Nalco to spread its wings into foreign soil; challenges before the PSU major

Nalco CMD Ansuman Das

AT A time when the global aluminium market has turned red, Indian PSU major under the ministry of mines, National Aluminum Company (NALCO) is all set to spread its wings into foreign soils. Cashing in on a global deficit in production of the metal, the Odisha-based Nalco...
is in talks with six countries setting up smelter units through joint ventures. If talks are successful, it will be a major leap forward for the Navaratna PSU.
However, it is not for the first time the PSU is setting its footprints abroad. Nalco is the largest exporter of aluminium in India and as an exporter, it has established its footprint over a large geographical area covering countries in the South East Asia, Far East, Indian Sub-continent, the Gulf, China and USA. Its exports are primarily calcined alumina and primary aluminium.
Of late, the PSU has been challenged in its once pioneer position in the aluminium industry built over three decades by Hindalco and Vedanta and these two have overtaken Nalco in smelting capacity, in the process eroding some of the past glories associated with it. Moreover, some of its machineries have also become outdated. So infusion of state-of-the-art technology is an uphill task before the PSU major.
Escalating input costs, particularly of energy and low aluminium prices on the London Metal Exchange (LME) is another area of concern for Nalco. The Odisha-based PSU has approached the ambassadors of Iran, Indonesia, Vietnam, Malaysia, Qatar, and Oman for setting up smelters overseas in joint ventures. "Nalco has approached the ambassadors of six countries- Indonesia, Vietnam, Malaysia, Qatar, Oman and Iran for setting up smelters overseas in joint venture," said Ansuman Das, CMD, Nalco while addressing the employees of company's smelter and power complex at Angul, Odisha. 
According to JP Morgan, the global aluminum market will move into a deficit in 2014, the first time in six years. According to the report, aluminum will report a deficit of 176,000 MT this year and the aluminum producers around the world are likely to idle more capacities to save costs, which in turn may hurt output.
According to JP Morgan, except China, the rest of the globe is likely to report a deficit of 1.3 million MT in 2014 and 0.57 million MT in 2015.
However, painting a contrasting picture in India, Nalco CMD Anshuman Das has said the Indian company is doing quite well. “We are running profitably, while smelters worldwide are being shut down.”
Nalco posted its best ever foreign exchange earnings of Rs 3719 crore in 2013-14 even as its aluminium output fell 21.58 percent to 316,000 tonne from 403,000 tonne in 2012-13. The aluminium major went for a planned cut in metal production through shut down of around 300 out of 960 pots on lower prices on the London Metal Exchange (LME).
The PSU is the largest integrated aluminum unit in Asia and is also one of the largest aluminum complexes of the world. Nalco is one of the companies that produce aluminum oxide at the lowest cost. For the proposed alumina refinery in Gujarat, Das stated that Nalco has offered the Gujarat government 49 percent stake to ensure its participation and commitment. Now, with former Gujarat CM all set to assume charge as the new Prime Minister of the BJP government at Centre, Nalco may hope only for better returns from Gujarat. Das expressed his optimism on completion of ongoing lean slurry project at Angul site by the end of this year.
The project would solve the ash disposal problem of the company's captive power plant (CPP) by transporting ash slurry to the voids of coal mines, he added.
Nalco is also hopeful about the Utkal-E Coal project and allotment of Pottangi bauxite mines which has mineable reserve of about 70 million tonnes. The PSU had to shut down one-third pots at its Angul smelter because of the sluggish aluminium market worldwide and coal shortage.
Nalco also posted its best ever performance in alumina and bauxite production. Bauxite production stood at 6.29 million tonne in FY14, 16.12 per cent higher than 5.41 million tonne in 2012-13.
Owing to the sluggish aluminium market worldwide and the coal shortage, Nalco was forced to shut down one-third of the pots at its smelter at Angul. Recently, however, the company added ten more pots to its 631 operational pots. It is a small, but significant step but definitely a positive step towads reclaiming its lost glory.