Adani, IHC Tie Up on $11.5 Billion Aluminium Push in Odisha

Indian primary aluminium trades at a premium of $80-$100 a tonne to LME cash, supported by a 7.5% import tariff. That premium looks vulnerable if the new smelter brings on supply faster than the market can absorb it. The Adani-IHC venture includes captive power, which gives it a structural cost advantage over smelters that buy grid electricity at retail tariffs. Domestic producers have enjoyed protection from cheap imports; a large, low-cost domestic competitor changes that calculus.

The demand side offers a counterweight. India's aluminium consumption per capita is 2.4 kg, versus 11 kg in China and 22 kg in the United States. Government spending on roads, bridges, power transmission and renewable energy parks is expected to push that figure higher over the decade. The Odisha complex, if timed with that demand wave, could absorb its own output without crushing prices. The state official said the MoU targets binding agreements within 12 months and construction start within 24 months.

For the sector, the risk is front-loaded. Hindalco and Nalco trade at 11-13 times forward earnings, already discounting a supply glut. If the MoU progresses to financial close and site work, those multiples could contract further. The bull case rests on execution delays – Indian mega-projects routinely slip – and the pace of domestic demand. A real clearing price test will come when the first alumina from the 4 MTPA refinery reaches the spot market, likely in 2028. Until then, the threat is priced but unproven.