Why This Manufacturing Company is Firing 1,000 Employees

Companies like BALCO are struggling with cheap imports from China

BALCO, owned by billionaire industrialist Anil Agarwal’s Vedanta Group, manufactures aluminium, which finds use in packaging, transportation, electrical, machinery and equipment, building construction and consumer durables.

The company wants to close the Korba unit by December 8, 2015 because of a crash in global aluminium prices and high energy costs. Aluminium prices in the global market have fallen sharply from more than $2,200 per tonne at the beginning of 2015 to $1,600 in the current month, making exports unviable.

“Worldwide there has been a fall in energy cost but for BALCO the absence of linkage coal and regulatory issue for starting our coal mines is making operations economically unviable,” said BALCO CEO Ramesh Nair.

Companies like BALCO are struggling with cheap imports from China, which is estimated to control half of global output of aluminium industry.

“In India, cheap aluminium from China and Middle-East has shrunk market share of domestic aluminium producers who are already struggling with rise in input cost. A staggering 55 per cent of domestic aluminium consumption is met through imports, forcing domestic players to operate at only 50 per cent of their installed capacity,” BALCO said.

The government has come to the rescue of the domestic steel industry by raising customs duty, but there have been no efforts to protect the local aluminium industry so far.