ET reported that with the commencement of Mahan smelter and Utkal alumina refinery in nearly three months' time, worse days for Hindalco seem to be over.
The management of the company expects the Mahan smelter to start production by March 2013. The commencement of production will help in generating cash inflows for the company. The decision to start the smelter was taken despite the company being deprived of captive coal till the stage 2 clearance for the Mahan coal block is received. Once mining starts at the Mahan coal block, there will be a reduction in the cost of production by nearly 25% (form USD 2000 per tonne to USD 1500 per tonne).
The bauxite mining is expected to start by March next year and the same will be fed to the Utkal alumina refinery. Though the utilisation level of the refinery is expected to be around 30% (total capacity of 1.5 million tonnes) during the first year, improvement in utilisation levels will happen over the next three to four years. This in addition to a ramp up in capacity from 1.5 million tonnes to 3 million tonnes will help drive volumes. A conveyor belt to transport bauxite ores to the refinery is scheduled to start within a year and will result in cost savings of USD 30 per tonne.
