BS reported that Bharat Aluminium Company, a subsidiary of Sterlite Industries, is planning to close its plant-1, which produces 100,000 tonnes of aluminium every year, as the dip in prices makes production unprofitable.

The report quoted a company executive as saying that “That plant has a high cost of production and it is not feasible to operate it when aluminium prices have dropped significantly.”

The executive added that it has started reducing output and full closure is expected soon.


The executive said that “We plan to sell surplus power after the closure to make profit there is a 270 MW dedicated power plant. Sterlite Industries is, however, expanding its aluminium production capacity through another subsidiary, called Vedanta Aluminium. The company plans to ramp up the first phase of its aluminum smelter in Jharsuguda, Orissa, to 250,000 tonnes by June. In the second phase, another plant with the same capacity will be completed by the end of the current financial year. These plants have low cost of production and the company hopes to sustain the new production despite low prices for the metal.”

Aluminium prices fell to USD 1,251 a tonne on the London Metal Exchange from last July’s all time high of USD 3,271 as the global credit crunch and economic slowdown curbed demand for the base metal. The inventory of aluminium has reached all time high of 3.76 million tonnes on the LME. An analyst estimates that about 35% of aluminium producers worldwide are making losses, many announcing closures.

Sterlite Industries acquired the majority stake in government owned BALCO in 2001 for INR 552 crore. The company added 250,000 tonnes per annum of additional smelting capacity to produce aluminium after the acquisition.

(Sourced from Business Standards)