MUMBAI, May 24: Power is a problem, only if we make it so. The aluminium industry can produce excellent metal with just five per cent of the normally required energy, but cannot do so due to the exorbitant increase in tariff from 12 to 25 per cent in the most vital raw material for the cheap process, recycling scrap. The increase in duty, effected in the 1997-98 budget, has dealt a sharp blow to the possibilities of higher quantities of cheap production of primary metal, and therefore of cheap value addition opportunities.The recycling scrap route also requires far less investment than the usual smelting method of producing aluminium metal, at just $500 per tonne against the $4,500 incurred in the normal production process.
The recycling scrap-based plants need not even be big. The economic size of such a metal production plant is a mere 25,000 tonnes per annum, against no less than 2,40,000 tonnes per annum for a traditional primary metal smelter.
India is out of sync with the world economy in itsdisregard for need for higher scrap imports: nearly 20 per cent of the world's sheet products and 50 to 60 per cent of extrusions are made from recycled metals, with wide-ranging applications in irrigation, automotive industries, packaging, building and construction industries. Approximately six millions tonnes of aluminium is recycled in the world, and recycling capacity is growing at more than 12 per cent per annum against a mere four per cent per annum in the case of primary aluminium.
The international aluminium scrap market is highly organised, with regular quoting and trading in international markets of 34 varieties of scrap, each of which have been recognised by the commerce ministry. The AAf , with support from other industry bodys such as the AINFMIA and institutions such as the BME has proposed to the government that the exorbitant 25 per cent duty be brought down immediately to between 5 and 10 per cent, as in the case of steel scrap. The proposal has been forwarded by the honorary president ofAAI, SN Johri, the chairman and managing director of Nalco.
Since domestic scrap is not segregated and identified for modern recycling, it is essential to import the baled and briquetted varieties of scrap.
Eventually, it is expected, with a general scrap culture emerging, domestic companies will develop their own scrap-watch teams which will generate the material within India. But for the moment, it is important that the government sees the same logic that prompted them to reduce the import duty on steel scrap to between five and 10 per cent: so that cheaper finished steel and value added steel products are produced within the country.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
