TC Malhotra contributes to MetalMiner from New Delhi.
The Indian aluminum industry has grown and continues to grow at a rapid pace and with at least five prominent aluminum production players, India can emerge as a powerhouse within the next decade. India is the world’s fifth largest alumina producer, after Australia, Guinea, Brazil and Jamaica, with aluminum production of about 2.7 million tons, accounting for almost 5% of the total aluminum production in the world. India has about 3 billion tons of bauxite reserves, which accounts for almost 7.5% of the world’s 65 billion bauxite reserves. Indian bauxite reserves are expected to last over 350 years.
The most commercially mined aluminum ore is bauxite, as it has the highest content of the base metal. The primary aluminum production process consists of three stages. The first stage involves the mining of bauxite, followed by refining of bauxite to alumina and finally smelting of alumina to aluminum.
Technical experts say that production of one ton of aluminum requires two tons of alumina while production of one ton of alumina requires two to three tons of bauxite.
Demand and Consumption
India’s per capita consumption of aluminum metal compares at around 1kg versus the per capita consumptions of other countries like the US and Europe (25 to 30 kgs), Japan (15 kgs), Taiwan (10 kgs) and China (3 kgs).
In India, the industries that require aluminum mostly include power (44%), consumer durables, transportation (10-12%), construction and packaging (17%). However, internationally, the pattern of consumption favors transportation, primarily due to large-scale aluminum consumption by the aviation industry.
Aluminum appears as the third most available element in the earth and also the second most used metal in the world after steel. Due to the consistent growth of the Indian economy at a rate of 8%, the demand for metals, used for various sectors, is also on the higher side. As a result, the Indian aluminum industry has grown consistently.
India’s Aluminum Players
The list of aluminum companies in India includes Hindalco, Nalco, Malco, Balco and Indal. Many consider these five companies as the leading aluminum producers in the country. Other players include Hindustan Zinc, Jindal Stainless, Kennametal India, Ratnamani Metals and Sujana Metal Products. Private sector Vedanta is also a leading producer of aluminum.
Power represents the largest cost component in the manufacturing of aluminum. Because about 70% of Indian power producers use coal as the main fuel to generate power, coal has become a critical resource necessary to enhance aluminum production in the country.
India has huge reserves of coal but due to large demand India has to import coal to meet the domestic need especially from power, steel and cement producers. Rising coal costs may affect the aluminum cost in the near future.
Industry analysts share a favorable view of the Indian aluminum industry because of the country’s open economy, high GDP growth rate, skilled employees and some government policies that place India ahead of other developing countries.
Moreover, in other countries, bauxite reserves have dwindled yet India still has huge unexplored reserves of bauxite. The low per capita consumption of aluminum in India provides opportunity for the Indian aluminum industry because available figures suggest that the per capita consumption of aluminum metal in developed countries ranges from 20 to 30 kg, whereas India’s per capita consumption of aluminum is approximately 1 kg.
However, the Indian aluminum industry faces a big threat from naxalite groups. Since 2009, the Indian federal government has implemented several initiatives designed to tackle the issue. Industry experts say the naxal problem represents a serious threat to the mining industries especially in the mineral heartland states like, Orissa, Chattisgarh, Jharkhand and Andhra Pradesh, where bauxite is the main mining resource.
Industry experts agreed that despite all the difficulties, the future of the aluminum industry in India is very bright.
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