Effect of COVID19 on Indian Aluminium Industry

On Tuesday, March 24, Prime Minister Narendra Modi announced a countrywide lockdown for 21 days starting Tuesday midnight. Since the announcement, no report of production cuts at smelters and refineries of three major Indian aluminium giants have arrived so far, except that Hindalco has temporarily scaled down operations at some of its aluminium and copper manufacturing facilities in line with the government's directives, according to a report last week.

The government has, however, exempted key production facilities from having a continuous production process during the lockdown. Reports say there is enough availability of raw material and consumable stock with the plant premises for the next 15 days, at least, which is helping carry out the production seamlessly. The government has exempted good trains from the lockout, which is why there has been no disruption in raw material supply. Most of the critical supplies including bauxite come by railway.

The only present constraint is the availability of labour. Adequate labourers are not reporting for duty, which at some stage may become a bottleneck resulting in a disruption in plant operation. Road transport has been badly hit too, due to which the dispatch of primary metal from the plants has become a concern. Plants are currently stockpiling their production within their premises.

Most of the downstream units are closed due to the strict enforcement of lockdown.

Port operations have also been badly hit due to labour shortage/non-availability. Ships are not being loaded or unloaded, creating an impact on the flow of primary aluminium export from India. However, this is unlikely to have any immediate or short term impact on production.

According to a report on April 1, National Aluminium Company Limited (NALCO) recorded a three-sixty degree success in bauxite and alumina productions in the fiscal year 2019-20. Utilising the full capacity at Panchpatmali mines, NALCO achieved bauxite production of 7.30 million tonnes, the highest ever since its journey started. NALCO’s alumina refinery also raised the bar by reaching its highest ever production of 2.16 million tonnes of alumina hydrate.

Vedanta’s Alumina Refinery at Lanjigarh also remained operational while adapting all precautionary measures against COVID19 as advised by the Government and the health authorities. Considering the danger of the situation in the wake of the spread of COVID19, the alumina refinery is active with reduced workforce and resources, ensuring the COVID-19 guidelines issued by the Central and State Authorities.