Hindalco Industries expects its copper business to remain resilient through the ongoing West Asia crisis, aided by elevated sulphuric acid prices and strong downstream demand, even as global copper refining economics remain under pressure.
The company said gains from sulphuric acid sales helped offset weak treatment and refining charges (TCRCs) and lower copper shipments during the March quarter. Copper segment revenue grew 52% year on year at Rs 14,565 crore while EBITDA rose 48 per cent year-on-year to a record Rs 907 crore despite metal shipments falling 5 per cent to 128 kt.
By-Product Realisations
“Copper prices have gone up quite a lot. But that doesn’t really benefit us. What we have benefited from is a strong demand for sulphuric acid and an increase in sulphuric acid prices because they are indexed to worldwide prices of sulphur, which have gone up because of the Middle East crisis,” Satish Pai, managing director, said during the earnings call.
The company said sulphuric acid prices are likely to remain elevated as long as supply disruptions linked to the conflict persist. Hindalco sells sulphuric acid in both domestic and export markets.
Pai said the copper business’ diversified value chain — including sulphuric acid, gold, silver and downstream copper products such as wires and rods — had helped cushion the impact of negative TCRCs globally.
While management maintained its long-term quarterly EBITDA guidance of Rs 600-700 crore for the copper business, Pai indicated that Q1FY27 could deliver stronger margins because sulphuric acid prices were still elevated.
Overseas Inflection
The company also expects FY27 to mark a turning point for Novelis, its US subsidiary, following disruption caused by the Oswego plant fire.
“The worst of the impact (of the Oswego fire) on the net income for Novelis is over. Q1 onwards, there will still be some impact because Oswego is just starting (but) it will be more on the EBITDA side. But I would say that for Novelis, the worst is over and this year should be the positive inflection point for them.”,” Pai said.
Hindalco said Novelis exited FY26 with adjusted EBITDA of $543 per tonne in Q4, close to its long-term guidance of $600 per tonne. The company added that its Bay Minette greenfield rolling and recycling facility in the US remained on track for commissioning later this year.
On capital expenditure, Hindalco plans to spend around Rs 12,000 crore in India during FY27, up from Rs 10,000 crore last year. The investments will be funded through internal cash flows and directed towards the Aditya alumina refinery, Aditya smelter and a 50 kt copper recycling plant at Pakhajan, Gujarat.
The copper recycling facility is expected to start commissioning in September and will process a mix of copper scrap and electronic waste.
Novelis, meanwhile, is expected to incur capital expenditure of $2.3-2.4 billion in FY27, with nearly 90 per cent allocated to the Bay Minette project. Hindalco said Novelis’ capex would decline sharply after FY27 once the project is completed, while India investments could rise further with the next phase of copper smelter expansion and aluminium upstream projects.
Consolidated capex for FY26 came in at Rs 31,619 crore. “The India capex (will be) Rs 12,000 crores this year. Next year it will be (between) Rs 15,000 to Rs 17,000 crore, but it’s not going to be at the same level as Bay Minette was. So, the consol capex will be lower (after FY27),” Pai said on the company’s latest earnings call.