Why Nalco says AP alloy plant won’t work

A proposed high-end aluminium alloy plant in Nellore, Andhra Pradesh, developed as a joint venture between National Aluminium Company Ltd (NALCO) and Mishra Dhatu Nigam Ltd (MIDHANI), has been found commercially unviable, according to a recent report. The project, intended to produce 60,000 tonnes per annum (TPA) of advanced aluminium alloys for sectors such as aerospace, defence, marine, and automotive, faces challenges due to low demand and limited domestic consumption.

Established in August 2019, Utkarsha Aluminium Dhatu Nigam Ltd is a 50:50 joint venture between NALCO and MIDHANI. The initiative aimed to reduce dependency on imported alloys and promote the 'Make in India' initiative by enhancing domestic manufacturing capabilities. However, a recent market survey indicated that the proposed plant's capacity is not commercially viable, citing factors such as low per capita aluminium consumption in India and insufficient localisation in key sectors.

Both the Ministries of Mines and Defence have reviewed the project's status and are considering its closure. A final decision is expected soon. Despite acquiring approximately 110 acres of land in Nellore for the facility, the project's financial viability remains a concern.

MIDHANI, a public sector undertaking under the Ministry of Defence, specializes in producing and supplying alloy materials, including super alloys, titanium alloys, and special steels, contributing to the self-reliance of critical materials for strategic infrastructure applications. The company has previously collaborated with the Indian Space Research Organisation (ISRO) to develop aluminium-lithium alloys for space applications.

The proposed plant's initial focus was on producing 60,000 TPA of flat-rolled aluminium products, with plans to diversify into other products based on national needs. However, the current market dynamics and demand projections have led to a reassessment of the project's feasibility.

NALCO, operating under the Ministry of Mines, manages a 0.46 million tonnes per annum aluminium smelter, a 1,200 MW captive power plant, and four million tonnes per annum of coal mines at Angul, Odisha. The company continues to explore opportunities to enhance domestic production and reduce reliance on imports in the aluminium sector.

The decision regarding the future of the high-end aluminium alloy project in Andhra Pradesh will be finalized soon, based on the ongoing reviews and assessments by the concerned ministries.