Aluminium smelters hit by power costs

Hindalco Industries Chairman Kumar Mangalam Birla on Tuesday told shareholders at the company’s AGM that the power cost pressure is hitting aluminum smelters hard, though aluminium business in the country has recorded highest production.

He also noted that China continues to be a major demand driver for the company and copper consumption in Asia, except China, has slowed down.

While highlighting challenges confronting the nation, the aluminium and copper businesses and the company’s scorecard in the context of these factors, Birla said that domestic affairs have been affecting the economy and several producers have curtailed production in recent months. He also said that treatment refined charges in 2011 is better than 2010. 

Birla said the company’s copper business in India attained strong traction and pointed out that all the major strategic expansions are on track. The company is also focused on consolidating its metal portfolio in India and as such, its consolidated capital expenditures for the current fiscal stands at Rs 13,802 crore.

Giving a macro picture, Birla stated, “The world aluminium consumption in 2011 was 45 million tonnes, compared to 41 million tonnes in 2010, an increase of around 10 per cent.

Production in 2011 was marginally higher, at 45.6 million tonnes, against 42 million tonnes in the previous year.”

Further, Birla said the company has entered China to expand its automotive leadership position. Economic growth in China, he continued, the major driver of commodity demand, accounting for over 40 per cent of global demand for aluminium and copper, slowed considerably.

On Hindalco’s operations, Birla stated that its “model of a balanced portfolio, with strong value-added businesses, supported by operational excellence, have been the key factors behind the commendable performance. The aluminium business in India recorded the highest ever metal production.

Cost pressures were largely neutralised through greater efficiencies. The copper business in India attained the highest ever profitability led by improvement in recovery, better product-mix, and by maximising value from byproducts.”