Our aluminium business is primarily owned and operated by BALCO. Sterlite owns 51.0% of the share capital of BALCO. Vedanta Aluminium also contribute to our aluminium business. We own 70.5% of the share capital of Vedanta Aluminium, with Sterlite owning the remaining 29.5% of Vedanta Aluminium. BALCO increased its production of ingots, rods and rolled products from 174,000 tonnes in fiscal 2006 to 357,000 tonnes in fiscal 2009, representing a CAGR of 27.1%. BALCO recently received a coal block allocation of 211.0 million tonnes for use in its captive power plants.
In addition, we are expanding our aluminium business through Vedanta Aluminium. In March 2007, Vedanta Aluminium began the progressive commissioning of a 1.4 mtpa greenfield alumina refinery project and an associated 90 MW captive power plant, at Lanjigarh in the State of Orissa. Vedanta Aluminium is also building a greenfield 500,000 tpa aluminium smelter, together with an associated 1,215 MW captive power plant, in Jharsuguda in the State of Orissa, in two phases of 250,000 tpa each. Commissioning of the first phase commenced in May 2008, and we expect the second phase to begin commissioning in 2010.
We also recently announced a $7.8 billion investment programme to increase our fully integrated aluminium smelting capacity to nearly 2.5mtpa by 2012. Upon completion, this is expected make us Asia’s largest and among the top 5 integrated producers of aluminium worldwide.
India is positioned to become one of the world’s largest producers of aluminium, with the 6th largest reserves of bauxite globally of c2.3 billion tonnes and the 4th largest reserves of coal worldwide of over 250 billion tonnes. Of these reserves, over 1.4 billion tonnes of bauxite and 62 billion tonnes of coal reserves are co-located in the State of Orissa alone. Vedanta’s existing presence in the region, together with its excellent track record of executing projects ahead of time and at low capital costs, make it ideally placed to lead the development of these abundant bauxite and coal reserves.
India also has the benefit of a fast growing domestic market with close proximity to the high growth markets of Asia and the Middle East. Demand for aluminium globally is projected to grow strongly at a compound rate of 5.7% between 2007 and 2020, with India and China projected to grow at 8.2% and 9.7%, respectively in the same period.
The next phase of brownfield growth projects comprises a 1,250 kt aluminium smelter project in Jharsuguda, Orissa (the “Jharsuguda II Project”), as well as a 325 kt aluminium smelter project together with an associated 1,200 MW captive thermal power plant in Korba, Chattisgarh (the “Korba III Project”). Correspondingly, we will also increase our alumina production capacity at Lanjigarh from 1.4 mtpa to 5 mtpa.
The Jharsuguda II Project will comprise four pot lines, each containing 336 cells. The first three pot lines with a total capacity of 937.5kt are scheduled to produce first metal by March 2010 and will be fully commissioned by September 2011. The fourth pot line with a capacity of 312.5kt will be fully commissioned by September 2012. The associated captive thermal power plant will comprise three units of 660 MW each. The commissioning of the power plant units is being scheduled to meet the power requirement of the new Jharsuguda smelter.
The Korba III Project will comprise one single pot line containing 336 cells and is expected to produce first metal by October 2010. It will be fully commissioned by September 2011. The associated captive thermal power plant will comprise four units of 300 MW each. The commissioning of the power plant units is being scheduled to meet the power requirement of the new Korba smelter.
The increase in alumina production capacity will be achieved by debottlenecking the capacity of the existing 1.4mtpa alumina refinery by an additional 0.6 mtpa by March 2010 and building three new production streams of 1 mtpa each. The first stream of 1 mtpa is scheduled for commissioning by mid 2010 and all three streams are expected to be completed by mid 2011.
The experienced in-house project management teams that implemented our earlier 245 kt brownfield aluminium smelter project at Korba, the 1.4 mtpa Lanjigarh alumina refinery, and the 500 kt greenfield aluminium smelter project at Jharsuguda (one year ahead of schedule), will manage these projects.
The estimated investment in the aluminium smelter projects is $5.65 billion for the Jharsuguda II Project and $2.0 billion for the Korba III Project, to be phased over four years. The total additional investment in Lanjigarh is estimated at $2.15 billion and is expected to be phased over three years. This investment includes the cost of building the aluminium smelters and the alumina refinery, the associated power facilities and all necessary infrastructure including railway networks and water pipelines. The investment will be funded through a combination of existing cash, internal cash accruals and external financing.