Curious Question - Aluminium Shortage Crisis & How India can save itself and Profit billions

All of us have at least noticed than in the recent times, coke cans are missing from most shops around us, even in cafes and restaurants, hardly few are left now.

Why is this happening? The answer lies in something much deeper

To understand what really is happening behind the stage, let's understand: -

SUPPLY CHAIN OF ALUMINIUM CANS

1. Bauxite Mining
India has one of the largest bauxite reserves in the world. So, the first step towards the end product of aluminium can is bauxite mining which charges close to $40 - $80 per tonne

2. Alumina Refining
Next in line is the task of refining of alumina from the bauxite mined
3 tonnes of bauxite = 1 tonne of alumina
Generates approx $320 - $400 per tonne

3. Primary Smelting
The extracted and refined alumina is smelted in this part of the process and generates close to $3200 per tonne

This end semi-finished product is then exported to countries like the UAE to continue the remaining two steps of the chain towards the coke can

4. Rolling and Extrusion
In this part, the smelted aluminium is rolled into sheets, foil and forgings, generating a revenue of around $1500-$2000 per tonne

5. End product - Coke Cans and many others
After rolling and extrusion, the sheets are finally used to shape cans, car bodies and aerospace alloys
Generates at least $3650 per tonne

The shocking twist is that despite owning on of the largest bauxite reserves and doing 60% of the process of making cans and other products from aluminium, India spends a large chunk of money in importing those cans, car bodies and alloys.

Even worse, despite doing 60% of the hard work, India is earning hardly 20% of what UAE and other countries are earning after importing the smelted aluminium in step 3 from India.

The reason behind this dilemma sums up into a single law made by the country that is charging a hefty 7.50% customs duty on imported primary aluminium and social welfare surcharge to protect indian producers from aluminium dumping. However, although the reason behind this law was pure intentioned, it has gone against the goal as the indian buyers has to pay the same price as the international buyers despite owning the reserves and producing cheapest aluminium globally.

To match the international prices, the domestic producers therefore sell at international prices to sustain themselves

Basically, if the indian producers can sell aluminium at high prices in international markets, why would they choose to sell in India at lower prices?

Also, although Indian government charges 7.50% on the aluminium raw material, it charges 0% tariff or any other charge on imported finished goods from aluminium.

That is the reason why India is unable to generate as high margin as UAE and others and is also therefore, facing the aluminium crunch.