National Aluminium Company Limited (NATIONALUM) Earnings Call Transcript & Summary

Greetings from NALCO. We welcome you to the investors’ analyst meet. Now we are having our director of finance, Mr. RC Joshi with us. Sitting next to him is our ED of Finance In-Charge, Mr. Sriman Panda. And myself, Bharat Sahu, the Company Secretary of NALCO. And I would be happy if you kindly introduce yourselves before we proceed with the formal meeting, please.

Yes. A very good afternoon to all of you, gentlemen. Thank you so much for giving us your time today. So I'm basically the lead analyst at YES Securities. I'm looking after the metals and the mining sector out over here. We wanted to get formally introduced to you so that -- in order to build a relationship and get to know more about the company and all the businesses lining up. We are looking forward to staying in touch with you over the whole course our relationship.

Yes. Thanks, Manav. And thank you so much for the opportunity to the NALCO management and especially to Chintan who has enabled this for us. At the outset, I wish like to congratulate the entire management team for their recent stupendous performance overall at the company level. We have seen very good results, very positive results. And we are very thankful. We are a large investor in our company. Generally, we are a very long-term value investor. Our senior partner, Hitesh Doshi owns this family-owned business. We don't have any client interface as such, and we manage close to INR 3,000 crores of AUM, which is a family-owned investment asset. NALCO for us appears to be a very promising and a long-term story. And from today's meeting, we want to really understand more about the business, your views, the operations, the cost metrics. And all of these because we have been trying to figure out all of these things in global context. And that's what the introduction is. Over to you, sir.

Yes. A very good evening to all our esteemed investors. At the very outset, I welcome all of you in this investors meet. I'm privileged to interact with our partners in progress to share a common vision of seeing a robust, resilient, financially sound NALCO, which is future-ready and synchronized with its values and belief systems, inspiring all stakeholders to dream more and achieve more. The journey of NALCO has been one of consistent growth and transformation. The steady progress of the organization has been possible because of continued trust, support and commitment of all our stakeholders and partners. I'm delighted to share insights into our performance, discuss strategic plans for the future. As we move ahead, our focus remains on expanding our alumina and aluminum capacities by early completion of expansion projects. Our commitment is to drive significant growth through innovation and adoption of best practices to minimize waste, ensuring that our operations are not only cost efficient, profitable, but also environmentally responsible. I wish to acknowledge my gratitude to each one of you for your continued support and belief in NALCO. Together, we have achieved several milestones and shall strive to achieve even greater progress in the coming years. Now we can start the interaction.

And in the interest of time, I would just ask you the questions which I have prepared in a very sequential manner, orderly manner. And I hope you will be happy to answer those questions. So starting with the cost of production and the conversion ratio, because that is a need that nobody in the industry has addressed. So what is the average cost of production for bauxite and alumina and aluminum? If you can just broadly help us understand these numbers, because it's a broad metric on which we want to work. So average cost of production for bauxite, alumina and aluminum.

Okay. See, as you know that as per the Mackenzie report, we are the lowest cost producer of bauxite and alumina in the world. And though it is a price-sensitive figure, but still broadly, I will tell you in the range of what we are producing the products. Our cost of production ranges from -- bauxite ranges from INR 1,000 to INR 1,100. And power, it ranges from INR 3 to INR 3.30. Alumina, it ranges from INR 23,000 to INR 25,000. And metals, similarly, ranges from INR 1,65,000 to INR 1,85,000.

That was very helpful, sir. And what would be the conversion ratio on which we operate for producing 1 tonne of alumina, how much is bauxite and...

Yes, yes. For producing 1 tonne of alumina, we need about 3.5 tonne of bauxite. And for producing 1 tonne of metal, we need 2 tonne of alumina.

Okay. And sir, broadly, what would be the power consumption in producing alumina units,, number of units?

It is around 14,500.

14,500 for producing alumina?

Metal, yes. Metal, aluminum.

And sir, in the whole cost metrics, if you can broadly break down the cost in terms of -- let's say, if we talk about alumina, so what is the major cost of compared to like raw materials, power, [indiscernible]? In percentage terms, if you can split the cost.

For metal, the raw material is about 42%. Power and fuel is about 37%. Staff cost is roughly 11%. Then depreciation, 3%. And other costs about 6%.

Alumina is 39%.

Yes, for alumina, 39% is your raw material cost. 40% is the power and fuel. 13% is your employee cost. And depreciation is about 10%. No, 3%. And rest is other costs.

Sir, this leads to -- actually, our next question is we are also trying to expand and build new facilities, like we are coming up with the alumina refinery. Then probably we are also in discussion of creating [indiscernible]. With the new facilities, will these cost metrics be in line or there will be change? Because these are all legacy costs, so broadly, the cost going forward will be in the same metrics or there will be some efficiency, some -- because of some savings in employee cost, et cetera?

As you know that we are expanding our alumina capacity by 1 million tonnes, which is likely to be commissioned in September '25. So -- and the entire project cost is made through the internal sources. We have not borrowed any money, okay? So there is no interest component as such on that. Only there will be some extra depreciation. But we are using the better technology. We are going for the higher technology. So that will also give us some savings. And as you said, yes, we'll save something from the employee cost also because proportionate employee cost will not be there. So only the additional cost that will come is on account of the depreciation, so that is about INR 7,600 crores. We are investing on that, some depreciation, whatever is there. So we have seen it is -- our cost will -- in comparison to our present cost, it will go up by about INR 2,000 to INR 2,500 per tonne.

The cost will go up in the new facility?

Yes, yes. About INR 2,000n is the goal.

Okay. That was very helpful, sir. So as of now, what would be the landed cost of the caustic, because we have a JV for caustic as well with [ GST ]?

Yes, landed cost of the caustic is now INR 36,700.

Which appears slightly higher than our peers because we have been tracking Hindalco also for comparison purpose. So do you have any understanding of why our cost is slightly on higher side? Or they have a better sourcing arrangement?

Maybe because of the location. Because I'm talking about the landed cost, it is far off -- yes, that is the reason why it is higher.

Mainly because of the transportation and logistics?

Yes, yes.

Okay. Okay. Now your CapEx -- yes. Sorry, sir, you were trying to say something.

Yes, good afternoon. The landed cost from our JV to our alumina refinery itself is INR 6,000, INR 6,500 crores. From our JV to our alumina refinery, the transportation cost itself is INR 6,000 to INR 6,500. So this tolls the transportation cost [ take bunch of it ].

I'm Hitesh. So I think this is due to we are far off from the source of the caustic.

Right. Right. So this is the logistic cost that is extra.

Sir, I'll come to the CapEx part now. The proposed CapEx of 1 million tonne of alumina refinery, which -- so are we on track to commence the operations by end of Q3 next financial year?

Yes. Our target is September '25. We are on target still now.

Okay. And what would be -- sir, in the initial years of operation, what is your view of production, like the capacity utilization from the new facility?

First year metal is, in '25, '26, around 3 lakh will achieve. And from next year onwards, full capacity we'll achieve.

Full capacity, okay. Also, sir, there were cost overruns and slight delay associated with our proposed CapEx. As we have noted in our annual report also, like in FY '23, we had around INR 6,500 crores of budgeted CapEx. And then in FY '24, we have mentioned slightly higher CapEx. So there would be factors, including change in scope or maybe regulatory approvals, things like that. Can you guide us with the breakup of what all has increased, like there would be some cost escalation also? So what has led to this increase in CapEx, if you can guide us?

This is mainly because of the delay of the project which has happened. And now this is the final figure and we are hopeful that from this year also we'll be saving -- we are seeing that some savings is coming from some of the projects. So within that CapEx, we will be completing the project.

What kind of savings can be achieved, sir, broadly?

Mainly change in scope. What we said earlier, there are some reduction and change in scope. So that is saving some of the cost for us.

We have also gone through this central project monitoring website, sir, and they have mentioned that roughly 67%, 68% of our work has been completed in the sense that whatever and the amount that they mentioned over the website is roughly INR 5,700 crores. Whereas, we are taking INR 8,200 in our annual report.

It will be less than INR 8,000.

Yes, okay. So will it include the power plant also?

No, no, no. There is only refinery and Pottangi mine.

Power plant is internal.

There, the power plant is included, that is required for that refinery. Power plant is included in that cost.

So Pottangi mine, sir, [indiscernible] roughly?

Broadly, Pottangi mine is [indiscernible] already. Those are [indiscernible].

And the conveyor belt which we are planning from Panchpatmali mine, that is separate? That is a separate...

That is separate. That is included in INR 2,100. It is included in INR 2,100 from Pottangi to -- yes, yes.

Okay. And the power plant is [indiscernible] power project broken down -- power plant [indiscernible].

Right now I don't have the breakup. Right now I don't have the breakup.

And sir, Sir, this conveyor belt that we are planning from Panchpatmali mine -- because we are also about to start the Pottangi mine, so in your opinion, what all benefits can accrue from this additional conveyor belt from Panchpatmali to our fifth stream of alumina?

No, it's not a question of what benefit. This is a compulsory. Because in the EC it is there, it has to be transported through the conveyor belt only. And moreover, this is the cheapest mode of transportation.

So are we expecting some delays in commencement of Pottangi operation? That is why we are taking this.

No, no, no. No, we have already taken an in principle decision that we will be engaging MDO. Board has already approved for engagement of MDO. We have already given order for transactional advisers. So once they give their report, based on that, we'll float our NIT for putting MDO in place.

So for Pottangi, we have all clearances and all approval in place?

Yes, all clearances are there. Only there will be some more clearance required. One is the opening of mining. That is one permission that is required. And there is some deviation because this conveyor belt will take some time. So until such time, we'll be transporting it through -- by road. So -- it is specifically is it there that it has to be transported by conveyor only. So now we have to amend the EC and other things. So that will take some time.

The DGMS clearance.

And the DGMS clearance is required for safety. Otherwise, all the clearances are in place.

Excellent. Very heartening to hear, sir. The only question that comes to my mind now is that after commencing Pottangi mines also, we will be having 2 sources for the fifth stream. One is the conveyor belt, which we are just trying to install from the Panchpatmali mine, and then we have Pottangi. So we will be having a double source over there. Will there be...

No, Panchpatmali will cater only to the existing refinery. This will be solely for fifth stream, what new is coming.

But I think [indiscernible] those sources. Once Panchpatmali is up, conveyor belt is now [indiscernible] plus Pottangi, both sources will provide bauxite.

[indiscernible] bauxite. But this [indiscernible] Panchpatmali, that is required for our stream refinery. [indiscernible]. This is solely for the new refinery.

So sir, what is my thinking is that Panchpatmali is already sufficient to run the current side of operations.

Indeed.

And you are expanding in Panchpatmali also, right?

No, no, no. Panchpatmali we are not expanding. It is in Pottangi.

There was a slight confusion that the conveyor belt that you are reporting is from Panchpatmali to the fifth stream, right?

No, no, no. This is from Pottangi to the fifth stream.

Okay. Okay. Panchpatmali [indiscernible], correct?

[indiscernible]

Okay. Okay. The current result that were stated long back -- so what was mentioned in the annual report, sir, I'm quoting it from annual report, that there might be delay in commencing operation from Pottangi mines. That is why we have a plan to install a conveyor belt from Panchpatmali to the fifth stream at a cost of INR 450-odd crores.

No, this is the alternate sourcing of bauxite. This is another project altogether. As such, we are not getting delayed in sourcing from the Pottangi mines. We are on track because September '25 will be our commissioning. By that time, we'll be ready with the Pottangi mine. That is an alternate sourcing we have just kept that may require may not be required.

Sir, you will have extra capacity for bauxite because of that...

Yes, yes.

We'll be able to use it by some brownfield expansion or what is the plan for that?

No, no. There is no project scope around expansion in that.

Sir, there is no project scope in [indiscernible]?

No.

Sir on the reserve side, we have data dated back to 2009, where we have stated around 376 million tonnes of reserve for our bauxite ore. So what would be the current remaining resources in your assessment? And is there a possibility of a reevaluation of the resources of the bauxite ore resources?

We are providing just the -- we are projecting the data will provide in that time.

No problem.

And similarly, sir, I have a...

And reevaluation of the -- what you said, what is happening is IBM is changing their guideline now and then. Earlier, we used to use only up to 3% to 4% of silica. But subsequently, they have changed the guideline to use up to 7% silica. So our reserve has gone up to that extent. Though our caustic soda consumption and other consumption has gone up, but reserve also has gone up to that extent. So similarly, if any further guideline from IBM will come, then we have to upgrade our technology to process those kind of ore. In that case, the reserve may go up.

But then cost of production will also go up in that...

Yes, yes. Definitely cost of production will go up. Yes, yes.

So it's really upwards 20,000, 30,000 or...

Panchpatmali, we have about 150 million tonnes of reserve in there. And Pottangi is 110 million.

110 million. And sir, any change in, let's say, from 4% to 7% when the guidelines have changed. So the cost of production rises by about $20, $30 or more than that?

See, mainly there will be increase in consumption of caustic soda, nothing else. So only to that extent, caustic soda consumption goes up. Otherwise, there is no change in cost.

So broadly, what would be the sensitivity from -- if we increase 3% silica and then -- to 4% silica?

It will be [indiscernible].

Similarly our coal blocks, which are at Utkal D and Utkal E. Utkal D, we have already commenced and that has resulted in a very good amount of savings for the company. What is the status of Utkal E, sir, as we speak?

Utkal D and E combined, EC we have already obtained. And we are hopeful that the combined capacity will be operated in this month itself, maybe in next 1 week's time. So already 2 million tonnes we have produced, which was the capacity of Utkal D. So combined, there is a capacity of 4 million tonnes. And we are hopeful that in balance period of whatever 3, 3.5 months we'll get, we can produce about 1.3 million tonnes.

Additional 1.3 million?

Yes. So it may be 3.3 million this year.

And the reserves that we have stated for Utkal D and E was approximately around [ 176 million ] metric tonnes. So is there any reassessment for those assets?

No, no, no.

Sir, any plans for acquiring any new bauxite mines or coal mines represent?

Yes, it is there in plan, and we are also participating. As and when any mines is for auction, we are participating in that.

So what we have understood is that post 2015 and specifically 2021, there were a regime change and earlier the mines were reserved for PSU. But as of now, there is no mines which are reserved for PSU.

No, no. You have to get it from auction mode only. Yes, yes. Only auction mode.

Is there any preference on which [indiscernible]?

No, no, no.

When we talk to many PSUs at conferences, we have learned that under the leadership of Modi Ji's current government, almost PSUs have hired big consultants to coordinate and the company to grow and become more lean and mean and become national champions and globally admired companies. So have we hired someone on the same lines? I don't want to name, but just have we hired any global consultancy last -- some time to take the NALCO to one of the higher level is the aspiration of the government and the company, sir?

Yes, we have hired them. We have prepared our vision document also through them. And also for these auctions also, we hired them so that they guide us, so that we can get mines in the auction. So it is a regular feature here, hiring the big force.

So we would hire 1, 2 year back or much longer before?

[Foreign Language] So as and when it is required, we used to take the support. Even manpower assessment for the company can now be hired through the agency. Recently in 2024, we have hired them for manpower assessment and all.

2018, corporate plan.

2018, we hired them for corporate plan. And regularly, we are hiring them for participating in the auction, mining auction.

Sir, when we talk to, say, power companies like NHPC or SJVN -- like in case of SJVN, they hired some consultant and the company which was producing 1 or 2 gigawatt in last 20, 25 years, next 10 years, they are going from 2 gigawatt to 25 gigawatt. That kind of growth plan is lined up at the country. I mean other NHPC also and few other finance PSUs when we talk to our PSUs. And second thing is that a country like China produces 45 million tonnes of aluminum and we are aspiring to be the third largest economy. And I think we have good bauxite reserves now. We have good coal mines and we have good -- we have globally competitive power rates in our country. So how do you see that and how we are placing ourselves? Because we are as compared to, say -- sorry?

Continue, please.

So are we planning to take country to next level of aluminum and alumina production, which is the metal of the future? We are reasonably low-cost producer. And so that is my question. And like country like New Guinea is producing 120 million tonnes of bauxite, China is producing 45 million tonnes of aluminum, while India looks very small in this game and what is our vision statement on that kind of -- how do you see this opportunity? And, yes.

So with this expansion of alumina, we'll be achieving 3.1 million tonnes of alumina capacity. We have now planned to go for 0.5 million tonnes of smelter. This year, of that, with INR 17,300 crores CapEx has already been approved by the Board. We are also in discussion with NTPC for sourcing of power in JV mode. So for that, MOU has already been signed. A consultant is being engaged for preparing the DPR. So -- and we hope that the zero date for that will be sometime 26th of May, and it will take about 3 years' time to complete that 0.5 million tonne of smelter.

So just a few questions on production and sales. So how we generally affect our alumina and aluminum sales like in terms of spot, how much is through spot, how much through a forward contract or a short-term, long-term contract? And how to link it with the LME pricing?

See, there is no fixed strategy as such how much we will be selling in spot and how much in term. Seeing the market condition like -- normally, if you see in normal year, 40% roughly we go for term and 60% we go for spot. But this year, the scenario is totally different because, as you know, the alumina price is abnormally high. So we have taken advantage of that and most of our sales are through spot.

So it depends on the strategy of...

Yes, right. Right. So would say it's a good -- it's a good strategy, I would say, [indiscernible].

So what was the exit realization for last quarter?

Last quarter?

Yes.

[indiscernible].

In November, we have a $529.

And that would be average realization?

Right. Average realization, we have achieved $529.

And what would be the current price in...

Current, it is higher than this.

Around $600, maybe around $600?

$600 plus.

$600 plus. Sir, secondly, when we affect alumina transfer to aluminum division for producing metal, so at what price generally do we transfer pricing?

No, it is at cost price.

Cost of production.

Yes.

Maybe Manav, you can take the next question, then I'll get back in the queue.

So one question I wanted to ask on the royalty rates. Can you explain me how does the bauxite royalty system works? And generally, there are a lot of fluctuations in the royalty payments, so how do the scheme of things work out over there?

See, this royalty calculation is mainly based on 3 parameters. One is the ATH in bauxite that is quality, second is the LME price and third is the exchange rate. So since all these 3 are variable, so you will always find there is a difference month-to-month in royalty payment.

Yes. Okay. So we're talking about LME price fluctuation. Is it back to -- I mean, are they to be something 0.6% of LME rates, right?

Yes, yes, yes.

Unlike other minerals, are there any domestic royalty premiums that NALCO has to pay for the mining?

No, no. No premium is taken.

Even for the Pottangi mines?

No, no. Same rate of royalties to be taken.

Sure, sir. Sir...

[Foreign Language]

Yes, please continue.

Sir, I also wanted to know what the [ embargoes ], the supreme court ruling was for the royalty regime. So [indiscernible] is going to how it's going to affect the cost of NALCO going forward? And especially retrospectively, do we fall under that particular ruling?

Yes, we fall in that particular domain. But so far, the act has not come. So we are not exactly able to assess. That's why we have not disclosed anything in last annual report also. Through Tata had disclosed that, but subsequently, they have also withdrawn because the act has not come so far.

Was there any [indiscernible] NALCO would have made earlier about this particular...

It will be about INR 2,000 crores impact for past period.

Okay. And can we derive it from the customers? Or it's going to...

No, you cannot, because this is [indiscernible].

In fact, the state government and the floor of the house, they have also announced because the act is now reformed, okay, since 2005. Now whatever Supreme Court has pronounced, they have not pronounced anything on the act as such. Or this act to be tested and government has to take a stand whether they want to reenact it under the same condition, same formula, same valuation of coal-bearing land, all that thing. And government mindset is not there because they know the mining industry will be there. So there will be hardly any retrospective cost for that.

Yes, sir.

So mindset of the state government or the central government, sir?

No, state government. They are in sync, central government, state government, on the same issue because they belong to the same year. It is not like Jharkhand or West Bengal where they want to maximize their revenue, they are in sync.

Because both the government and state, they are in sync.

And there is no question of recovering from customer, that is ruled out.

That is not possible.

Sure, sir. One more...

Even when -- one more thing, even coal companies, even if it is retrospectively given effect, they cannot recover from loss, because as far as for the FSA, the coal price is freeze. For any change in royalty on them, they cannot recover -- pass it over to NALCO.

Sure. Sure, sir.

Manav, 1 minute. So you mean to say the state government is not favor of retrospective also and prospective also. That is what is your view, sir?

Yes. As of now, whatever has been reported in the media, that is what the understanding impression is.

Yes, Manav.

Sir, one question on the Pottangi mines, can you -- what is the annual production capacity run rate which is expected from those mines?

3.5 million tonnes.

3.5 million tonnes. And it's running to suffice the need for your refinery. And additionally, you mentioned...

We'll ’ll be doing it through MDO, yes.

Yes, through MDO. So there will be some cost shift of -- taking place on the MDO from the earlier deposit to INR 1,100 per tonne. This cost shift will go up a bit.

Yes, there will be some increase in cost definitely.

Yes. So a fair option should be like INR 1,500, INR 1,600 per tonne for the Pottangi mine?

No, it's not that high. Around INR 1,400.

INR 1,400, okay. So I wanted to talk a little bit about the supply and pricing scenario for alumina considering the prices have been higher than average over the last 10 years, especially this particular year. So we wanted to know if the global alumina industry is seeing a supply deficit of...

Your voice is breaking.

Is it better now?

Yes, yes.

The global alumina industry is seeing a supply deficit of roughly 1 million tonnes to 1.5 million tonnes. But we have seen that some of the alumina smelters in China have shut down and also announced Production cuts. So do you see that the pricing situation can be expected to cool off from these highs of $700 or $650 levels? What do you think, what you might say on that?

I expect that this price level will continue until at least March.

Okay. And post that it will be NALCO's 1 million tonne of refinery is coming in, right? We have another refinery coming in, in Russia about -- adding 2.5 million tonnes, if I'm not wrong. So do you think that we may go back to the original $450 levels or below that?

Yes, yes, it will go up. We will go back to that price level definitely. This is an abnormally high price. This will not sustain. Smelter will not sustain with these prices.

Can I supplement? This abnormal alumina price was driven by 4, 5 factors. There was a production disruption in Australia. Then there was carbon export of bauxite from Guinea to China. So that is why there was a demand for alumina. Then there was another issue in Brazil also. Now recently, it has softened by more than $100 due to a smelter production shutdown of around 2.5 lakh announced in Mozambique. So that has taken a demand around 7.7 lakh tonne, 3.5 I think it was from the market. So that has softened this price. Now coming to China, yes, as the winter approaches, there will be carbon production because of environment and emission and all that, so that may again take out some of the demand. That will play out maybe in the month or so. And as expected, we are still expecting more than $600 plus for the remaining period.

But in the longer term, I can expect it to be around 16% to 17% of how the LME aluminum prices behave, right?

Yes. That would be much more [ like 17% ].

Sir, one question on the proposed CapEx for the aluminum smelter, which you have guided for INR 17,000 crores. Can you give us a broad breakup in terms of the machinery expenses planned and machinery, and what are the regulatory approvals taking place here?

Right now, I don't have the breakup with me.

Okay. But at what stage of the process are we when it comes to the EC being done there?

No, no. Status is [indiscernible].

And sir, the related question, which is what Manav has just asked, is in this CapEx of INR 17,000 crores, have we also included the alumina capacity that would be required, like 4.5 million at least would be requiring about 1 million tonnes?

That will be coming from that our refinery plant, that 1 million tonnes we have.

So that INR 17,000 crores is only for smelter?

Only for smelter. Only for smelter.

And any recycling or will it be a future-ready plant? Meaning that if any -- if at all, any future expansion if you want to -- so the infrastructure would be future ready for that CapEx that you said?

This will be a brownfield expansion. This will be brownfield expansion. And there is no further land in the same place. Then we have to go to some other location. It will be brownfield beyond this point.

Okay. Because why this comes to our mind is that this INR 17,000 crores, what we study and what we understand from the public domain information for our industry and other peers, it is quite steep. So just wanted to have an understanding whether it is for future -- because recently, Hindalco and others have announced their CapEx plans. They are incurring INR 8,000 crores, INR 9,000 crores of CapEx for 1 million tonne of LME capacity -- 0.5 million tonnes.

They have announced for expansion of 180 plots with the same technology AP300. But our endeavor there is to go for AP500. They have not commercialized AP500. So it may be AP600. So for that, discussions are going on. So our capacity expansion is something different. And there is only expanding the existing technology by another 180 plots.

Sir, could you just explain this once again?

I couldn't get you.

Explain once again.

My thing is that, sir, if they are spending roughly double the amount to produce same thing, what kind of technology benefit on cost we can have whatever you are upgrading the technology, as you are saying?

Yes, in terms of power efficiency, it is much cheaper. In terms of output also, it will be much more higher. This is the latest technology available in the world, AP600.

You can save INR 800 to INR 1,000 crores per year for producing 0.5 million, how much is 0.5 million tonnes?

No, we don't have the breakup of what comprises INR 8,000 or INR 8,500 crores. And INR 17,000 crores...

INR 8,000 sounds to be very low for 0.5 million tonnes. It's not possible to build up 0.5 million tonnes of capacity at INR 8,000.

So you're saying whatever we have read through published information and whatever presentation you have given to other investors.

Okay. We can update it after.

Please share it, we'll update it. We'll update it.

Yes, Manav. Go ahead.

Yes. So on the CapEx guidance, what would be the numbers that we can look at for the next 3 fiscals? I mean this fiscal, then FY '26 and FY '27, if you could broadly share that.

This fiscal, it is INR 2,000 crores. Next fiscal, it is INR 2,200 crores. And for '27, we have not planned so far.

I'm guessing that in FY '27, it might start peaking since the smelter will be operational. So more details will come out down the line?

Right. Right.

And one thing earlier you had mentioned, I think I lost my connection, was about the Utkal coal D and coal E block. The combined capacity is 2 million tonnes per annum for each.

4 million tonnes. Combined capacity is 4 million tonnes.

So 2 million tonnes for each, right?

Yes, 2 million tonnes for each.

Okay. And what would be the current blend of coal requirements? Like how much are we sourcing from Coal India through contracts and through e-auction route?

See, our requirement is about 7.5 million tonnes of total requirements. We have about 4.5 million tonne FSA with Coal India. So besides that, whatever is required, we are taking it from our mines. So we are not procuring anything on e-auction right now. So that is what we are getting in coal.

Okay. And with the Utkal mines kicking in, what per tonne cost savings can we see on the coal front?

Per tonne?

Yes. I mean I think it's going to replace the 4.5 million tonne you're sourcing from Coal India right now, right? If you could give me the number of how much that kind will be replaced and on what basis, if you have?

So roughly per tonne, if you compare with the e-auction price, it is about INR 800 to INR 900 per tonne saving in full cost.

INR 800 to INR 900?

Yes.

Okay. And so eventually the Utkal mines seeking at full ramp-up capacities, what would be the targeted coal blend in our requirements? I think 7.5 remains the same.

Yes, yes. That remains the same. So whatever we get from NCL as FSA. Besides that, whatever is required will be taken from the Utkal D and E.

Okay. And the new...

Roughly, 3.2 million tonne, 3.3 million tonne.

Okay. So one question. I mean I think I'm probably done on that. The mining ECs are completed on the Pottangi mines, right? They should be up and running by May 2025 or...

Yes. April-May '25, we may start mining.

And we did the project for that alternative sourcing of bauxite, right? That should also be in line with the aluminum sales...

Yes, yes. That is also September '25.

And sir, talking about our aluminum sales mix, what part of it would be domestic versus the exports?

In terms of value?

In terms of value?

No, volume.

Volume this current year.

[indiscernible]

Can you repeat it?

Yes. When it comes to alumina sales, what percentage of the volumes are targeted for the export market? And who are we supplying?

Alumina, as such, we are exporting the entire quantity besides whatever is required for smelter. Hardly, 60,000, 70,000 tonnes we are selling in the domestic market, the rest everything is exported.

Okay. So with the export markets, we can -- I'm guessing we'll get higher realization as well?

Yes, yes, definitely. That is one reason. And second is that it is not possible to sell in the domestic market because of the logistic constraint.

Sir, Hitesh here sir. I think you've been very transparent and very forthcoming, and very impressive answers from you and it was beyond our expectation. And sir, what can be the reason for the company 5, 10 years in terms of alumina and aluminum capacity going forward? And second thing, I think the aluminum is not so profitable for us. So what is our thinking over there? Like would we like to go more for alumina going further? How can we acquire more mines? And what 10-year plan in terms of our capacity expansion?

See, 5 to 10 years down the line, we will go more for the value-added products because so far, we are only in the primary metal. We'll go for the value-added products in future. So for that, we have some plans in place as per our recent document. And regarding what you said, the aluminum is not very much beneficial is not correct. Actually, I also thought that is correct. But when I found out, that is giving me the maximum contribution.

Second thing is that, as you said, we just -- we have the Hindalco's recent 5 lakh-tonne expansion and its cost. If we have your email ID, we will just extend it with you on e-mail. Just to know...

Yes, yes. Sure, sure. You can e-mail to our company secretary who is coordinating this. And accordingly, we will also give our feedback in that.

And the second thing is, in fact, this will produce 0.5 million tonne of aluminum will require roughly INR 4,000 crores of power as per the numbers given by you, which we just calculated. So there can be a power saving of 20%, 25% with a much better technology. That can be done you think, sir?

Yes, yes.

It will be one of the most efficient plants in the world, what we are going to do.

Right, right, right.

Sir, can you tell something about the KABIL JV and whatever we have done up to in some foreign countries and what is the vision of the company and the government's’ involvement in these ventures?

I'm sorry, I was not present. Can you please repeat your question, please?

Can you tell us something on the KABIL JV, whatever assets we acquired on that? And what can be reason for the company and the government on that side? I think government is talking about tax benefits for the rare earth minerals and all that. So what can be the big picture over there? Can it lead to large -- in terms of volumes volume and profitability, which is where I think the private sector cannot enter and acquire. The hurry government is not in favor of anything that -- things with this issue.

Yes, it is too early to speak on the profitability and about the mining acquisition of KABIL as of now. But yes, KABIL is slowly and steadily progressing in that direction. In fact, in Argentina, the exploration activity has already started. In Catamarca, KABIL has already entered into an agreement with CAMYEN, one mining company in Argentina, a government state PSU of Argentina. And one of our person has already been deputed there as country head and looking after the entire activities, so the exploration activities at Argentina at the Catamarca province. In fact, initially when this company was envisaged, that time NALCO, in fact, it is a promoter company, NALCO was a promoter company and NALCO had engaged consulting firm, DMT Consulting, and they had identified 12 critical minerals. Out of those 12 critical minerals, we had chosen only 2, that is lithium and cobalt. And then for this lithium and cobalt, it is only presently available or abundantly available in Argentina, in Bolivia, Chile, Australia. But because Chile and Bolivia are politically unrest, so the focus is on Argentina and Australia. As I said, in Argentina, we have made a good progress. We are already into exploration activities. Once that exploration activity is successful, then we'll go for exploitation. Meanwhile, in Australia also, we have made a good progress. In fact, originally E&Y was appointed as a consultant. They have identified 5 different projects. And recently, we have gone for some sort of nonbinding MOU with one owner to have 20% stake in those companies. It is in fact, too early to say their names, but some other major PSU are also joining hands with KABIL, Khanij Bidesh India Limited, to go for the mining at Australia if the price, whatever we have bid, will be successful.

That was very heartening to know, sir. Again, 1 or 2 questions maybe on the global scenario because we have seen that -- and in your annual report also you have mentioned that the Chalco, the China aluminum company, has signed a framework agreement in Guinea to form an alumina refinery over there. So how do you see this development? What would be the scale?

Yes. Go ahead, sorry?

So a few things on the global scenario, we have mentioned in the annual report also that Chalco, the China Aluminum Corporation, has signed a framework agreement with Guinea to set up an alumina refinery over there. So how do you see this development, vis-a-vis our alumina production, and what would be their scale at Guinea? And how is this Guinea bauxite if we compare it with our bauxite?

Guinea bauxite got better quality, but still NALCO bauxite mines is better than that. That is what reported. And Chalco going for a production facility in Guinea, earlier you might have heard a few years back even there was a possibility of taking in slurry pumps bauxite from Guinea to Hindalco. That was one of the ambitious plan, but that was shelved. So Chalco setting up a refinery plant even in Guinea, basically, they will -- their cost of procuring bauxite will come down, no doubt, because now they are getting it imported to China. But overall, aluminum and alumina supply-demand balance will not be disrupted by that. That's what we see.

Sir, I think the major focus of the company is as per your -- as per what I'm understanding is to go in value-added products from here. So what can we -- when can we roll out this? What kind of CapEx we can see in the next 5 years and what kind of return ratios we are looking for this expansion?

You see this has been on our drawing board since 2018. It was part of our corporate plan, feasibility report all has been prepared for 4 downstream products for which land has been also identified somewhere, but only main constant was the hot metal. Okay. Now these things will come into reality once our smelter expansion materializes. Until that time, taking from -- curtailing from the domestic market sales and setting up here, so there is a little bit of internal churning going on. So once the smelter plant gets rolling, definitely the value-added products, rolled coil and other extrusion products, will come up.

But sir, we already have 0.5 million tonnes of aluminum, so we can't expand on value-added products in that facility.

No, you see out of those 4 units, I think it was 40,000 to 50,000 metric tonne hot metal requirement for each unit, that would have taken around 2 lakh tonnes or 1.6 lakh to 2 lakh tonnes. Then NALCO had entered into another JV with MIDHANI giving 50,000 tonnes for a JV, which is not materializing as of now.

Aluminum park.

And then NALCO is committed to give 50,000 metric tonnes to the aluminum park, Angul Aluminum Park, which has come up with our JV with state government. So then NALCO is totally out of the domestic market scenario.

No surplus metal with us. So we are waiting until we get 0.5 million tonnes.

So all the future CapEx will come after 2020 and that's also on value-added product, not on the -- it means we are not planning anything right now?

No, no.

Manav, you have something to ask, or we should wind up and...

The question that I was about to ask, Hitesh, you just asked that. And one thing, sir. All in all, over the next 5 to 10 years, what we are about to see is that NALCO would be shifting much more towards the end product and much more consumer oriented, right? And can we expect that probably this would be the last stream of refinery out of the CapEx plans and the plans going ahead? The fifth stream could be the last alumina refinery and then the focus will be completely on the metal production side.

No, no. It will be premature to say so. That cannot be said. Because there are still bauxite mines available in the country.

And we are also going to take some more mines and that is the most profitable business for us. Selling that surplus material gives a lot of comfort to us. In any market, we make profit. So that is why we'll definitely go for further addition of alumina refinery.

It's too premature to say this is the end of road in alumina.

Sir, when could this be a mining auction...

It's not audible.

Sir, you may acquire more mines for future expansion. So can you provide more details on that? What kind of plants do we have and when can we expect 2 million tonnes of alumina from our company? Because we have preferential...

Actually, for adding further alumina, we need definitely bauxite mines, further bauxite mines, because the bauxite mines are sufficient only for this. So we are bidding for all the -- in all the options of bauxite mines we are bidding. Once we will be successful in any bidding, then we'll plan for further expansion of alumina.

Okay. And there also, we will do the mining ourselves, like recently with Odisha Mineral Corporation, that they supply bauxite from the JV rather than producing themselves the bauxite mining? We would like to go for our own mining or we can acquire from someone like OMC, the bauxite, and then we can go in.

No, no, we'll go for our own mining. We'll go for our own mining.

So it may happen in next 6, 12 months?

Yes, it may happen anytime. Because as and when any bid is coming, we are participating. Once we will be the H1 bidder, we will get the mine, then we'll plan accordingly.

So we can become a 6 million, 7 million tonne kind of alumina company going forward?

Yes, yes, yes. Definitely. Definitely.

The big picture is to become a very big company, right?

Big number. Yes, yes. Right.

And when can we get this recent document? Or is it internal, you are saying the recent document?

It's internal, Hitesh.

Where can we find the auction detail, sir?

Auction detail?

The mines which are coming for auction just for -- because we are tracking the sector. So where can we know about this?

Ministry of Mines provides it.

Yes, Ministry of Mines provides it generally.

Yes, Ministry of Mines provides the details actually. It is uploaded in their website.

Is that information in India's [indiscernible] we are not excluded in lines of countries like Guinea or other countries where we can see huge results. But India is a country is showing very less reserves, so do you think we are underexplored and -- as a country or as a company [indiscernible] we can add our reserves?

Actually, present Mines Ministry is giving a lot of focus on this, and I hope that some more reserves will come in future.

So as a country, we can have much more reserves, you think?

Yes, yes. Yes, definitely.

It can be substantially more than current?

Yes. [indiscernible]

Okay. And lastly...

Can we wind up, sir? Sir, we have a meeting right now. Can we wrap up?

Thank you very much for you time.

Thank you so much. Thank you.

Thank you so much. We hope to connect with you in the future.

Okay. Thank you. Thank you.

Thank you, Manav, and thank you [indiscernible] for organizing this.

Thanks a lot, sir.

Thank you, Mr. Manav. Thank you, Hitesh, from Nirzar Securities. Thank you very much for this meeting, and we look forward to a similar kind of association in the future also. Thank you.

Thank you so much, Mr. Bharat, for organizing this for us. Thank you so much.