I heard from someone who is associated with Nalco that they have one of the best mines in the world with very good alumina percentage…which has significant cost advantage in the production of aluminium.
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This is indeed true. The quality of bauxite is such that to make alumina the temperature required is far lesser than what one needs with bauxite from Australia (major global source). This gives Nalco an advantage of almost US$100/t in alumina cost and around US$200/t in aluminum cost.
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Thanks! Since the 10 Yr CAGR Profit growth is higher for Hindalco, it seems something has positively impacted Nalco in just the last 10 years. Maybe some new mines won in the last 10 years with higher Alumina percentage as @N29 mentioned and as you also mentioned about energy savings which should be a big factor too.
Hindalco with Novelis and thus International Sales scores over in total sales but Nalco has the profitability edge till it has these mines running…
Btw the link has good information on mines auction in the current FY. So far 6 mines were auctioned for Bauxite and neither Nalco nor Hindalco was the winning party.
https://mines.gov.in/webportal/content/archived/details-of-successful-auction-during-the-year-4134
Interesting article on India’s push for critical minerals. The govt.arm for this seems to be “KABIL - Khanij bidesh India , this being a 40/30/30 JV between Nalco, hcl and mining exploration consultancy.
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Found this article to be very insightful
30,000cr Capex Plans - 17,0000cr of Aluminium + 13,000cr for Power (JV with NTPC)
This is excluding the ongoing Alumina and Bauxite Capex.
Massive Debt is likely to be taken
Any Example of PSU managing to do such capex efficiently, without delays or cost overruns?
NALCO | Management Interview
- Expect some pressure on aluminium prices after US tariffs kick in.
- Aluminium prices may drop to $2,570 & Alumina prices to be around $500’
- Fallout of US tariffs as well as the co’s Q3 performance.
- New Alumina refinery to begin operations in Sep 2025.
- Margin will sustain at 25-30%
- Reserve Cash: INR 4000 cr
Watch here
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A US or global slowdown can lead to aluminium prices falling down to $2,300 per tonne, Emkay said
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Nalco has mixed performance in the execution front.
It entered into a JV with GACL and began a caustic soda plant whose output has successfully eliminated the need for imports and shielded it from raw material price fluctuations.
The alumina plant future expansion along with enhanced bauxite production from Pottangi mine is an 8000 crore project funded through reserves with zero debt. The alumina plant that is currently being expanded will go live on September 2025 is costing 5677 crores funded through internal accruals. Pottangi mines expansion is again through internal accrual costing 1961 crores.
It is now planning a JV with NTPC to get 100% power production done in-house and reduce dependence on grid electricity which is very expensive. This could be a game changer in making Nalco a very low cost producer. The bill for this capex is estimated at 13000 crores, and the coal requirements would be 7 million tonnes per annum out of which 4 million will be obtained from Nalco’s own Utkal D and E coal blocks.
Their JV with BARC for extraction of lucrative germanium and gallium from “red mud” waste generated after aluminum production is still in planning phase since 2014.
Their JV KABIL with other PSU companies to source critical minerals is yet to see any results.
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Although Nalco has been a very good foreign exchange earner for the government, India also imports 56000 crores worth of aluminum which the govt will be keen to replace with domestic production.
Aluminum can be a replacement for copper in electrical grids and is already finding increasing use in automobiles due to its lightweight advantages in EV and petrol vehicles.
Domestic demand, led by auto sector and including power and infra sectors, is projected to hit 10 million tonnes from the current 4.5 million tonnes.
Due to these factors, Nalco has visible growth drivers providing good earnings visibility down the road although short term pain could be felt in the next few quarters
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