India's NALCO to Expand Refinery Capacity

Guest commentator TC Malhotra contributes from New Delhi.

Indian government-owned National Aluminum Company Limited (NALCO) has finally decided to commission its expanded refinery capacity this month, according to a Hindu Business Line article.

The company is enhancing production capacity at the refinery in Damanjodi, nearly 400 kilometers from state capital Bhubaneswar, from 1.58 million metric tons to 2.1 million metric tons, which will be further upgraded to 2.28 million metric tons.

The company has earlier estimated that the expansion plan may cost Rs 44 billion ($978.2 million), but now it is believed that the second phase of expansion could see a 10 percent cost increase.

Indian business daily Hindu Business Line has quoted B.L. Bagra, CMD of the state-owned company, as saying that though the additional cost would be recoverable from the original contractors, it is expected to be within 10 percent of the approved cost estimate.

The work at the refinery lagged after a Maoist attack there two years ago, forcing several contractors and their workers to leave.

Later this fiscal year, the refinery capacity will further be upgraded to 2.28 million metric tons when the additional equipment under the second phase is put to work.

NALCO is considered to have been a turning point in the history of the Indian aluminum industry. NALCO was incorporated in 1981 in the public sector to exploit a part of the large bauxite deposits discovered in the east coast of the country.

NALCO’s 1.58-million-ton alumina refinery, having three parallel streams of equal capacity, is located in the valley of Damanjodi in the eastern Indian state of Orissa. In operation since September 1986, the refinery is designed to provide alumina to the company’s smelter at Angul and export the balance alumina to overseas markets through Visakhapatnam Port.

Almost all the major players in the Indian aluminum industry have their own alumina plants. Besides Nalco, other major aluminum companies in India include government-owned Hindalco, Balco and Malco. Balco and Malco have already been acquired by private player Vedanta Resources.

Hindalco has plants at Renukoot, Belgaum and Murib the Renukoot in the northern state of Uttar Pradesh has alumina production capacity of 700,000 tons per year. Hindalco’s Belgaum plant is located in the south Indian state of Karnataka. The Belgaum unit currently has an alumina production capacity of 380,000 tons per year, while the Muri alumina plant in Jharkhand State has got an alumina capacity of 450,000 tons per year.

India is the world’s fifth largest alumina producer, with aluminum production of about 2.7 million tons, accounting for almost 5 percent of the total aluminum production in the world. India has about 3 billion tons of bauxite reserves, which account for almost 7.5 percent of the world’s 65 billion tons of reserves. Indian bauxite reserves are expected to last over 350 years.

In India, the industries that require aluminum mostly include power (44%), consumer durables, transportation (10-12%), construction and packaging (17%).

–TC Malhotra

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