Calcutta, July 25: Indian Aluminium Company (Indal) chairman SM Datta has called on the government to change its trade policies by allowing value-adders convert locally-produced alumina into aluminium in power-rich countries or swap it for the metal.

Addressing shareholders at Indal's 59th annual general meeting here on Thursday, Datta said even if the announced smelter expansions are commissioned, growth in semi-fabricating industry will be stymied by the paucity of metal. Aluminim prices in the country are 20 per cent higher than the international figure.

"The price disadvantage can be offset by exploring the opportunity of refining bauxite into alumina which can then be tolled into low-cost metal outside India where power is plentiful and cheap or swapped for metal in the international market," Datta said.

"This will result in considerable saving of power and capital costs but requires a change in trade policies to make it viable," he said.

Datta criticised the move to double import duty on aluminium scrap to 20 per cent this year. The duty, he said, is out of line with those in the comparable countries of Asean, and hence, cannot be sustained.

He said metal recycling is the cheapest source of aluminium in the country. Besides saving electricity, it is environment-friendly. Also, there is no unused domestic scrap that may call for such a high import duty, he argued.

He said Indal has plans to upgrade quality, essential for survival in a competitive market. "We also intend to put the available capacity to best use," he said. A study on the issue has been commissioned with Alcan, the Canadian major which holds a 34 per cent stake in Indal.

Shareholders, saying that Indal's ratio of reserves & surplus to capital is 8:1, sought a 1:1 bonus offer in 1998, the company's diamond jubilee year. Datta said the issue could be considered at the board meet. Datta said his company had weighed the option to dematerialse shares but had decided against it. This, because the move would only mean a doubling of the expenditure. On Indal's efforts to introduce new applications of aluminium, Datta said that his company had carried out an application-specific study on extrusion-based building products.

The findings showed that market growth could be much higher than 3.5 per cent at present. Indal, spurred on by the study, entered into a joint venture with the Switzerland-based Hydro Aluminium SA to set up Indal Hydro Extrusions which will cater to the new product segment. The company has also floated a venture with the UK-based Courtaulds Plc for production of laminated tubes.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.