An event of great importance to the aluminium industry, INCAL 2007, has been scheduled from November 21 to 23 at the International Convention Centre , Hyderabad.

It is organised by the Aluminium Association of India ( AAI ) — the apex body representing the country’s aluminium industries. This would then be an opportune time to analyse the prospects for this metal in India .

The advantages of  aluminium are very well acknowledged — its excellent strength to weight ratio, high ductility, superior resistance to corrosion , high thermal and electrical conductivity, good reflexivity to heat , light and electromagnetic waves, low cost of recycling in terms of energy  requirement and  easy amenability to surface and colour treatment. Casting of aluminium alloys offers a great degree of flexibility and no other metal can be cast under such a wide range of processes and piece weights varying from a few grams to 100 kg.

In terms of  availability of its main ore — bauxite ( named after the village Les Baux-de-Provence in southern France, where it was first discovered in 1821 by geologist Pierre Berthier ), aluminium is fairly well placed , with global deposits of over 34 billion tonnes.

Disadvantages

The biggest disadvantage of aluminium, which is holding up its more universal usage, is the high cost of  extraction of the primary metal. The  Hall-Heroult process followed the world over , discovered independently and almost simultaneously in 1886 by the American chemist Charles Martin Hall and the Frenchman Paul Heroult , is an electrolytic one and involves power consumption of around 13000 to 15000 kilowatthours per tonne of aluminium produced. Strangely, none of the attempts in the last hundred years to develop alternative , lower power consuming technologies have been commercially successful.

Because of this factor, aluminium production units the world over have usually come up near cheap sources of electric power such as hydel plants. Even in India , that is where the initial aluminium smelters came up such as Hirakud , Mettur and Belgaum.

Policy changes

It is another matter that subsequently state governments changed this policy of supply of cheap power to aluminium smelters and the newer smelters have been forced to use very expensive coal-based thermal power which renders Indian metal costly. Moreover, the process control technologies used in most Indian smelters is rather outdated, resulting in higher specific energy consumption figures, compared to world averages.

Ample deposits

The only way Indian aluminium companies are able to remain competitive is because of the ample deposits of low iron content bauxite along the East coast in Orissa and Andhra Pradesh.

India has the sixth largest deposits of bauxite in the world , estimated at around 2.6 billion tonnes. The basic strategy adopted by the domestic aluminium companies is to profit from the export of alumina ( its production is not power intensive ) and thus offset the high cost of metal production. The high global prices of alumina as well as primary aluminium in the last few years have helped the Indian  aluminium producers make good profits. Some of the Indian companies have been considering the strategy of “tolling” (sending the alumina to be converted to metal in the Middle East smelters , where gas-based power is cheap ) but so far there has been no action taken.

However, the price trend is very sensitive to the conditions of the Chinese market and any slowdown in consumption there in the years after the Olympics can commence a bearish price phase. Ironically, this may be good in a way since it will enable our aluminium industry to expand the domestic market, which is  highly price sensitive. The present smelting capacity in India is around 11,75,000  tonnes per year, while the production of primary metal in 2006-07 was 11,62,232 tonnes, which was about three per cent of the world output. Fresh capacities to the tune of 21,33,000 tonnes per year (both brownfield and greenfield) have been proposed to be set up in the next five years, based on a CAGR of eight per cent in domestic aluminium consumption.

But there is a question mark about the coming up of these new capacities. Of late, however, companies interested in exploiting this East Coast bauxite have had to face  an unexpected and very delicate social problem . This is the objection of local inhabitants ,most of them tribals, to the development of mines in these areas on the plea that the mining will adversely affect their traditional way of life and also cause environmental damage. In the last few years,these protests against the proposed mining projects have attained a militant nature with state governments being unable to take any decisive measures. In addition, many of the protesters have filed petitions in courts  which have effectively stalled the projects  for years  due to the dilatory nature of the judicial process.

The most ill-fated of such projects is that of Utkal Alumina International ltd., which was promoted by Alcan as far back as 1993 and has run aground since then. Similarly, Vedanta’s recently proposed mega-project has also been stymied through a court case.

Consumption pattern

What the Indian aluminium industry needs to do is promote more consumption in the transport sector ,where the lightness of the metal will mean lighter vehicles and consequent reduction in fuel consumption per tonne-km of goods or people transported.

Globally, the use of aluminium in automobiles has gone up from 33 kg per vehicle in 1975 to 120 kg per vehicle at present. But, in India the usage is only 5 kg average per car. Therefore, there is tremendous potential for increasing aluminium usage in the Indian automobile industry. However, it must be recognised that the world over, there is a fierce contest among between the aluminium, plastics and steel industries for maximising the use of their products in automobiles. The field is still very open.

Rise in packaging

The other sector where one can visualise good growth in aluminium consumption within the country is packaging. This is because of the rapid growth of organised retail and change in consumer culture due to an expanding middle class and rising incomes.

A positive here is that re-processing of trashed aluminium is simpler than recycling plastic and, consumes much lower energy than re-melting scrap steel. So, overall life cycle costs may turn out to be the lowest for aluminium packaging, despite the high initial cost.

The domestic aluminium die-casting/extrusion industry is bullish on exports this year. This is due to the rising number of quality casting outsourcings to India by European companies and the industry expects to see aluminium die-casting exports to rise by 35 per cent. In addition, due to the high growth of the automobile sector, the domestic market for aluminium die-castings is billed to grow at a very high rate.

The writer is a former journalist. He can be contacted on Email: nnsachi@yahoo.com