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Hindalco expansions on stream by June
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Wednesday, 13 Feb 2013

Dnaindia reported that aluminium maker Hindalco Industries will bring on stream its three greenfield projects by the H1 of 2013.

Analysts however expressed concerns that subdued aluminium prices could put pressure on the operating income of the new projects. While the 1.5 million tonne per annum Utkal alumina project and 360,000 tonne per annum Mahan project will be ready by April 2013 the Aditya alumina smelter will start rolling out metal by June 2013.

This will be accompanied by the start of its 135,000 tonne of Hirakud flat rolled products factory with marginal production which will be ramped up in the next 18 months.

Mr Debnarayan Bhattacharya MD of Hindalco said that “With all the expansions, it will be a new Hindalco more efficient lower cost of production and higher volumes. However analysts feel it will be a more stressed company due to high exposure to LME aluminium prices, the global benchmark.

An analyst with a domestic brokerage said that for almost a year aluminium prices have remained under pressure in the range of $2,050-2,100 per tonne and that has been one of the reasons why the company had been going slow on its expansion as that would not fetch higher operating income from new projects.

He said low LME prices and high input costs have kept its margins at around 6%, which is not impressive, and the situation is not likely to change going forward much. Unless LME aluminium prices go beyond USD 2,200 per tonne the outlook for any of its expansions is not really good.

Mr Bhattacharya said that since the Utkal project which will feed alumina to Mahan and Aditya projects will come up earlier, some initial batches of alumina will be sold in the merchant market. LME aluminium may stay pressured in the near term, but expressed hope it would bounce back soon.

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