BALCO to close plant as aluminium prices crash
Bharat Aluminium Company (BALCO) is planning to shut down its plant - 1, which produce 100,000 tons of aluminium every year, as the weakening prices make production unprofitable.
Anil Agarwal owned Sterlite Industries acquired the majority stake in government - owned BALCO in 2001 for Rs 552 crore. The company added 250,000 tons per annum of additional smelting capacity to produce aluminium after the acquisition. "That plant has a high cost of production and it is not feasible to operate it when aluminium prices have dropped significantly," said a company executive. It has started reducing output and full closure is expected soon. Aluminium prices dropped to $1,251 per ton on the London Metal Exchange (LME) from last July's all time high of $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 tons on the LME. According to reports, about 35 percent of aluminium producers worldwide are making losses, many announcing closures.
"We plan to sell surplus power after the closure to make profit," said the executive; 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 tons 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.
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