Inability of domestic aluminium-makers to access surplus alumina available with Nalco has increased their cost burden leading to greater reliance on imports, according to Indian Industrial Value Chain Council (IIVCC)

IIVCC is a group of organisations involved in industrial production and consumption supply chain activities .

India imports nearly 60 per cent of its aluminium requirement annually.

To manufacture one tonne of aluminium approximately two tonnes of alumina is required.

According to Ashok Kumar Agrawal, National Convener, IIVCC, Nalco was provided bauxite mines free of cost to promote growth of the domestic aluminium industry. Hence, excess alumina which is not being consumed by Nalco should be offered to other domestic producers instead of exporting it.

India’s domestic alumina requirement is around 8 million tonnes annually, of which, 7 million tonnes are available internally. The remaining is met through exports.

According to the IIVCC, Nalco has an aluminium smelting capacity of 0.48 million tonne per annum (mtpa) and an alumina production capacity of 2.3 mtpa. So after utilising alumina for its own aluminium production, the company has surplus availability of alumina to the tune of 1.3 mtpa.

“However, Nalco’s alumina exports presently account for 60 per cent of its production. It utilises 1 mtpa of alumina generated for captive consumption and the balance 1.3 mtpa is sold via tenders only to overseas buyers,” the IIVCC claimed.

Uneven playing field

By exporting alumina, Nalco is creating an uneven playing field for its peer aluminium companies, the group said, adding that there are several domestic aluminium smelters operating in established SEZs in the country and by supplying to these producers the PSU will get all the export benefits like duty drawback, EPCG benefits and others.

SEZ-based plants have expressed their interest in participating in Nalco tenders and paying the port prices for directly securing supplies from it, which could net the PSU an additional ₹200 crore.

“Due to Nalco’s policy to not supply locally to domestic aluminium players, there now exists a situation of simultaneous export and import of alumina within India, which has caused a loss to the exchequer of nearly $5 billion (₹40,000 crore) in just the last seven years,” the IIVCC said.

The roundabout in exporting and re-importing alumina is also congesting the logistics network domestically.