04-08-2012, 03:13 PM
Aluminium Industry in India
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The Background
Though the existence of Aluminium was first established in the year 1808, it took almost 46 years to make its production commercially viable. The research work of several years resulted in extracting the aluminium from the ore. Aluminium is third most available element in the earth constituting almost 7.3% by mass. Currently it is also the second most used metal in the world after steel. Due to the consistent growth of Indian economy at a rate of 8%, the demand for metals, used for various sectors, is also on the higher side. As a result, the Indian aluminium industry is also growing consistently. In FY09, the aluminium industry in India saw a growth of about 9%.
The production of aluminium started in India in 1938 when the Aluminum Corporation of India's plant was commissioned. The plant which was set up with a financial and technical collaboration with Alcan, Canada had a capacity of producing 2,500 ton per annum. Hindustan Aluminum Corporation (Hindalco) was set up in UP in the year 1959; it had a capacity of producing 20,000 ton per annum. In 1965, a public sector enterprise Malco which had a capacity of 10,000 ton per annum was commissioned; by 1987, National Aluminium Company (NALCO) was commissioned to produce aluminium. It had a capacity of producing 0.218 million ton.
During the 1970s, the government started regulating and controlling the Indian aluminium industry. Restrictions in entry and price distribution controls were quite common in the Indian aluminium sector. Aluminium Control Order was implemented where the aluminium producers had to sell 50% of their products for electrical usages. However, in 1989, the order was removed as the government decontrolling was revoked. With de-licensing of industry in 1991, the liberal import of technologies and capital goods was started. The liberalization resulted in a growth rate of 12% of the industry, comparing to the growth rate of 6% during the 1980.
Aluminium Production in India
India is world's fifth largest aluminium producer with an aluminium production competence of around 2.7 million tones, accounting almost 5% of the total aluminium production in the world. India is also a huge reservoir of Bauxite with a Bauxite reserve of 3 billion tones.
The Production
India lies at the eighth position in the list of leading primary aluminium producers in the world. India saw a significant growth in aluminium production in the past five years. In 2006-07, the production target of aluminium in India laid by the Ministry of Mines, Government of India was 1,153 KT, which was augmented to 1,237 KT in the next year (2007-08). Due to the growing demand from the construction, electrical, automobiles and packaging industry, the production of aluminium also hiked up. In FY 09, the total aluminium production in India was around 1.35 tonnes.
The Consumption
After a stagnant consumption of primary aluminium in India from the end of 1990s to 2002 (when the consumptions were between 500 – 600 KT), it started rising sharply since 2002. The consumption reached at 1,080 KT in 2006. The consumption of aluminium in India is dominated by the industries like power, infrastructure, and transportation etc.
The Major Players
The Indian aluminium industry is dominated by four or five companies that constitute the majority of India's aluminium production. Following are the major players in the Indian aluminium industry
History
The Hindustan Aluminum Corporation Limited was established in 1958 by the Aditya Birla Group. In 1962 the company began production in Renukoot in Uttar Pradesh making 20 billion metric tons per year of aluminum metal and 40 billion metric tons per year of alumina. In 1989 the company was restructured and renamed Hindalco.[6]
Novelis acquisition
On February 11, 2007, the company entered into an agreement to acquire the Canadian company Novelis for US$6 billion, making the combined entity the world's largest rolled-aluminium producer.[7] At 2007 Novelis was the world's largest producer of rolled aluminum and a major recycler of aluminum cans.[6] On May 15, 2007, the acquisition was completed with Novelis shareholders receiving $44.93 per outstanding share of common stock.
Hindalco, through its wholly owned subsidiary AV Metals Inc., acquired 75,415,536 common shares of Novelis, representing 100 percent of the issued and outstanding common shares. Immediately after closing, AV Metals Inc. transferred the common shares of Novelis to its wholly owned subsidiary AV Aluminum Inc.
When Hindalco made this bid in 2007 this became the largest Indian investment in North America and the second-largest overseas investment by an Indian company (behind Tata Steel Europe's purchase of Corus two weeks earlier) to this time.[6]