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Badal Sanyal

KOLKATA, Dec. 28

UNNERVED by the steep fall in the international prices of alumina and aluminium and the subsequent increase in imports of the metal during the past few years, domestic aluminium producers - through the Federation of Indian Mineral Industries (FIMI) - have urged the Union Ministry of Coal and Mines to restructure duties so as to protect the interests of the domestic aluminium industry.

In its recent letter to the Ministry, FIMI suggested that the import duty on bauxite, alumina as well as primary metal and metal products be raised to check the cheap imports of alumina/aluminium and its products. The federation also suggested that the excise duty should be reduced to facilitate secondary producers of aluminium products to avail of raw materials from domestic aluminium plants at a competitive price as against the imported material.

Since domestic aluminium recycling units have to source scrap material from other countries in the absence of adequate availability from domestic sources, FIMI suggested that the import of scrap should be allowed at the present rate of customs duty. The promotion of scrap-based units has to be considered carefully because it has an adverse environment impact, although recycling of scrap requires less power consumption.

The country imports about 80,000 tonnes of scrap per annum for recycling purposes, while about 40,000 tonnes of secondary metal are produced by recycling domestic scrap. The bulk of the aluminium recycling is still limited to the unorganised sector, catering mostly to the utensil and casting industries. The recycling units collect scrap through street collectors and the scrap gets traded internally on cash basis.

Internationally the development of aluminium recycling industry has led to formal arrangement between scrap generator and scrap consumers for collection, segregation and buyback of scrap. It is, therefore, argued that the Government should keep the import duty on scrap at a low level so that recycling units in the organised sector use more of imported scrap to produce value-added items for export purposes.

Indicating that the domestic annual consumption aluminium is expected to increase from 0.7 million tonnes to 0.92 m.t. by 2006-07 as against the existing installed smelting capacity in the country of about 0.69 m.t. Incidentally, no greenfield smelter has come up so far.

In the given situation, FIMI suggested that greenfield smelters of about 4,00,000 tonnes per annum capacity be planned now for the future. This apart, secondary recycling should be promoted to contribute 30 per cent of domestic metal requirement.

The Government should encourage domestic producers to set up smelters abroad where power is cheap. Alternatively, the domestic producers can go abroad for tolling of their low-cost alumina and get back metal after smelting. This arrangement should be feasible because the cost of power is cheaper abroad vis-a-vis in the country.

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