Aluminium producers likely to see pressure on profits, says NALCO chief

India's aluminium producers may see pressure on their profits because they have nearly full capacity utilisation at a time when global prices are falling, said Tapan Kumar Chand, chairman and managing director of NALCO, on Thursday.

The average price of aluminum on the London Metal Exchange has dropped nearly 14 per cent to $1768 per tonne in the September quarter so far compared to $2,054 in the same period last year. The metal is expected to trade in the range of $1750-$1800 per MT during 2019-20.

“The threat of increasing aluminium import--which accounted for 58.9 per cent of total aluminium consumption in 2018-19--persists. Support from the government in countering the same shall help the domestic producers to safeguard their market share and profitability,” he said.

Chand told shareholders at the company's annual general meeting metals prices are falling globally on fear of global economic slowdown, but he expects the demand for aluminum to remain strong, driven by automobiles, construction and power sectors. NALCO has decided to go ahead on its investment plans despite the current pressure on aluminum prices.

NALCO is adding 1million tonne per annum to its existing installed capacity of 2.275 MTPY at a cost of around of Rs 5,540 crore in its existing alumina refinery, hoping to complete the project by 2022-23.

The company plans to source bauxite from the Panchpatmali mines by setting up of a crushing and conveying system at a capital expenditure of Rs 483 crore, said the state-owned company's annual report.

The Pottangi bauxite mines, reserved by the government for NALCO, is scheduled for opening by May 2022. The Utkal- D mine is expected to start in 2019-20 and Utkal E after obtaining statutory clearances, said Chand.

NALCO aims to get a share in the electric vehicles sector by venturing into production of lithium-ion cell, and the Indian Space Research Organisation has shortlisted the company for transfer of cell technology.