global producers. The country should realise this potential and can become a global hub for aluminium. — Mr S.K. Roongta, Managing Director, Vedanta Aluminium
A seasoned public-sector strongman, Mr S.K. Roongta, former chairman, Steel Authority of India Ltd (SAIL), has a new challenge in hand — taking aluminium to new heights for Vedanta Aluminium. As Managing Director of the private-sector metals major, Mr Roongta is upbeat about aluminium prices going up, bringing in better profits. Excerpts:
What made you switch tracks to aluminium?
I spent 38 years of my professional life in steel. Meeting the challenges of SAIL's transformation and putting it on a high-growth path was an experience to cherish. Aluminium is the metal of the present as well as future. I found it challenging to be able to steer Vedanta's 2.5-mtpa fully integrated aluminium facilities along with power generation capacity of 6,000 MW.
Is Vedanta planning new investments in aluminum?
Vedanta's largest greenfield investment here has been in the aluminium sector. Jharsuguda (Odisha) is being developed as an aluminium and power hub. We are putting up a new smelter of 1.25-mtpa capacity in Jharsuguda and another smelter of 0.325-mtpa at BALCO. Once commissioned, both these smelters will produce around 2.5 mtpa of aluminium.
How do you asses the current policy-making scenario?
There is a general consensus that Indian economy is in need of fresh reforms to sustain the growth momentum. In the metals and power space, and other sectors as well, issues relating to coal availability and regulatory issues pertaining to environment and forest clearances, etc., remain a big challenge.
The state of aluminium industry is a case in point. Aluminium production hinges on backward linkages to bauxite and coal. India is home to one of largest reserves of coal and high-grade bauxite in the world. It can certainly be at the bottom of the cost curve of global producers. The country should realise this potential and can become a global hub for aluminium.
Environmental issues have affected some of your projects. Your views?
Economic growth and environment protection must go hand in hand. We accord the highest priority to issues related with environment, social and human rights, and endeavour to adopt the world's best practices.
Our Lanjigarh alumina refinery is the first zero-discharge refinery in the country, with lower energy and water use than the world average. Clearly, international benchmarks are the driving force behind all our endeavours.
What is the status of your power projects?
Power plants with combined capacity of 3,615 MW at Jharsuguda are our largest capacity at a single location. At BALCO, we have 810 MW captive power plants that are operational and a further capacity of 1,200 MW is getting ready.
The first of 4 x 300 MW power unit would go on stream in Q4 FY 2012 and other units will be commissioned thereafter.
At Talwandi, in Punjab, construction is on to set up a super-critical plant of 1,980 MW capacity (660 x 3) which will be fully operational in 2014. This will add a capacity of about 8,000 MW, besides 847 MW in other group companies, including 273 MW of wind energy.
What is your outlook for bauxite, a key resource for the aluminium industry?
India is home to some of the world's best bauxite deposits in Odisha. As a policy, the country should harness this advantage by encouraging value addition in its vicinity, with resultant industrial, economic and all-round development of backward areas. This will also reduce the overload on Indian Railways and roads, as it will cut down expensive logistics. We are hopeful that Orissa Mining Corporation will adhere to its commitment and provide us with the required mine, as substantial downstream investments have been undertaken.
What is the scope of growth for aluminium in India?
India's aluminium growth story is just getting unfolded with per-capita consumption at just 1.3 kg, compared with 14 kg in China. At present, the power sector consumes a major share of aluminium, but as the economy grows, consumption in transportation, construction, consumer durables and packaging segments will grow faster. What is important is that the aluminium Vedanta produces has to be further processed into end products. Thus, there is potential for a few hundred new entrepreneurs to set up downstream industries. Vedanta doesn't intend to enter this segment, but would like to facilitate new entrepreneurs to set up units.
Is the worldwide decline in metal prices affecting your profit margin?
Metal prices, including aluminium, were somewhat depressed in the later half of CY 2011, which did affect profit. There has, however been some recovery in 2012. China remains a major force in the world space and with Chinese economy still growing and demand on the rise in other emerging markets, global demand should grow well.
What are the prospects for aluminium prices?
We see better prospects in the coming months. Both China and Europe are bottoming out and are unable to maintain their production levels, given the rising costs and non-availability of raw materials. The demand from the infrastructure segment will also see a rise in Asia. By March 2012, we expect London Metal Exchange prices at $2,300 to $2,400.
India is home to one of largest reserves of coal and high-grade bauxite in the world. It can certainly be at the bottom of the cost curve of global producers. The country should realise this potential and can become a global hub for aluminium. — Mr S.K. Roongta, Managing Director, Vedanta Aluminium
A seasoned public-sector strongman, Mr S.K. Roongta, former chairman, Steel Authority of India Ltd (SAIL), has a new challenge in hand — taking aluminium to new heights for Vedanta Aluminium. As Managing Director of the private-sector metals major, Mr Roongta is upbeat about aluminium prices going up, bringing in better profits. Excerpts:
What made you switch tracks to aluminium?
I spent 38 years of my professional life in steel. Meeting the challenges of SAIL's transformation and putting it on a high-growth path was an experience to cherish. Aluminium is the metal of the present as well as future. I found it challenging to be able to steer Vedanta's 2.5-mtpa fully integrated aluminium facilities along with power generation capacity of 6,000 MW.
Is Vedanta planning new investments in aluminum?
Vedanta's largest greenfield investment here has been in the aluminium sector. Jharsuguda (Odisha) is being developed as an aluminium and power hub. We are putting up a new smelter of 1.25-mtpa capacity in Jharsuguda and another smelter of 0.325-mtpa at BALCO. Once commissioned, both these smelters will produce around 2.5 mtpa of aluminium.
How do you asses the current policy-making scenario?
There is a general consensus that Indian economy is in need of fresh reforms to sustain the growth momentum. In the metals and power space, and other sectors as well, issues relating to coal availability and regulatory issues pertaining to environment and forest clearances, etc., remain a big challenge.
The state of aluminium industry is a case in point. Aluminium production hinges on backward linkages to bauxite and coal. India is home to one of largest reserves of coal and high-grade bauxite in the world. It can certainly be at the bottom of the cost curve of global producers. The country should realise this potential and can become a global hub for aluminium.
Environmental issues have affected some of your projects. Your views?
Economic growth and environment protection must go hand in hand. We accord the highest priority to issues related with environment, social and human rights, and endeavour to adopt the world's best practices.
Our Lanjigarh alumina refinery is the first zero-discharge refinery in the country, with lower energy and water use than the world average. Clearly, international benchmarks are the driving force behind all our endeavours.
What is the status of your power projects?
Power plants with combined capacity of 3,615 MW at Jharsuguda are our largest capacity at a single location. At BALCO, we have 810 MW captive power plants that are operational and a further capacity of 1,200 MW is getting ready.
The first of 4 x 300 MW power unit would go on stream in Q4 FY 2012 and other units will be commissioned thereafter.
At Talwandi, in Punjab, construction is on to set up a super-critical plant of 1,980 MW capacity (660 x 3) which will be fully operational in 2014. This will add a capacity of about 8,000 MW, besides 847 MW in other group companies, including 273 MW of wind energy.
What is your outlook for bauxite, a key resource for the aluminium industry?
India is home to some of the world's best bauxite deposits in Odisha. As a policy, the country should harness this advantage by encouraging value addition in its vicinity, with resultant industrial, economic and all-round development of backward areas. This will also reduce the overload on Indian Railways and roads, as it will cut down expensive logistics. We are hopeful that Orissa Mining Corporation will adhere to its commitment and provide us with the required mine, as substantial downstream investments have been undertaken.
What is the scope of growth for aluminium in India?
India's aluminium growth story is just getting unfolded with per-capita consumption at just 1.3 kg, compared with 14 kg in China. At present, the power sector consumes a major share of aluminium, but as the economy grows, consumption in transportation, construction, consumer durables and packaging segments will grow faster. What is important is that the aluminium Vedanta produces has to be further processed into end products. Thus, there is potential for a few hundred new entrepreneurs to set up downstream industries. Vedanta doesn't intend to enter this segment, but would like to facilitate new entrepreneurs to set up units.
Is the worldwide decline in metal prices affecting your profit margin?
Metal prices, including aluminium, were somewhat depressed in the later half of CY 2011, which did affect profit. There has, however been some recovery in 2012. China remains a major force in the world space and with Chinese economy still growing and demand on the rise in other emerging markets, global demand should grow well.
What are the prospects for aluminium prices?
We see better prospects in the coming months. Both China and Europe are bottoming out and are unable to maintain their production levels, given the rising costs and non-availability of raw materials. The demand from the infrastructure segment will also see a rise in Asia. By March 2012, we expect London Metal Exchange prices at $2,300 to $2,400.
