Nalco to export incremental output

National Aluminium Co Ltd (Nalco), after posting good numbers in the first quarter, is training its guns on the export market to maximise profits.

The public sector aluminium producer, which started phase-wise commissioning of the expanded alumina refinery in Orissa in the last quarter, will see an additional alumina production of close to 60,000 tonne in the second quarter.

“Although it was commissioned in the last quarter, the impact will be seen in the second quarter figures as the production has started now. We expect decent benefits to reflect in the current quarter’s numbers,” a top company official said.

He said the company will export the entire additional production, as it does not require any additional alumina for the aluminium smelter at Angul. “We are optimistic on the price trends and demand of alumina globally and hence we will continue to focus on the export markets,” he said.

The company plans to produce an additional alumina of 3-3.5 lakh tonne in the current fiscal.

Nalco, at present, exports close to 6 lakh tonne out of a total production of 15.75 lakh tonne annually.

It is currently under process of expansion of the alumina refinery from 15.75 lakh tonne per annum to 22.75 lakh tonne per annum. The capacity will first be expanded to 21 lakh tonne which is already under implementation and is slated to be completely ready by the current fiscal end. With a few technology augmentations, it will be further expanded to 22.75 lakh tonne by the next fiscal.

Alumina, whose price is often calculated as close to 15% of London Metal Exchange aluminium price, has seen a downward correction in its price due to falling aluminium price globally. The price of aluminium has fallen to $2,300 per tonne, down from $2,600 per tonne a month back. But it is a temporary phenomenon and the outlook is bright, he said. Besides, the company source said, volume growth will act as a driver in offsetting the impact of falling LME prices.

While analysts said that the company had posted better-than-expected numbers, they have shown concern about increasing input costs.

“Operating cost pressure continues with alumina cost of production rising 23% year on year to $252/tonne, captive power generation cost up 37% yoy to Rs2.25/unit and aluminium production cost up 22% yoy to $1,975/t. The hike in cost was mainly due to higher raw material and staff cost which increased 155% yoy on further provisioning for wage revision,’’ said Bikash Bhalotia, analyst with brokerage Pinc Research, in a report on the company published on August 16.

He said while the cost of aluminium has come down due to turmoil in the US and Europe, going forward the price could rise.

“However, we believe that decline is limited from current levels ($2,340/t) as prices would be supported by rising cost (alumina, energy),’’ he said in the report.