Aluminium Industry in India – UPSC

• Aluminium smelting is India’s second most important metallurgical industry, after iron and steel.
• India had 41.45 lakh tonnes of smelter capacity and 74.75 lakh tonnes of alumina capacity in 2023-24, and produced 4,159 thousand tonnes of aluminium. It ranked 2nd in the world, as it also did in 2020.
• Its geography rests on one chain: bauxite to alumina near the mines, alumina to metal near cheap power.

Aluminium Industry

Character and Uses

• Properties: a good conductor of electricity and heat, elastic and flexible, and easily shaped into any form.
• Uses:
  • Production and distribution of electricity.
  • Household utensils and electric appliances.
  • Aeroplanes, railway coaches and bus bodies.
  • Nuclear and defence accessories.
  • Building, packaging and coinage.
• It increasingly replaces steel, copper, zinc and lead in many uses.
• Fastest growing metal: it grew nearly 20 times in sixty years, against 6 to 7 times for other metals, on one older comparison. It remains the fastest growing non-ferrous metal in India.
• Two segments:
  • Upstream: primary aluminium made from raw materials, starting with bauxite mining.
  • Downstream: primary metal processed into semi-finished goods such as rods, bars, castings and forgings, along with sheet, foil and extrusions.
• Consumption pattern in 2003 differed sharply from the world’s:

• Per capita use: barely 500 grams in an older count, against 5.9 kg in the USA and 3.6 kg in Brazil. Industry estimates put it near 4 kg in 2025, against about 11 kg worldwide.

Raw Material: Bauxite

• Bauxite is the raw material. It is bulky, so moisture and impurities should be removed before the ore travels long distances.
• Output is now far more concentrated than older accounts show. Total resources were 4,958 million tonnes in 2020, and output was 23.97 million tonnes in 2023-24.

• Where the ore lies:
  • Odisha: the main belt is in Kalahandi and Koraput, and it continues into Andhra Pradesh.
  • Jharkhand: spread over Ranchi, Lohardaga, Palamu and Gumla, with some in Dumka and Munger. Lohardaga and its surroundings have high-grade ore.
  • Maharashtra: the largest deposits are in Kolhapur, capping the plateau basalts. Udgeri, Dhangarwadi, Radhanagari and Inderganj have rich ore, with 52–89% alumina.
  • Chhattisgarh: the Maikala range in Bilaspur and Durg, and the Amarkantak plateau of Surguja, Raigarh and Bilaspur.
  • Madhya Pradesh: the Amarkantak plateau, the Maikala range in Shahdol, Mandla and Balaghat, and Katni, formerly part of Jabalpur district.
  • Smaller sources:
    • Andhra Pradesh: Visakhapatnam, East Godavari, West Godavari.
    • Keralam (Kerala): Kannur, Kollam, Thiruvananthapuram.
    • Rajasthan: Kota.
    • Uttar Pradesh: Banda, Lalitpur, Varanasi.
    • Jammu and Kashmir: Jammu, Poonch, Udhampur.
    • Goa.

Location Factors

• The two stages locate differently:
  • Alumina refineries stand near the mines, because the ore loses much weight.
  • Smelters need very large amounts of electricity, so they stand near cheap power, and most Indian smelters also stand near their refineries.
• Input ratios: about 6 tonnes of bauxite give 2 tonnes of alumina, which give 1 tonne of aluminium.
• Other inputs per tonne of metal: about 0.26 tonnes of caustic soda and 0.09 tonnes of lime, with small amounts of cryolite, aluminium fluoride, calcium fluoride, calcined anthracite and soda ash.
• Electricity: an older figure is 18,573 kWh per tonne. Power makes up about 30–40% of production cost, or 30–35% on a lower estimate, and this makes affordable power essential.
• Power sources:
  • Smelters often stand close to large power stations, and hydroelectric sites were favoured for lower carbon footprints: Hirakud, Rihand at Renukoot, and Mettur.
  • Indian smelters now mostly run on their own captive thermal power, which ties them to coal.
• Site shortage: the industry’s need for very cheap power has long limited the sites that suit it.
• Odisha is now the centre of gravity, with Jharsuguda, Angul, Aditya and Hirakud smelters and three large refineries.

Aluminium Production Process

• Refining (Bayer process, Carl Josef Bayer): crushed and milled bauxite meets caustic soda in a pressure vessel at about 170–180°C. Filtering leaves behind red mud. Crystallisation gives aluminium hydroxide, and a rotary kiln turns that into alumina.
• Smelting (Hall-Héroult process, Charles Martin Hall and Paul Héroult): alumina is reduced to metal by electrolysis in carbon-lined cells, at a smelter. This step takes the huge electricity load.
• Finishing: molten metal is cast into ingots, billets and slabs, then rolled, extruded or drawn into sheet, foil, rods and wire.

Aluminium Smelting Plants in India

• Korba has since grown. A new potline of 0.435 million tonnes, using 525 kA cells, took BALCO to 1 million tonnes in October 2025.
• Production:

• Output rose slowly during the first three Plans, then reached a first peak in 2006-07. Power shortages and interrupted bauxite supply then held it back, before large new smelters opened in Odisha and elsewhere.

Evolution of Aluminium Industries in India

• It is among the youngest of metal industries. Commercial production became possible only with the electrolytic process of 1886.
• Bauxite is abundant across the earth’s crust, but sizeable concentrations are rare.
• Fabrication of utensils from imported metal began in India in 1929.
• 1937: the Aluminium Corporation of India was formed, but its first venture was delayed. It was the first real attempt to make aluminium in India.
• 1938: the Indian Aluminium Company (INDAL) began production at Alupuram, Kerala. In 1940 the government gave it support through import tax exemption and a heavy duty on imported aluminium.
• 1942: the Aluminium Corporation began producing alumina at Jaykaynagar, West Bengal, and metal followed in 1944.
• The Second World War gave the industry its push. These two firms remained the only producers until 1960.
• Second Five Year Plan:
  • INDAL added Hirakud, Odisha. It had rolled sheets from imported alumina since 1943, and had refined Indian bauxite since 1948.
  • HINDALCO was set up at Renukoot, Uttar Pradesh, in 1958.
• Third Five Year Plan:
  • MALCO, operating since 1965, at Mettur, Tamil Nadu.
  • BALCO, established in 1965, at Korba, Chhattisgarh, in the public sector.
• 1970: INDAL set up a plant at Belgaum (Belagavi), Karnataka.
• 1981: NALCO was formed. Commercial production began in 1988-89.
• Reform: the industry was decontrolled in 1989 and gained further from liberalisation in 1991.

Aluminium Industries in India

• On this chart, “Alluminium Cooperation” should read Aluminium Corporation.
• Hindustan Aluminium Company (HINDALCO), Renukoot:
  • Set up in 1958. All of its production facilities for alumina, metal and fabricated goods are at the Rihand dam in Sonbhadra, Uttar Pradesh.
  • It was long described as India’s largest integrated primary producer and Uttar Pradesh’s biggest industrial enterprise.
  • Bauxite: from Lohardaga (Jharkhand) and Amarkantak, on the Madhya Pradesh–Chhattisgarh border.
  • Renukoot is Hindalco’s largest smelter, within a group capacity of 13.45 lakh tonnes.
• Jaykaynagar, near Asansol, West Bengal (Aluminium Corporation of India):
  • The first to make aluminium from Indian bauxite. Registered in 1937, it made alumina from 1942 and metal from 1944.
  • It ran a captive coal mine and thermal station, along with alumina, reduction, sheet rolling and utensil units.
  • Kolkata provided its market.
• Bharat Aluminium Company (BALCO), Korba:
  • Established in 1965, with Soviet help. Its first plant, of one lakh tonnes, made alumina from 1973 and metal from about 1975.
  • Bauxite came from the Phutkapahar region and Amarkantak.
  • Other units: Bidhanbag near Asansol, gained by nationalisation in 1984, and Ratnagiri (Maharashtra), listed with 50,000 tonnes.
  • Disinvestment: the government sold 51% to Sterlite Industries in March 2001. It is now in the Vedanta group, with the government holding the rest.
• National Aluminium Company (NALCO):
  • Formed in 1981. Its integrated complex has its refinery at Damanjodi, near Jeypore in Koraput district, with bauxite from Panchpatmali.
  • Smelter: at Angul, then in Dhenkanal district. It started at about 2,18,000 tonnes and now has 4.6 lakh tonnes.
  • State-of-the-art facilities, and long called India’s largest bauxite–alumina–aluminium complex.
  • Exports: more than 3.75 lakh tonnes of alumina, through Visakhapatnam port.
  • Expansion: bauxite mining went from 48 to 63 lakh tonnes and alumina from 15.75 to 21 lakh tonnes, with captive power of 1,200 MW.
  • Standing: it has been called the world’s lowest-cost producer, among the top 10 companies, and second to Hindalco in India. By 2023-24 smelter capacity, Vedanta (with BALCO) and Hindalco were both larger.
  • Plans: a fifth refinery stream to reach 3.1 million tonnes of alumina, and a new 0.5 million tonne smelter at Angul by about 2030-31.
• Madras Aluminium Company (MALCO), Mettur: operating since 1965, with power from the nearby Mettur dam. Its smelter has been closed since December 2008.
• Indian Aluminium Company (INDAL): plants at Alupuram and Hirakud. It merged into Hindalco in 2004.
• Vedanta Aluminium, Jharsuguda: the largest smelter site in India, with 17.5 lakh tonnes of capacity. It cast 1.83 million tonnes in 2024-25.

• The capacities on this map are for 2001, when the total stood at 7.12 lakh tonnes. The total was 41.45 lakh tonnes in 2023-24, Jharsuguda does not appear, and INDAL is now part of Hindalco.

Problems of Aluminium Industry in India

• Power: high cost and shortage of power are the major hurdles, and the lack of cheap power has been a main brake on growth.
• Production bottlenecks:
  • Dislocation of supply from the grid.
  • Total stoppage of power.
  • The response has been for smelters to build their own thermal power plants, which raises their exposure to coal cost and carbon rules.
• Old technology: smelters that are decades old use more power and cost more to run.
• Bauxite left unused:
  • Vast east coast deposits long lay idle after their discovery.
  • Refineries at Damanjodi, Lanjigarh and Rayagada now use this belt.
  • Mining can still be refused. All 12 gram sabhas rejected bauxite mining in the Niyamgiri hills in 2013, after a Supreme Court order, and Gandhamardan was abandoned earlier.
  • India imported 4.49 million tonnes of bauxite in 2023-24.
• Controlled prices: the industry once sold to State electricity boards at unremunerative prices, and control reached commercial grade metal too. This eroded profits until the decontrol of 1989.
• Costly inputs: high input costs make it hard to compete abroad.
• Imported inputs: essential materials such as cryolite and fluoride are still imported.
• Demand and supply:
  • An older picture had demand above 1 million tonnes a year against output of about 0.5 million tonnes, with a shortage of primary metal for core sectors.
  • Output is now over 4 million tonnes. Imports have grown too, mainly because demand has risen across many sectors.
• Barriers to entry:
  • Economies of scale: costs, chiefly power, fall as size rises, so small plants struggle.
  • Huge capital: small entrepreneurs cannot enter easily.
  • Long set-up time: a plant of BALCO’s size takes about 3–4 years to work.
  • Control over mines: existing players hold the known bauxite mines, which affects ore prices for others.
  • Scarcity of power: as above, a basic constraint on growth.
  • Government factors: environmental clearance and the allotment of mines take long.
  • Land: existing players can expand on brownfield sites more easily than a newcomer can start a greenfield one.
• International competition: India’s bauxite grade is good, but output and product quality have lagged Australia, Canada, France and the USA.
• Labour: strikes and unrest have also held the industry back.
• Outlook: the Ministry of Mines’ vision document of 4 July 2025 aims at a sixfold rise in output by 2047, bauxite capacity of 150 million tonnes, and a doubling of recycling.