Madras Aluminum Company Ltd (MALCO), a part of London-listed Vedanta Resources Plc belonging to Anil Agarwal, has announced that it will ‘temporarily suspend’ aluminum production as price of the metal continues to fall on the London Metal Exchange.
 
Madras Aluminum Company Ltd informed the BSE , “In view of continuous fall on the London Metal Exchange aluminum prices, the company has reviewed the business outlook for aluminum business and has decided to temporarily suspend the entire aluminum production with immediate effect.'' The firm had last month slashed its aluminum production by 60 per cent due to the declining metal prices and amid the global economic slowdown. An industry analyst said Malco’s decision is indeed alarming. Adding, “Remember, India is the lowest-cost producer of the white metal and if plants begin to shut down here, then surely the situation is turning grave.”
 
Analysts also pointed out that the company will earn some revenue during the shutdown period by selling power to Tamil Nadu, the state where its smelter is located. In Tamil Nadu, the peak price of power is Rs 9 per unit. Therefore, rather than selling aluminum at a loss, the company will sell power and make some profit.

Aluminum production is very energy-intensive. To produce one tonne of aluminum, about 15,000 units of power is required. Malco has a captive 75 mw generating unit in Tamil Nadu and the company said it will sell surplus power generated from its captive plant to the third parties in the state.
 
Shares of MALCO closed at Rs 41.90 on the BSE, up 2.57 per cent over the previous close.