The world aluminium market is sluggish and is in slump cycle. Global aluminium production has out-passed consumption by 2.6 per cent, making a surplus of roughly 1.4 million tonnes in 2015. Slowdown in consumption in China has resulted in dumping of surplus production of that country in international market, making a steep fall in metal prices.
At present, aluminium prices are moving in a narrow band of around 1500 US $ per tonne much below the cost of production of primary producers. 70 per cent of companies in the world have reported cash loss. Many smelters have been closed and many more are resorting to production cut.
“Given the tough going in the market, Nalco, the leading foreign exchange earner of the country amongst the CPSEs, has developed a new corporate plan with a new business model that will withstand market onslaughts and keep the company afloat with profitability,” Nalco CMD Tapan Kumar Chand said.
According to the chief of this aluminium major, the New Business Model (NBM) shall insulate Nalco from the vagaries of market. It also strengthens the company’s aluminium business by reducing the cost with increase in volume of production through modernisation and brownfield expansion and upstream and downstream integration. Besides this, the model envisages diversification into Green Power, Nuclear Power, IPP, rare metal like titanium, recovery of iron from red mud waste and merchant mining that are immune to downturn in metal market.
“We have already formed a joint venture company with Gujarat Alkalies and 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 added.
Talking about Indian scenario, the head of the Navratna CPSE says that in India, though consumption is increasing by 6 per cent, mainly on account of increase in demand in electric and electronics sectors, increase in import has become a matter of serious concern as volume of import has exceeded 1.6 million tonnes in 2014-15 and is continuously on the rise. “Aluminium import constitutes 56 per cent of total domestic consumption of metal, leaving only 44 per cent of the market to domestic producers,” said Chand.