State-owned NALCO is considering a new 0.5 million tonne aluminium smelter in Andhra Pradesh, costing about Rs 18,000 crore. The plant would let it turn all of its expanded alumina output into metal rather than sell alumina abroad.
At a glance
- The proposed smelter would add 0.5 million tonnes a year of aluminium capacity, and land has not yet been identified.
- It would also need a 1,000 MW power plant costing another Rs 11,000 crore.
- NALCO says it will stop exporting alumina once its alumina capacity rises to 3.1 million tonnes.
Background
National Aluminium Company (NALCO) is a government-owned producer based in Odisha. It mines bauxite and refines it into alumina, a white powder, at Damanjodi, then smelts alumina into aluminium metal at Angul. It takes roughly two tonnes of alumina to make one tonne of aluminium, and smelting uses huge amounts of electricity, which is why smelters come with their own power plants.
What happened
NALCO is weighing a new aluminium smelter with 0.5 million tonnes of annual capacity in Andhra Pradesh, chairman and managing director B P Singh said on Tuesday. The smelter alone would cost about Rs 18,000 crore. It would also need 1,000 MW of power, which would cost another Rs 11,000 crore.
The plan is at an early stage. "Land is not yet visible. We are holding talks with the state government," Singh said. The project would come on top of NALCO's announced capital spending of Rs 25,000 crore until 2031.
Why NALCO wants another smelter
The trigger is a jump in alumina output. NALCO's alumina capacity is 2.1 million tonnes a year today and will rise to 3.1 million tonnes when a new refinery starts by 2027-28. Its current smelter can make about 0.46 million tonnes of aluminium, far less than that alumina could feed.
NALCO wants to turn all of that alumina into aluminium, which sells for more, and says it will stop exporting alumina after the expansion. It is already adding 0.5 million tonnes of smelting capacity at Angul. In September it licensed Emirates Global Aluminium's DX+ Ultra smelting technology for that Odisha project.
What it means for India
With both new smelters, NALCO is aiming for about 1.5 million tonnes of aluminium capacity, roughly three times its current level. That would add a large new source of primary aluminium for Indian buyers in power cables, construction and vehicles.
Andhra Pradesh would gain a major industrial project if land and power are secured. For global markets, the change is subtler: less Indian alumina on the export market, and more Indian metal later in the decade.
Our read
Outlook: neutral. The smelter is years away and still lacks land, so it does not change today's aluminium supply. Over time it would add Indian metal output while removing NALCO's alumina from the export market.
What to watch
- Whether NALCO and the Andhra Pradesh government agree on land for the smelter.
- Progress on the new alumina refinery, due to be commissioned by 2027-28.
- Construction milestones for the 0.5 million tonne Angul expansion using EGA's technology.
For information only, not investment advice.
Aluminium price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-09-29: NALCO's CMD says the company is considering a 0.5 million tonne smelter in Andhra Pradesh.
Supply Drivers
Two new smelters could lift NALCO's aluminium capacity to about 1.5 million tonnes a year from roughly 0.46 million today.
Refinery Output
A new refinery will raise NALCO's alumina capacity to 3.1 million tonnes by 2027-28, all meant for its own smelters.
What could lift prices
- Ending NALCO's alumina exports would tighten supply for overseas smelters that buy Indian alumina.
- The project's high power needs show how costly new smelting capacity is, which limits how fast global supply can grow.
What could weigh on prices
- Another 1 million tonnes of Indian smelting capacity would add to global aluminium supply later in the decade.
- More domestic metal could reduce India's need for imported primary aluminium.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | High | The plan would roughly triple NALCO's aluminium capacity and bring a large new plant to Andhra Pradesh. |
| United Arab Emirates | Low | EGA supplies the smelting technology for NALCO's Angul expansion. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Aluminium Smelting | Positive | India's smelting base would grow by another 0.5 million tonnes a year. |
| Power Generation | Positive | The smelter would need a dedicated 1,000 MW power plant. |
Who gains, who loses
- Andhra Pradesh: The state could host an investment of around Rs 29,000 crore including the power plant.
- Overseas buyers of Indian alumina: NALCO says it will stop exporting alumina once its expanded capacity is used at home.
Other ways this could play out
- If land and power are secured quickly, the Andhra Pradesh smelter could follow the Angul expansion within a few years.
- If talks with the state stall, NALCO may keep exporting part of its extra alumina for longer.
Price risks
- A faster-than-expected build would add Indian supply sooner and weigh on regional premiums.
- Delays to the new refinery would push back the whole plan.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
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