New Delhi/Kolkata: State-owned National Aluminium Company Ltd (NALCO) is considering establishing a 0.5 million tonne per annum aluminium smelter in Andhra Pradesh to convert its expanded alumina capacity fully into aluminium rather than exporting raw alumina, the company said on Tuesday.
Expansion aims and capacity
NALCO’s current alumina production stands at 2.1 million tonnes per annum. The company expects this to rise to 3.1 million tonnes once its new refinery comes on stream by FY28, leaving an extra 1.0 million tonnes of alumina to be utilised. To process the increased alumina into metal, the firm is evaluating a 0.5 million tonne smelter in Andhra Pradesh so that a larger share of its alumina is converted into higher-value aluminium products.
NALCO’s existing aluminium smelter capacity is about 0.46 million tonnes per annum. The company has set a broader target of raising aluminium capacity to around 1.5 million tonnes, and the Andhra Pradesh project would be an addition to those plans.
Investment, power needs and technology
The company estimated capital expenditure for a 0.5 million tonne smelter at roughly ₹18,000 crore. Power requirements for the plant are projected at about 1,000 MW, which NALCO said would add approximately ₹11,000 crore to the outlay for captive power or power arrangements.
"Land is not yet visible. We are holding talks with the state government. Once that comes, it will be announced,"
The company underlined that the Andhra Pradesh project would be additional to a previously announced capital expenditure of ₹25,000 crore till 2031. That Rs 25,000 crore outlay covers planned expansions including a 0.5 million tonne brownfield addition at Angul in Odisha, where NALCO has signed a technology licence with UAE’s Emirates Global Aluminium to use DX+ Ultra smelting technology.
| Item | Figure |
|---|---|
| Current alumina capacity | 2.1 million tpa |
| Post-refinery alumina capacity (FY28) | 3.1 million tpa |
| Current aluminium smelter capacity | 0.46 million tpa |
| Proposed Andhra Pradesh smelter | 0.5 million tpa |
| Estimated smelter investment | ₹18,000 crore |
| Estimated power requirement | 1,000 MW (≈₹11,000 crore) |
Why Andhra Pradesh and strategic shift
NALCO said it presently exports about 0.13 million tonnes of alumina but intends, following a ministry vision for greater value addition, to convert all of its expanded alumina output into aluminium. Establishing a smelter in Andhra Pradesh would allow the company to use a larger share of alumina produced from its refineries for in‑house aluminium making.
The company confirmed it is in preliminary discussions with the Andhra Pradesh government over land and other clearances, but no site has been finalised. NALCO noted that firm announcements will follow once land and related approvals are secured.
Economic and local implications
- Industrial investment: If realised, the project would represent a large greenfield/brownfield private‑public industrial investment in Andhra Pradesh beyond the company’s Rs 25,000 crore plan.
- Power demand: A 1,000 MW requirement would pose significant choices on power procurement — captive generation, state power purchases or long‑term power purchase agreements — with implications for grid planning and coal or renewable sourcing.
- Value addition: Processing alumina into aluminium domestically supports higher value exports and domestic supply to downstream users, including aerospace and specialised applications for which NALCO said it has engaged a consultant to work out a product strategy.
NALCO has not released a timeline for the Andhra Pradesh smelter. Officials said the project is contingent on securing adequate land and finalising discussions with the state government, after which a formal announcement would follow.
Context and recent moves
Separately, NALCO has taken steps to modernise and expand capacity at its Angul complex in Odisha, including entering into a technology licence with Emirates Global Aluminium for a DX+ Ultra smelting unit. That Angul brownfield addition is part of the ₹25,000 crore capex plan through 2031; the Andhra Pradesh project would be an extra investment if pursued.
Industry observers say such moves reflect a broader push by Indian public and private sector aluminium producers to upgrade refining and smelting value chains domestically, reduce raw exports and capture higher margins through product diversification. NALCO’s engagement of a consultant to chart product strategy, including for aerospace and specialised applications, is consistent with that objective.
The company reiterated it will not export alumina after expansion and is working on options to convert the additional alumina into aluminium in India. Discussions with the Andhra Pradesh government are ongoing, and NALCO will announce details once land and agreements are in place.
