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Aluminium is globally perceived as a 'green metal'. Not only because of its infinite recyclability but due to the way its growing application, particularly in the transport sector, and defence equipment is aiding in the reduction of carbon footprint of user industries. The silvery white metal replacing steel in vehicles at different price points has improved their fuel efficiency, cutting their carbon emissions.
While all this finds favour with the green brigade, as long as bauxite mining in the upstream is done without polluting stream and river waters, Vedanta Aluminium chief executive officer Abhijit Pati says Indian producers should go a step further. And to facilitate making value-added products straight from primary hot metal received at aluminium parks adjacent to smelters.
For value addition on a significant scale without going through the process of remelting ingots after moving these to distant conversion centres burning fossil fuel in the process, it is imperative to have aluminium parks. Such parks ideally large in size offering efficient infrastructure and logistics support are prospering in China and the West Asia to the benefit of small and medium converters.
For these to become an integral part of an efficient "aluminium ecosystem, the government help should be available by way of cheap access to land, power and fiscal incentives to park promoters and metal converters," said Pati.
China is offering export incentives ranging from 11 to 13 per cent to value-added aluminium products. This is to ensure progressive transition in exports from commodity metal to products. This is the way to capture value generated from the point of mining of bauxite through refining of intermediate product alumina to smelting of primary aluminium to making of semis.
In fact, this is the reason why Pati is not enthused about India, endowed as it is with the world's fourth largest bauxite deposits and coal resources of 302 billion tonnes, building a smelter abroad and then feed it with alumina produced here. "What must not be lost sight of is maximum numbers of jobs are created at smelting and semis stages," he said.
India's demand registered growth of 10 per cent in 2015 and this could further gain in momentum because of the push given to Make in India campaign, infrastructure building, including creation of smart cities and growing use of aluminium in the world's sixth largest automobile industry. The emerging demand scene makes it imperative that along with smelting capacity expansion, aluminium parks linked to smelters for transfer of hot metal are built.
The central government owned National Aluminium Company (Nalco), which has a 460,000 tonne smelter at Angul in Odisha, was the country's first to propose building a park in equal partnership with the state Industrial Infrastructure Development Corporation. More recently, Vedanta, which has built one of the world's largest single site smelters of 1.75 million tonne (mt) capacity, backed by a 3,600 Mw power complex, in Odisha's Jharsuguda is in discussions with the state government to build an aluminium park "on an ambitious scale that will house a large number of cables, conductors, extrusion, casting, metal powder and foundry alloy units," said Pati.
Parks of this kind offer, in industry lingo, "plug and produce" advantage meaning converters within get hot metal, electricity, water and logistics support on the tap leading to major improvements in cost efficiency. It takes about five hours for liquid aluminium to solidify. Well ahead of that, the liquid undergoes "treatment of aluminium through crucible process" and then immediately transferred to converting units in parks.
No wonder coinciding with government earmarking land for building the parks, both Vedanta and Nalco are receiving investment proposals from foreign and domestic converters. An aluminium park recommends itself for economy in energy it offers to downstream converters. Ballpark figure is when aluminium products are made directly from hot metal avoiding remelting of ingots, there is energy saving of 30 per cent.
Moreover, as ingots are moved from a smelter to value addition centres over distances, oxidisation causes metal loss of up to five per cent. Vedanta says it will be ready to supply up to 15 per cent of its hot metal to the proposed parks at Jharsuguda and Korba in Chhattisgarh. In China, almost 40 per cent of annual aluminium production of over 31 mt is received by value adding units as hot metal. Ideally, we should build parks on the lines of Aluminium Bahrain and Sohar Aluminium.
