overview of aluminium industry- india & abroad - 1st dec 10

Prof. K.S.S.Murthy, Hon. Gen. SecretaryAluminium Association of IndiaNo. 118, Ramanashree Arcade, First floor, 18, M.G.Road, Bangalore – 560 001Tel : 080 2558 2197 / 2558 2757, Fax : 080 2559 4535e-mail : [email protected] / [email protected] : http//www:aluminium-india.org

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 earth’s crust, after oxygen and silicon. It makes up about 8% by weight, of the Earth’s 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.

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ALUMINIUM – Metal of the future

Aluminium – solutions for sustainable future

http://en.wikipedia.org/wiki/File:Aluminium-4.jpg

ALUMINIUM – GREEN METAL

According to the International Aluminium Institute (IAI), global production of new aluminiumstock account for 1% of the global human-induced greenhouse gas (GHG) emissions which causeglobal warming. However, the energy savings that can be made through recycling the metalrepeatedly, fuel savings that can be obtained by light-weighting the vehicles and reduction ofemissions from vehicles made of aluminium cumulatively have a far greater positive impact onthe global environment and climate change. For example, every 100 kg of automotivealuminium replacing other heavier materials saves about 2 tonnes of carbon dioxide overthe vehicle‘s lifetime on account of enhanced fuel efficiency ALUMINIUM – ENERGY SAVER

Recycling is the ‘cornerstone’ of Aluminium’s 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.


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Primary aluminium production by country (1950-2007)

Primary aluminium production by country (1950-2007)


CountriesProduction in ‘000 t

2008 % of total 2014 % of total

China 13,695 34 21,481 43

Russia 4,191 10 3,712 7

Canada 3,124 8 756 2

USA 2,658 7 1,754 3

Australia 1,978 5 1,727 3

Brazil 1,661 4 1,684 3

Norway 1,383 3 1,195 2

India 1,348 3 3,958 8

Dubai 899 2 1026 2

Others 9,194 23 13,042 26

Total 40,131 100 50,335 100

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Major producing countries (Source: CRU & Industry data)


CountriesConsumption in ‘000 t

2008 % of total 2014 % of total

China 12,604 34 22,088 44

Russia 5,147 14 5,505 11

Canada 2,319 6 2,259 4

USA 1,929 5 2,054 4

Australia 1,459 4 2,030 4

Brazil 1,089 3 3,800 8

Norway 951 3 869 2

India 937 3 1297 3

Dubai 933 3 1,198 2

Others 10,051 24 9,551 19

Total 37,419 100 50,651 100

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Major Consuming Countries ( Source : CRU & Industry data)


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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. India’s primary production capacity at the end-March 2009 was 1.53Mt, which is an increase from 1.20Mt at the end- March 2008..

India’s remarkably low per capita consumption of 1.6kg offers immense potential for growth in its domestic market.

India’s 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 producers- Hindalco, Vedanta Group and the state owned Nalco, together account for the majority of share of total domestic

aluminium production in India

The Three major producers- Hindalco, Vedanta Group and the state owned Nalco, together account for the majority of share of total domestic

aluminium production in India

World : 46.6 million ton

CY 094%

11%

23%

29%

India : 1.81 million ton FY 10

E 15%11%

11%37%

26%


Chinese primary aluminium production

1,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,0008,5009,0009,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

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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,


13 Aluminium – solutions for sustainable future

Regional Bauxite, Alumina, Primary and Recycled Aluminium Production, 2007Regional 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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Global Old Scrap Recycled by Market


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.

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.

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


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.

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.

Most recent forecasts from IAI’s 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.



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 metal’s atomic structure is not altered during melting.

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 metal’s atomic structure is not altered during melting.

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

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.


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.


Global end-use markets for finished Aluminium products, 2007

Global end-use markets for finished Aluminium products, 2007

27%

24%13%

21%

15%Transport

Building & Construction

Packaging

Engineering and Cables

Other


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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)


APPLICATIONS SECTORSAluminium 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, Aluminium’s 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.


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)


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887785

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savingMaximum

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Primary latest-

technology weight reduction

Aluminium helps light weighting CarsAluminium helps light weighting Cars


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 April-October. During April-October 2010, overall automobile exports registered a growth rate of 41.44 percent.

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 April-October. During April-October 2010, overall automobile exports registered a growth rate of 41.44 percent.

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.


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.


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

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India GDP v/s Al cons. Per capitaIndia GDP v/s Al cons. Per capita



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

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 India’s 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.

Company 2009 2013

Hindalco Industries 0.488 1.138

Nalco 0.403 1.000

Vedanta Resources 0.638 2.000

Others 0.200 0.300

Aluminum meter production in million tonnes


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All major producers have chalked out future mega expansion plans

Company Location Aluminium (kt) Alumina (kt)

Project Cost -

(USD Amt Million)

Hindalco Orissa 1500

7029.877

Orissa 100

Madhya Pradesh 360

Jharkhand 360

Orissa 360 1500

Vedanta Orissa 1750 3500 9666.081

Chattisgarh 325

Jindal Andhra Pradesh 250 1500 1977.153

Ashapura 1000 768.893

Nalco Orissa 735 1400 5052.724

Andhra Pradesh 1400 1537.786

Secondary producers 219.684

Total 4240 11800 26252.197


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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 high- income 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. Aluminium – solutions for sustainable future

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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 per-capita 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. Brazil’s 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 Brazil’s 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 per-capita 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.



The Future: Aluminium by 2020The 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 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.



Aluminium Association of IndiaNo. 118, Ramanashree Arcade, First floor, 18, M.G.Road, Bangalore – 560

001Tel : 080 2558 2197 / 2558 2757, Fax : 080 2559 4535e-mail : [email protected] / [email protected]

website : http//www:aluminium-india.org


overview of aluminium industry- india & abroad - 1st dec 10

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