Adani takes on Birla, Vedanta with $11.5 billion aluminium bet
Bhubaneswar: The Adani Group is set to compete head-on with the Aditya Birla Group and the Vedanta Group through its planned $11.5 billion entry into
Bhubaneswar: The Adani Group is set to compete head-on with the Aditya Birla Group and the Vedanta Group through its planned $11.5 billion entry into aluminium production in an equal partnership with Emirati investment firm International Holding Company (IHC). The proposed 2 million tonnes per annum (mtpa) plant in Odisha would also help India reduce its reliance on imported aluminium, a light-weight metal that is increasingly used in electric vehicles and the batteries that power them. India consumes 5.5 million tonnes of the metal a year, of which just over 4 million tonnes is produced locally. Also Read | Inside the Adani Group's plan to remake its workforce Adani Enterprises Ltd, the group's flagship company, IHC and the Odisha government on Wednesday signed an agreement to set up the plant in the state.
The project site will be finalized and regulatory approvals secured over the next 18 months. The project will take about 4.5-5 years to start producing its first batch of aluminium, according to Karan Adani, the managing director of Adani Ports and Special Economic Zone (APSEZ) and director at Adani Cement. The elder son of group chairman Gautam Adani is expected to lead the group's aluminium business also. The 38-year-old cited two reasons for the group's decision to enter the sector. “It’s a very energy intensive business and that works in the advantage of the group as we are one of the lowest (cost) producers of energy. So that is one of the biggest competitive edge that we bring to the table,” he said in Bhubaneswar on Wednesday. Also Read | Aluminium producers poised to strike gold with firm prices “Secondly, as digitisation and manufacturing in the country increase, the demand for aluminium is going to go up, and we see that as a big long-term opportunity,” he said.
The estimated $11.5 billion investment in the project would be financed through 70% debt and 30% equity infusion, as per Adani. Adani’s share of the equity component will be funded by Adani Enterprises’ internal accruals, Karan Adani said. The Adani-IHC venture will procure bauxite from state-owned Odisha Mining Corp. Ltd (OMC) under a long-term linkage agreement, one of the key provisions of its pact with the Odisha government, he said. The company will also evaluate bidding for upcoming bauxite mines to secure long-term raw material supplies. India’s largest aluminium producer is currently Vedanta Aluminium Metal Ltd with annual production of 2.5 mtpa, followed by Aditya Birla Group’s Hindalco (1.4 mtpa) and public sector firm Aluminium Company Ltd (0.5 mtpa). Also Read | Adani Green is building faster than the grid can handle Adani downplayed competition with his peer conglomerates in aluminium production.
The BriefWire