Adani Group, IHC to Invest $11.5 Billion in New Aluminium Manufacturing Unit

Adani Group and Abu Dhabi-based investment giant International Holding Company (IHC) intend to invest $11.5 billion together in coming years. The investment will be used to put up a giant aluminium plant, which may increase India’s total capacity by around 50 per cent.

This would be Adani’s second metals business following its copper smelter in Gujarat which began operations last year. Which, reflected the power and ports group’s goal to secure commodity supply for its growing infrastructure empire.

Adani and IHC’s Strong Bond

In order to construct an aluminium smelter in Odisha with a yearly capacity of over 2 million tonnes, Adani and IHC would pool their equity and debt investments. The partners' investment split remained undisclosed. If this were to happen, it would shatter records for foreign investment in India's mining and metal industries. Smelting and refining will be done in one integrated unit at the site. In 2022, the Adani family and IHC invested $2 billion in three listed companies: Adani Enterprises, Adani Green Energy, and Adani Energy Solutions.

This investment in the Odisha aluminium venture would further solidify the Adani family's business links with IHC. Sheikh Tahnoon bin Zayed Al Nahyan chairs IHC, one of the largest investment firms in the world, which has the support of Abu Dhabi's royal family. Real estate, healthcare, and technology are all areas where IHC is participating as a part of the emirate's sovereign wealth fund activities.

Its primary areas of interest in India have been energy, infrastructure, and property. Among its holdings in the nation is a majority interest in Sammaan Capital, formerly known as Indiabulls Housing Finance, which was acquired through an affiliate of Avenir Investment RSC for $1 billion.

Aluminum Consumption in India on the Rise

Among the world's top three aluminium consumers, India ranks third. By FY30, consumption is projected to reach 8.5 million metric tonnes. Additionally, by FY40, it will reach 18 million tonnes, and by FY47, it will reach 28 million tonnes, as stated in India's vision statement for the metal. Producers of metals, like Vedanta Aluminium and Hindalco Industries, are increasing their production capacity in anticipation of a demand boom.

This hike is majorly caused by the government's strong emphasis on manufacturing. This will help to satisfy the increasing domestic demand and decrease reliance on imports. It was reported last year that Rio Tinto, a worldwide natural resources major, was in talks to form a partnership with AMG Metals and Materials, financed by the creators of Greenko Group, to launch an integrated sustainable energy-powered aluminium project.

Aiming for a 10% market share by FY47 is certainly doable if India plays its cards wisely. This whole demand may be met if India's capacity is increased to 37 MTPA by FY47. At now, India's share in the global aluminium market is 3.8%.