The project comprises a refinery situated at Rayagada in Orissa; facilities for mining bauxite at Baphlimali, Orissa, captive berth facilities at Vizag port and a power plant at the Alumina refinery. The refinery will be situated close to the mines and alumina and other imported raw materials will be transported by rail, as there is a rail link between Tikri (project site) andVizag.

UAIL has obtained the Railway Traffic Clearance for handling the outgoing and incoming material. This will ensure the mobility of materials at extremely economic freight rates for the company. The financial closure of the project will be completed by the end of the year 2000 and Utkal Alumina may enter the market only around the year 2004. It may also undertake a second phase expansion to 2.5 million tonnes at an appropriate time, depending on the future global alumina supply position.

The international market for alumina has been extremely volatile. Strangely, the year 1999, noted a 4 year low in average spot prices during April 1999 ($147 per ton), and in December were at a 10 year high. Though Utkal Alumina will not be able to take advantage of the high prices of Alumina, it will, as a result of the high prices, definitely find it relatively easy to raise finance for the project from the market.

Meanwhile, domestic alumina exporters, Indal and Nalco are all set to reap major gains throughexports of alumina as prices soared beyond $350 per tonne FOB. Spot alumina prices was at around $300 per ton FOB mark in December 199, but quickly moved to levels of $375 to $385 per tonne. The average price for December, according to traders was $351 per tonne compared to $288 per ton in November. The key factor behind this spurt in prices was the explosion in the early part of the summer of 1999 at Kaiser's 1 million tpy Gramercy alumina refinery.

This plant is scheduled to re-open in the middle of this year. The current market environment should ensure that all stops are pulled out to prevent any delays.

The speed of the rise in alumina prices on the upward part of the cycle has been astounding to all observers, however, analysts at Metal Bulletin Research fear that once the Kaiser plant re-opens the fall in price will be just as dramatic.

Metal Bulletin Research's forecast for spot alumina prices for the first two quarters of this year are $320 per tonne and $300 per tonne respectively. For thethird and fourth quarters they expect prices significantly lower, and approaching towards the $200 per tonen level as supplies become more plentiful. The Billiton-Reynolds' Worsely refinery expansion in Australia to 3.1 million tpy is also due to start up in 2000, which will certainly add further pressure to prices.

Choudhary, says, "Currently the world alumina market is ruling tight and prices aren't likely to soften till mid 2000 when Kaiser's Gramercy Alumina refinery is back in operation." With the support of strong consumption growth of aluminium in 2000, he expects alumina prices to rule at above $250 per ton for the major part of 2000.

Indal will step up its exports of special grade alumina to 23,000 tonnes in 1999-2000 against 12,000 tonnes in 1998-1999. It will also increase its exports of metallurgical grade alumina to 1,60,000 tonnes from 1,20,000 tonnes. During 1999-2000 its Muri Alumina refinery will reach a production rate of 92,000 tonnes.

This refinery will be expanded to reach 1,10,000tonnes by March 2000 and thereafter to 1,20,000 tons and eventually to 250,000 tpy, in stages. The Belgaum refinery which has a capacity of 2,80,000 tonnes is working at around 110% capacity and will produce around 3,20,000 tpy in 1999-2000. It will be expanded to 3,45,000 tpy and ultimately to 5,10,000 tpy in about 3 years.

Indal is expected to boost its alumina exports to 1,65,000 to 1,75,000 tonnes in 1999-2000 (April to March) from about 1,30,000 tonnes in the previous year.

Nalco on the other hand exported 6,10,940 tonnes of alumina in financial year 1998-1999 which was an increase of 27% over the previous year. However, in financial year 1999-2000 exports are expected to be lower as Nalco has now sorted out its aluminum smelting problems and its production is in full swing since April 1999.

It will thus, be using greater quantities of alumina for its captive production of aluminum metal. Nalco has also undertaken a massive expansion project to be implemented in two stages. In the first stage, itplans to double its bauxite mining capacity to 4.8 million tonnes and raise the alumina refinery capacity to 1.575 million tonnes from 800,000 tonnes.

Thus Nalco, Indal and UAIL will together export close to 2 million tonnes of Alumina (not including UAIL's proposal to expand a further 1.5m tpy at a later date) and this will make India a significant player in the global merchant alumina market.