National Aluminium to Triple Capacity in Six Years

By Abhishek Shanker

Dec. 23 (Bloomberg) -- National Aluminium Co., India’s second-biggest producer, plans to almost triple production capacity in the next six years as demand rises in Asia, Europe and North America.

Output of the lightweight metal may reach 1.25 million metric tons from 460,000 tons, Director of Production A.K. Sharma said in an interview. The company, which added 115,000 tons of capacity on Dec. 20, aims to put on another 180,000 tons in the next phase at its Angul plant in eastern Orissa state, he said, without specifying a timeframe.

Aluminum, used to make cars, aircraft and beverage cans, has climbed 45 percent this year in London as China, the world’s biggest producer and consumer, became a net importer and demand began to recover in the U.S., Japan and Europe.

“With higher prices and expanded capacity, National Aluminium will make good money,” said Giriraj Daga, an analyst in Khandwala Securities Ltd. in Mumbai. “Going forward, prices may rise further due to better demand.”

National Aluminium shares rose as much as 2.5 percent to 384.45 rupees and traded at 382.65 rupees as of 11:46 p.m. in Mumbai. The key Sensitive Index of the Bombay Stock Exchange gained 1.7 percent.

Global Production

China’s imports of refined aluminum swelled 1,245 percent to 1.45 million tons in the first 11 months of this year, while exports slumped 71 percent to 18,609 tons, according to government data.

Aluminum production in North America fell 17.9 percent this year, according to data from the International Aluminum Institute. Output fell 19.5 percent in West Europe and 11.6 percent in East/Central Europe, while production in Asia, including India, rose 11.8 percent.

“Declining capacities in North America and Europe because of rising input costs and expectations of an increase in per capita consumption of metals in China and India will help us,” Sharma said yesterday by telephone from Bhubaneshwar, where National Aluminium is based.

National Aluminium said yesterday it raised prices by 2.9 percent, the third increase this month, after the metal rose in London trading.

The company has sought 250 acres of land from the state government to expand its Angul facility, which will include a 240 megawatt power plant, Sharma said. Following the 180,000 ton capacity addition, it plans to add a further 107,000 tons, Sharma said.

Work on a 160 billion rupee ($3.4 billion), 500,000 ton smelter at Jharsuguda is expected to commence in June 2010 after a setback of more than a year because of delayed state government approvals, he said. The company may have to tap the market to fund the project that will include a 1,250 megawatt power plant, he said, without giving details.

“The state government may complete the environment impact study of the project in about five months after which we can expect an approval,” Sharma said.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net