Price volatility takes sheen off aluminium firms' capital expenditure

Hindalco's subsidiary Novelis as well as the aluminium division of Vedanta have trimmed guidance by 30-40 per cent for the year

Companies in the aluminium sector like Vedanta and Novelis, which is Hindalco's US subsidiary, are pruning their capital expenditure (capex) needs for the current financial year (FY23) as high cost of production and volatility in global aluminium prices force players to redraw their plans.

Vedanta's investor presentation for the September quarter shows that the company has trimmed its capex guidance for the aluminium and power division by 40 per cent ($1 billion to $0.6 billion). This has impacted Vedanta's overall capex guidance for FY23 which is down by 20 per cent ($2 bn to $1.6 bn). 

Novelis, which makes aluminium products for