OVERVIEW OF ALUMINIUM INDUSTRY INDIA & ABROAD

Prof. K.S.S.Murthy, Hon. Gen. Secretary

Aluminium Association of India
No. 118, Ramanashree Arcade, First floor, 18, M.G.Road, Bangalore 560 001 Tel : 080 2558 2197 / 2558 2757, Fax : 080 2559 4535 e-mail : aluminium@eth.net / aai@aluminium-india.org website : http//www:aluminium-india.org

ALUMINIUM Metal of the future

Amongst metals, Aluminium ranks second, next only to steel, in terms of volumes used, due to its versatility, which stems from its excellent properties. It is exceptionally light, has high strength when alloyed, is impervious to rust & possesses a high degree of workability. It is also a good conductor of heat and electricity and has a soft luster, with an aesthetically pleasing appearance. Aluminium is highly recyclable and over 70% of the total metal produced till date, is still in use. The proportion of recycled metal in total aluminum produced is constantly increasing Aluminium is the third most abundant element in the earths crust, after oxygen and silicon. It makes up about 8% by weight, of the Earths solid surface. Aluminium is also considered to be a Green Metal, and the Aluminium Industry is the only industry in the world to claim to become green house gas (GHG) neutral, by the year 2020.

Aluminium solutions for sustainable future

ALUMINIUM GREEN METAL According to the International Aluminium Institute (IAI), global production of new aluminium stock account for 1% of the global human-induced greenhouse gas (GHG) emissions which cause global warming. However, the energy savings that can be made through recycling the metal repeatedly, fuel savings that can be obtained by light-weighting the vehicles and reduction of emissions from vehicles made of aluminium cumulatively have a far greater positive impact on the global environment and climate change. For example, every 100 kg of automotive aluminium replacing other heavier materials saves about 2 tonnes of carbon dioxide over the vehicles lifetime on account of enhanced fuel efficiency

ALUMINIUM ENERGY SAVER

Recycling is the cornerstone of Aluminiums Sustainability. Aluminium recycling reduces greenhouse gas emissions by 95%, compared to Primary Aluminium production. It only takes 5% of the energy required to produce Primary Aluminium to recycle it. Aluminium is an energy bank most of the original input can be recovered every time the Aluminium product is recycled. Aluminium can be recycled to infinity without any loss of quality or properties. Over 70% of the Aluminium ever produced worldwide is still in use today 450 million tonnes.

Aluminium solutions for sustainable future

Primary aluminium production by country (1950-2007)

Primary aluminium production by country (1950-2007)

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Major producing countries (Source: CRU & Industry data)

Countries 2008 China Russia Canada USA Australia Brazil 13,695 4,191 3,124 2,658 1,978 1,661 % of total 34 10 8 7 5 4

Production in 000 t 2014 21,481 3,712 756 1,754 1,727 1,684 % of total 43 7 2 3 3 3

Norway
India Dubai

1,383
1,348 899

3
3 2

1,195
3,958 1026

2
8 2

Others
Total

9,194
40,131

23
100

13,042
50,335

26
100

Aluminium solutions for sustainable future

Major Consuming Countries ( Source : CRU & Industry data)

Consumption in 000 t 2008 China Russia Canada USA Australia Brazil Norway India Dubai
Others Total 12,604 5,147 2,319 1,929 1,459 1,089 951 937 933 10,051 37,419

Countries

% of total
34 14 6 5 4 3 3 3 3 24 100

2014 22,088 5,505 2,259 2,054 2,030 3,800 869 1297 1,198
9,551

% of total 44 11 4 4 4 8 2 3 2 19 100

50,651

Aluminium solutions for sustainable future

India is positioned in 6th place with a bauxite resource base of about 770Mt. Almost 85% of these resources consist of the metallurgical grade bauxite, which is used in aluminium production. High quality bauxite ore and low labour and power costs has established India as one of the lowest cost producers of primary aluminium worldwide. Indian companies lie in the least quartile of the global primary aluminium cost curve. Indias primary production capacity at the end-March 2009 was 1.53Mt, which is an increase from 1.20Mt at the end- March 2008..
Indias remarkably low per capita consumption of 1.6kg offers immense potential for growth in its domestic market. Indias domestic aluminium consumption tripled between 2002 - 2009 from 0.5Mt to 1.4Mt a CAGR growth of 12%. The industry has been closely following the robust growth in demand by increasing domestic capacity at a CAGR of 10% from 0.75Mt to 1.32Mt in the same period. Domestic production also increased at a CAGR of 11% from 0.6Mt to 1.5Mt. Between 2009 and 2014, however, demand is expected to grow at a CAGR 9.5% to 2Mt driven by the automotive and construction sectors, which are each likely to grow at a CAGR of 10% during the same period. The Three major producersHindalco, Vedanta Group and the state owned Nalco, together account for the majority of share of total domestic aluminium production in India

Aluminium solutions for sustainable future

World : 46.6 million ton CY 09

4%
11%
Others Wire & cable 11% 4% FRPs 33% Castings 23% Extrusions 29%

India : 1.81 million ton FY 10 E

11% 15%

37%

11%

23%

26% 29%

Aluminium solutions for sustainable future

Chinese primary aluminium production

Production rate (000t/year)

9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Aluminium solutions for sustainable future

2500 2000
1500

Output

1000
500

Capacity

0
2006 2007 2008 2009-e 2010-e

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RECYCLING: A Cornerstone of Sustainable Development

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Aluminium can be recycled over and over again without loss of properties. Aluminium recycling benefits present and future generations by conserving natural resources and energy. Recycling saves up to 95 per cent of the energy required for primary aluminium production, thereby avoiding corresponding emissions, including greenhouse gases.
Global aluminium recycling rates are high, approximately 90 per cent for transport and construction applications and about 60 per cent for beverage cans. At the global level, one-third of all aluminium metal entering the market is from recycled material. Recycled material accounted for around 15 million tonnes (IAI estimates). This comprises 7.7 million tonnes returned from customers after fabrication processes and 7.4 million tonnes of product returned from end-ofuse (for example, aluminium content of used motor vehicles and used beverage cans UBCs).The global energy saving is around 215,000 GWh,

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Regional Bauxite, Alumina, Primary and Recycled Aluminium Production, 2007

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Global Share of Primary and Recycled Metal Production

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Global Share of Primary and Recycled Metal Production

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Number of Recycling Plants, 2008

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Global Metal Use- 1950, 1980 and 2007

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Of an estimated total of over 800 million tonnes of aluminium produced in the world since commercial manufacture began in the 1880s, about three quarters is still in productive use. About 32% is located in buildings in the form of facades, windows, doors etc., 28% as electrical cable and machinery and 28% within moving objects such as cars, commercial vehicles, trains, ships. Recycling the metal currently stored in use would equal up to 16 years primary aluminium output.

Global Old Scrap Recycled by Market

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Aluminium recycling benefits present and future generations by conserving energy and other natural resources. It saves up to 95% of the energy required for primary aluminium production, thereby avoiding corresponding emissions, including greenhouse gases

2007 Primary Energy Content of Primary, Recycled and Aluminium Stored in Use in PJ (Petajoule) (10^15 Joules)

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Most recent forecasts from IAIs Global Aluminium Recycling Committee show growth in recovered scrap from 2010 at approximately 9.5 million tonnes to almost 17 million tonnes in 2020, following the life cycle analysis of the various product groups and taking into account projected collection and recycling rates.

Aluminium solutions for sustainable future

End-of-Life Product Recycling: the Route to High Quality Products

At the end of their useful life, if pre-treated and/or sorted, aluminium products can be recycled for use in almost all aluminium applications since the metals atomic structure is not altered during melting.

Aluminium Recycling forecast to grow by 75pct in the next decade The recycling industry has seen recycled aluminium volumes rise significantly from 13.7 million tonnes in 2003 to 19.4 million tonnes in 2009, representing an increase of 42% compared to 28% increase in primary production. This is supported by strong growth of recovered scrap from end-of-life products of closed to 50% during the same period. Most recent forecasts from IAIs Global Aluminium Recycling Committee show growth in recovered scrap from 2010 at approximately 9.5 million tonnes to almost 17 million tonnes in 2020, following the life cycle analysis of the various product groups and taking into account projected collection and recycling rates.

Aluminium solutions for sustainable future

Global end-use markets for finished Aluminium products, 2007

Transport Building & Construction Packaging Engineering and Cables Other

15%

27%

21%

13%

24%

Aluminium solutions for sustainable future

Development and expected development on a global scale from 1980 - 2030 in aluminium consumption in kg per capita. (Source: CRU)

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Global primary capacity is estimated to increase at a CAGR of about 3% to 52.6Mt in 2014 from 45.7Mt in 2009 most of which is likely to come from emerging markets such as China, India and the Middle East. Aluminium demand is likely to increase at a CAGR of about 4.1%. Production during the same period is expected to increase at a CAGR of about 3.9%. Despite the growth in demand exceeding supply, the global aluminium industry is expected to remain in a surplus state

Current (Red) and expected 2030 (Blue) consumption in kg per capita broken down geographically (Data: CRU)

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APPLICATIONS SECTORS
Aluminium is a key component of so many aspects of our life from the buildings we work in, to the cars we drive, from the cans we drink out of, to the flights we take. Its unique combination of properties make it ideal for an almost endless range of applications, and an essential part of modern day life. ===========================================================================

Building & Construction

The Building and Construction industry is today faced with many environmental challenges - its impact on climate change, to its choice of materials and methods of waste disposal. Aluminium is one of the most abundant metals in the world, Aluminiums formability, high strength-to-weight ratio, corrosion resistance, and ease of recycling makes it the ideal material for a wide range of building applications such as form-work, curtain-walling, doors and windows.
The global inventory of aluminium in use has grown from 90 million tonnes in 1970 to about 600 million tonnes today and is forecast to reach more than 1 billion tonnes in 2020. This is creating a vast material and energy storage bank for future recycling use. The building sector is forecasted to represent up to 35%, transport 28% and engineering plus cable 27% of the 2020 inventory in use.

Aluminium solutions for sustainable future

Transportation
This is one of the most important application sectors for Aluminium, both in terms of current volumes and growth prospects. The combination of lightweight, strength and formability characteristics of Aluminium, make it the ideal material for transport applications, such as aerospace, automotive & marine. Currently, Europe is using approx 140kg of Aluminium /car, which is expected to increase to 160 kg/car in the next 2-3 years.

The automobile industry is the biggest consumer of aluminium on the global market, and approx. 21% of primary aluminium is used here. (Source: CRU Photo: Audi.com)

Aluminium solutions for sustainable future

Aluminium helps light weighting Cars

1400 1200 1000 weight [kg] 800 600
Primary state-ofthe-art weight 1229 reduction Minimum secondary weight saving

Maximum secondary weight saving

1003

Primary latesttechnology weight reduction

400
200 0 Ref.- Car

928

887

785

Primary state- Primary latestof-the-art technology weight weight

Upper final weight (Al-Car)

Lower final weight (Al-Car)

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30 25

AUTO COMPONENT INDUSTRY

26.00
38% 29%

50% 40%
22.00

20
20%
21% 13% 8% 2%

24%

15 10

18.00 18.40 25% 20% 15.00

30%
20% 18% 20%

12.00 8.70
2%

10% 0% -10% -20%

5
-

3.28

-8% 3.25 3.01

3.89

3.97

4.47

5.43

6.73

199697

199798

199899

19992000

200001

200102

200203

200304

200405

200506

200607

200708

200809

200910

201011*

* Estimated

Turnover

Growth rate(%)

Strength In Indian Auto Sales Numbers Provide Platform For Aluminium As per the report released by Society for Indian Automobiles Manufacturers (SIAM) , domestic sales recorded a rise of 45.93% in October 2010. Domestic sales in September grew by 21.63%. In October 2010, production grew by 44.8%. The cumulative production data for April-October 2010 shows production growth of 33.07% over same period last year.

Passenger vehicles and commercial vehicles registered a growth of 33.7 and 37.7% respectively during April-Oct 2010. Two wheelers marked a rise of 29% during AprilOctober. During April-October 2010, overall automobile exports registered a growth rate of 41.44 percent.

Aluminium solutions for sustainable future

Packaging
Aluminium, the ideal material for Packaging has made significant inroads into the packaging sector, and is already a well established packaging raw material in the western world. Aluminium is used extensively for the protection, storage and preparation of food and beverages as well as medicines and cosmetics. The key geographical areas for growth in packaging, are the developing countries. Aluminium foil has excellent barrier properties which keeps out air & moisture and makes it superior to paper packaging.

Aluminium solutions for sustainable future

Power
The Electrical sector is still a major consuming sector for Aluminium, in India. Aluminium or Aluminium alloy electrical conductors are widely used in overhead electrical transmission and distribution cables, power systems and substations . Aluminium is particularly well suited to these uses because of its high electrical conductivity, low weight and good resistance to corrosion..

There are really only a few application sectors where aluminium is not used. Use is expected to grow as its properties are especially appreciated by designers, architects and engineers as well as by the manufacturers and end users of the product.

Aluminium solutions for sustainable future

Aluminium solutions for sustainable future

GDP Growth
Primary Aluminium consumption in India has grown from 450 kt in 1991, to 1,140 kt in 2008 and currently accounts for 3.1 % of global consumption. Total Aluminium consumption (Primary + Recycled) has grown significantly, at a CAGR of around 15% during 2002-09 and reached 1.5 million tonnes. As per Mckinsey & Co., Indian Aluminium use will grow 9 to 11 per cent to 2.10 to 2.75 million tonnes, by 2015. As per Mckinsey & Co.,the growth drivers of the Indian economy are as follows: Indian incomes will triple over next two decades India will emerge as the fifth largest consumer economy. A large urban middle class will develop, but the rural sector will benefit too Patterns of consumption will shift rapidly, towards discretionary spending. The Aluminum consumption follows the GDP growth curve, hence these would also be growth drivers for the consumption of Aluminium
India GDP v/s Al cons. Per capita
800 GDP per capita(LHS) 700 600 500 0.8 400 0.6 300 200 100 0 0.4 0.2 0 Per capita Al cons (RHS) 1.2 1 1.4

2001

2002

1990

1995

2000

2003

2004

2005

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2006

Aluminum Consumption per capita versus gross domestic product per capita for the 20 most populous countries in 2006

Aluminium solutions for sustainable future

INDIA TO AUGMENT ALUMINIUM PRODUCTION

Aluminum industry in India is moving towards overcapacity, since supply is likely to grow in excess of demand going forward. Considering that all aluminum projects would begin commercial production with expanded capacity as planned, there could be at least 2 million tonnes of additional capacity for exports by 2013.

Fitch Ratings report recently said that Indias aluminum productions will more than treble to 4.4 Million tonnes by mid 2012 with new capacities coming on stream, along with requisite captive Power generation capacities.
Aluminum meter production in million tonnes
Company Hindalco Industries Nalco Vedanta Resources Others 2009 0.488 0.403 0.638 0.200 2013 1.138 1.000 2.000 0.300

Aluminium solutions for sustainable future

All major producers have chalked out future mega expansion plans
Project Cost Company Hindalco Location Orissa Orissa 100 Aluminium (kt) Alumina (kt) 1500 (USD Amt Million)

Madhya Pradesh
Jharkhand

360
360

7029.877

Orissa
Vedanta Orissa Chattisgarh Jindal Ashapura Nalco Orissa Andhra Pradesh Andhra Pradesh

360
1750 325 250

1500
3500 9666.081 1977.153 768.893 5052.724 1537.786

1500 1000

735

1400 1400

Secondary producers
Total 4240 11800

219.684
26252.197

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Aluminium solutions for sustainable future

CONCLUSIONS The world is changing, competition reigns, and natural selection has been refining and perfecting business globally. Against this background, successful aluminum companies have been adapting their respective structures to address new market realities, improving management and production and devising optimum strategies. The aluminum business shows dynamic development, and the outlook for the metal as a structural material is bright. It is indispensable both for achieving higher standards of living and for supporting solutions to such crucial global issues as energy and material savings and ecological safety. Aluminium consumption per-capita increases rapidly to about 20 kg/person from 2 kg/person as per-capita income increase to $20000 from $50000. The end-uses to which aluminium is put appear to differ significantly between highincome countries and low-to middle-income countries. In low and middle income countries, the main uses of aluminium are in electrical systems and construction. In high-income countries, the largest use of aluminium is in transportation. Inconsistent end-use classifications, however, limit the quantification of these differences.

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Long-Term Forecast Based on a model relating consumption to income, by 2025 aluminum consumption is likely to be 120 Mt compared with 45.3 Mt in 2006. This represents a growth rate of 4.1% per year. Most of the increased consumption will take place in countries that consumed only modest amounts of aluminum in 2006. China, which consumed about 6.6 kg percapita in 2006, is expected to consume 28.7 kg per-capita in 2025. Russia, which consumed 7.4 kg per-capita in 2006, is expected to consume 28.7 kg per-capita in 2025, and Brazil, which consumed 5.5 kg per-capita in 2006, is expected to consume 7.9 kg per-capita in 2025. Brazils consumption is based on a relatively modest projection that its rate of economic growth will only be 3% per year; recent data could indicate that Brazils future rate of growth may be greater than 3%. India, which consumed 1.8 kg per-capita in 2006, is expected to consume 4.2 kg percapita in 2025. Consumption in high-income countries is not expected to rise significantly on a per-capita basis, but total consumption may increase modestly owing to population increases.

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The Future: Aluminium by 2020

The growing markets for aluminium are supplied by both primary and recycled metal sources. The increasing demand for aluminium and the long lifetime of many products mean that, for the foreseeable future, the overall volume of primary metal will continue to be substantially greater than the volume of recycled metal.

The global inventory of aluminium in use has grown from 90 million tonnes in 1970 to about 600 million tonnes today and is forecast to reach more than 1 billion tonnes in 2020. This is creating a vast material and energy storage bank for future recycling use. The building sector is forecasted to represent up to 35%, transport 28% and engineering plus cable 27% of the 2020 inventory in use.

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Aluminium solutions for sustainable future

THANK YOU
Aluminium Association of India No. 118, Ramanashree Arcade, First floor, 18, M.G.Road, Bangalore 560 001 Tel : 080 2558 2197 / 2558 2757, Fax : 080 2559 4535 e-mail : aluminium@eth.net / aai@aluminium-india.org website : http//www:aluminium-india.org