Billionaire Kumar Mangalam Birla’s Indian aluminium producer plans to ramp up low-carbon production to at least 30 percent of its output in the next three to four years to cater to growing demand from consuming industries globally as they strive to clean up their supply chains.
Hindalco Industries Ltd. will certify about eight percent of its annual aluminium production of 1.3 million tons as low-carbon in the current financial year, which started April 1, based on the availability of solar power at its smelters. It will scale this up further as renewable energy supply grows, Managing Director Satish Pai said in a call after the Mumbai-based company’s quarterly earnings.
“What we are trying to do in Hindalco and Novelis is that we prepare to meet different customers having different requirements,” Pai said, referring to the US unit Novelis Inc. “It is a mix of things we are trying to be ready for and we have to see how the market evolves,” he said. Pai is also the chair of the International Aluminium Institute.
Last year, Hindalco signed an agreement with Greenko Energy Holdings, one of India’s largest renewable energy companies, to provide carbon-free electricity to the aluminium producer’s Odisha smelter for 25 years. The industry is also pivoting toward cleaner energy as a means to meet the requirements arising out of the Carbon Border Adjustment Mechanism, or CBAM, which imposes duties on certain imports from countries that don’t price carbon the way Europe does.
Hindalco has shipped about 200 tons of low-carbon aluminium to western economies, Pai said. Demand for low-carbon aluminium is mainly in Europe but “it is a matter of time as it spreads to other countries,” he said, adding that there is no demand for the product in India currently.
The company is not getting any “real premium” for this product, Pai said. “I don’t think you will get a large premium for it but there will be certain markets, sectors and customers who will only buy low-carbon. So you have to have it if you want to service those customers.”
Producing the metal is highly energy-intensive and its carbon footprint can vary widely depending on the energy source that feeds smelters.
