Aluminium Industry in the Indian subcontinent is a highly concentrated sector with 5 prominent players catering to the majority of the country’s aluminium production. The country has been witnessing a growing demand for the metal in the domestic market accounting for an enviable growth in the sector. Truly speaking, today the aluminium production in the country is outpacing the demand. Very strangely the per capita consumption of the aluminium metal in India is less than 1kg, whereas the same is estimated at 25 to 30 kgs in US & Europe, 15 kgs in Japan, 10 kgs in Taiwan and 3 kgs in China. Despite the lower per capita demand for the metal in india, there is a heavy demand for aluminium in the domestic market on account of the metal being used in large quantities across a number of industries. Of the total volume required by the domestic market, the power industry makes use of about 44% and the consumer durables and transportation industries consume about 10-12%, while the construction and packaging sectors buy about 17%.
The History of Aluminium Production in India
Aluminium was discovered long back in the year 1808. However, its production could be made commercially viable only after 46 years. Several years of research in the arena could help extracting the metal from ore. Estimates reveal that aluminium is the third highly available metal in the earth’s crust that constitutes not less than 7.3% of the mass of earth. Following steel, aluminium is the second most used metal in the world. While the Indian economy consistently grows at a rate of 8% per annum, demand for various metals has been consistently increasing across several sectors and industry segments. As a result of this, Indian aluminium industry is undergoing a phenomenal development. In the FY)9 alone, aluminum industry in India grew by 9%.
Industrial scale production of aluminium commenced in India in the year 1938 with the commissioning of the Aluminum Corporation of India. The firm was established with a technical and financial collaboration with a Canada based firm Alcan. Â During the very beginning, the plant had a capacity to produce 2,500 ton of aluminium per annum. This was followed by Hindustan Aluminum Corporation (Hindalco) which was set up in the state of Uttar Pradesh in 1959, which could give an output of 20,000 ton per annum. The year 1965 saw the commissioning of Malco, a public sector enterprise which had a production capacity of 10,000 ton per annum. Following a number of such initiatives, the National Aluminium Company (NALCO) was commissioned in the year 1987 to produce aluminium, which could produce 0.218 million tons of aluminium per year.
The government of India began introducing a number of measures in 1970s to control and regulate the aluminium industry in the nation. In the Indian aluminium industry scenario, restrictions with regard to the entry of new players and price distribution control measures became highly common. The implementation of Aluminium Control Order mandated the aluminium producers to sell not less than 50% of their total volume output for the purpose of electrical usage. However, this government order was withdrawn in the year 1989, with the revoking of government decontrolling. The industry was de-licensed in 1991, which resulted in the liberal importing of technologies and capital goods related to the aluminium industry. These measures could take up the volume of aluminium production by 12% as against the growth rate of 6% reported during the 1980.
Aluminium Production and Consumption in India
India has the credit of being the fifth largest producer of aluminium in the world. The country has a capacity to produce more than 2.7 million tones of aluminium per year, accounting making up about 5% of the total aluminium production on the globe. India boasts of a massive quantity of Bauxite reserve of about 3 billion tones. India enjoys the eighth position among the leading producers of primary aluminium in the world. The country has been witnessing a phenomenal growth in aluminium production over the past ten years.
There was stagnation in the consumption of aluminium between the 1990s and 2002 when the consumption of the metal was estimated at 500-600 KT. However, since 2002, there has been a sharp rise in the consumption of aluminium in the nation. Chiefly, the industries that lead in the consumption of aluminium are power, infrastructure, and transportation and related firms.
The Major Players in the Aluminium Production Sector
Aluminium production industry in India is mainly dominated by about five firms that account for the majority of the country’s metal production including Hindustan Aluminium Company (HINDALCO), National Aluminium Company (NALCO), Bharat Aluminium Company (BALCO), MALCO and INDAL. HINDALCO: Hindalco is the largest firm in the Indian aluminium industry holding more than 39% of market share. This is a flagship unit of the Aditya Birla Group with its aluminium plant at located at Renukoot in Uttar Pradesh. The firm manufactures a number of aluminium products making up a market share of 42% in the primary aluminium segment, 20% in extrusions and 63% in rolled products, while 31% of the products are in the wheels and 44% in foils segments.
Sterlite Industries is one another giant in the arena comprising two wings namely BALCO and MALCO. BALCO is a partly integrated firm, MALCO is a completely integrated producer of aluminium. Sterlite company holds a market share of about 32%.
NALCO is yet another leading producer of the aluminium metal in India. Government of India has purchased a stake of about 87.15% in this firm. NALCO’s aluminium refinery unit is situated at Damanjodi. In addition, the firm also has a smelter unit at Angul, Orissa. At present, NALCO is focussed on a capex project aimed at increasing the volume of its production from 345,000 tonnes to 460,000 tonnes.
The list of aluminium companies in India includes Hindalco, Hindustan Zinc, Jindal Stainless, Kennametal, India, Nalco, Malco, Ratnamani Metals, Sujana Metal Products, Balco and Indal.
In the past, the growth of alumina and aluminium industries was in the range of 2 to 3% per annum. However, the growth rate may remain minimal in developed countries like US, Canada, Europe and Japan. But its growth is bound to be reasonably high in developing economies such as BRIC countries (Brazil, Russia, India and China) and Middle East.
The Future of Aluminium Industry in India
The per capita consumption of aluminium metal at developed countries is estimated at about 20 to 30 kg. In most countries, the bauxite reserve has got almost depleted. The scenario in India is just the opposite. While the per capita consumption of the metal is only 1.3kg, the country has a huge reserve of good quality bauxite reserve. In addition, several factors including high GDP growth rate, skilled employees, highly encouraging Government policy and the favourable trade relations of the nation with a number of developed and developing countries will ensure a bright future for the aluminium industry in the country.
A study of the aluminium industry in India today reveals that most refineries will be commissioned in the subcontinent around 2020. The scenario existing suggests that India is the right place following Vietnam where aluminium industry can hope to see a bright future. All these factors indicate that there is a highly promising future for the aluminium industry in the country further stimulated by the huge global market potential that will give a thrust to the industry.