FREEZE ZONE

Mumbai, Dec. 10: Madras Aluminium Company Ltd (Malco) — a Vedanta group entity — has suspended production at its Mettur facility in Tamil Nadu.

The shutdown has been triggered by a sharp fall in world prices. Malco is the first aluminium producer in the country to halt production.

“In view of a continuous fall in LME aluminium prices, the company has reviewed the business outlook and has decided to temporarily suspend the entire aluminium production with immediate effect. The alumina refinery will operate only to cater to other industrial requirements,” Malco said in a communication to the stock exchanges today.

The company said its power plant would continue to operate and sell to third parties. Malco did not stipulate a time frame for the suspension. It said it would review the situation.

Last month, Malco had decided to reduce production by 60 per cent on account of the falling prices of the metal on the London Metal Exchange (LME) and higher input costs. The Mettur unit has capacity to produce 40,000 tonnes a year. It has already received approval from the Tamil Nadu Electricity Board to sell surplus power to third parties within the state.

Analysts are not ruling out the possibility of other domestic companies deciding to cut production.

Pawan Burde, metal analyst at Angel Broking, told The Telegraph that prices had come down from a peak of $3,300 per tonne this year to $1,500 per tonne at present. Domestic companies are also having to combat a fall in demand.

“It isn’t only about prices; demand has also started slowing down and this is an industry trend. Therefore, companies are adjusting production with demand,” he said.