India’s Nalco to Diversify to Weather the Aluminium Downturn

India’s Nalco to Diversify to Weather the Aluminium Downturn

India’s state-owned aluminium producer National Aluminium Company Limited (Nalco) says it has changed its business model to remain profitable during the global aluminium downturn.

Worldwide aluminium production has surpassed consumption by 2.6%, Nalco said in a press release on Wednesday. This excess in production has led to a surplus of roughly 1.4 million metric tons last year.

“Given the tough going in the market, Nalco, the leading foreign exchange earner of the country amongst the CPSE’s, has developed a new Corporate Plan with a new business model that will withstand market onslaughts and keep the company afloat with profitability,” says Tapan Kumar Chand, Nalco’s CMD.

Chand went on to describe the New Business Model (NBM), saying that it would insulate Nalco from the vagaries of the current aluminium market. The NBM is also meant to strengthen Nalco’s aluminium business by cutting costs while increasing the volume of production. Nalco plans to accomplish this via modernization and brownfield expansion, as well as upstream and downstream integration. The NBM also suggests Nalco’s diversification into green power, nuclear power, IPP, rare metals like titanium, recovery of iron from red mud waste, and merchant mining. Nalco believes these areas are immune to downturns in the metals market.

“We have already formed a Joint Venture Company with Gujarat Alkalies & Chemicals Limited for a Caustic Soda Plant at Dahej in Gujarat. We are also exploring the opportunity to set up a greenfield aluminium smelter abroad, where energy would be available at a competitive price. The company has started discussions with Iran, Oman, Qatar and Indonesia in this regard,” Chand continued.

Describing the Indian market, the head of the Navratna CPSE says that in India, despite the fact that consumption is increasing by 6%, which is essentially due to an increase in demand in electric and electronics sectors, an increase in imports has become problematic, as the volume of aluminium imports has risen to 1.6 million metric tons in 2014-15 and is continuing to rise.

“Aluminium import constitutes 56% of total domestic consumption of metal, leaving only 44% of the market to domestic producers,” explains Chand.