Capex, Opex and Techno-economic Viability for Green-Field Alumina Refinery in India

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In present post, we are bringing out some special facts which will be useful for the top notch officials in taking strategic decisions with regard to capital investments, Operating cost and techno-economic viability aspects for setting up new Alumina refineries in India. 

As such, only a few Alumina refineries were constructed and commissioned across the globe during last decade. Broad details and present status of new refineries executed over last 15 years / under execution presently  in India are outlined in subsequent paragraphs-

1. 1.4 Mtpa Vedanta Alumina Refinery, India: This plant was designed for 1.4 Mtpa alumina with two streams each stream having 0.70 Mtpa production capacity. One of the stream of this plant was commissioned  in 2006 with non-designated source of bauxite as Niyamgiri deposits could not be cleared  by the Government of India for carrying out bauxite mining activities.  The specific capital investment for this plant was very low as the company took advantage of volatile market of equipment and facilities during execution period. But processing of low alumina content and high reactive silica content in bauxite of unidentified areas during commissioning itself made the plant uneconomical. Finally, the shutdown of the plant was forced on 9th December 2012 because of non-availability of bauxite. Plant remains shutdown as yet. However, the Vedanta management is striving to restart the operation of this plant shortly even with imported bauxite.
2. 1.4 Mtpa Anrak Alumina Refinery, India: This plant is located at about 70 km from Visakhapatnam in the state of Andhra Pradesh in India. This Alumina refinery has two streams of 0.70 Mtpa each and the execution is expected to be completed for commissioning by end of the current year - 2013. Most of the equipment and facilities of this plant have been installed and one of the process streams out of two are in readiness for trial but no adequate bauxite available as the earmarked Jarrella bauxite deposits are yet to be cleared by the Government. The trial run for Stationary calciner supplied by Outotec Germany was done in early first week of April 2013 with purchased hydrate and a few thousand tonnes of calcined alumina could be produced. HSD was used as the fuel for firing followed by HFO for calcination during commissioning trial. The estimated specific capital investment of this plant was much higher than that of Vedanta. But this plant could save substantially on technology, engineering and site activities during implementation.
3. 1.5 Mtpa Utkal Alumina Refinery, India: This plant is owned by Aditya Birla group of companies. The execution of this plant was conceived sometime in 1996. The construction of this plant is in advance stage and mechanical completion of this plant is expected by the end of 2013. This plant has been designed by Rio Tinto Alcan Australia who are considered leader in process technology across the globe. But because of inordinate delay in implementation because of various socio-political reasons, the capex of this project has increased substantially. Thus the specific capital investment of Utkal alumina plant was much higher than targeted figure. 
4. 1.4 Mtpa JSW Alumina Refinery, India: Under diversification plan, JSW group company decided to set up alumina refinery in Vijaya Nagaram district of Andhra Pradesh with state of the art and most modern plant associating Rio Tinto Alcan Australia as technology supplier in the year 2005. The company has acquired adequate land but execution of project is under hold awaiting clearance from Government of India for bauxite mining from Araku group of deposits.
5. 1.0 Mtpa NALCO Alumina Refinery, India: National Aluminium Company (NALCO) has initiated studies for setting up 1.0 Mtpa Alumina refinery near Mandavi in Gujarat. As per our estimates, the specific capital investment for this project will be high at around US$ 1000 per   tonne of Calcined alumina mainly because of Lignite based Co-generation plant, required Desalination plant, marginally bigger size equipment requirement because of lower alumina recovery from available bauxite in Gujarat and additional expenditure towards development of infrastructure facilities like port etc. for the project.

The capital expenditure data analysis clearly reveal that specific capital investment in setting up Alumina refineries in India varies from US$ 650 to US$ 1000 per tonne of calcined alumina depending on geographic location of the plant in the country. The capex will be lowest for the plant in Orissa, Gujarat and Jharkhand where as the same will highest in Gujarat.  The reasons are well known to all concern as elaborated in above paragraph. Also, the opex will be higher mainly because of poor plant efficiency figures due to wide variation in mineralogical and chemical composition of basic input material, Bauxite. Also, the volume effect of plant capacity because of low reserve of Bauxite in Gujarat is the other reason. It will be prudent to mention that comparatively lower grade of bauxite, non-availability of desalinated water, availability of low calorific value solid fuel source (Lignite) for co-generation plant are the main reasons for highest capex. Again, on opex part, the same will be abnormally high because of poor plant efficiency figures coupled with low grade of bauxite in Gujarat. At current price level of Caustic soda, Heavy furnace oil and Lignite, even the economic viability for Alumina refinery in Gujarat is a question mark because of high specific capital investment of around US$1000 per tonne and estimated operating cost excluding financing charges (interest & depreciation) at around US$ 200 per tonne of Calcined alumina as per preliminary estimates.However, the actual figures of Capex and Opex can be ascertained by Project Owner with detailed studies before taking financial decision on the matter. In spite of all these facts stated above, Green-field Alumina refineries will be installed mostly in India and Vietnam in coming decade because of huge bauxite reserves of comparatively improved quality than other countries across the globe. In other words, India and Vietnam are the future destinations for green-field Alumina refineries in years to come.

Trust, the above deliberation will give a glimpse of required capex, opex and economic viability aspects for setting up green-field Alumina refinery to one and all across the globe. The author of this technical article will welcome your comments on the subject, if any. Please feel free in sharing your views.

Regards.

Rajendra Kunwar
rajendra@ceti.co.in
www.ceti.co.in