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Novelis: a Sustainability Champion and Growth Driver for Hindalco

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Hindalco Industries Ltd’s domestic operations have been struggling to earn profit during an unfavorable global economic scenario of past couple of years. The only silver lining in Hindalco’s sky is Novelis Inc., its international subsidiary, whose value-added aluminium products and increased focus on recycling have helped profits grow to a considerable extent.

Atlanta-based Novelis is a world-leader in rolled aluminium products and recycling of used aluminium beverage cans. The company recycles nearly 40 billion cans annually and processes the secondary metal thus produced, into can stock to be turned into new beverage cans.

Novelis’ efforts towards recycling of UBC and other forms of used aluminium products is not only doing its bit for environment but also bringing about a welcome change in the company’ economic fortunes. The company is targeting to use recycled aluminium material or scrap in 50% of its production by 2015. This is in line with the company’s strategy to reach a recycled content capacity of 80% by 2020. According to the chairman of Hindalco, for the current year, the subsidiary aggressively worked on it and increased recycled content in its production to 39% from 34% the previous year.

“Novelis’ investments have been strategically geared … to capture the increasing emphasis on light-weighting in the automobile industry, and recycling in all the four operating regions,” said Kumar Mangalam Birla.

The company’s second annual sustainability report received an A rating from the Global Reporting Initiative and the report also recorded a 19% reduction in energy intensity, a 11% reduction in greenhouse gas emissions and an 18% improvement towards reducing landfill to zero.

A good amount of strategical planning and market research has been put behind this sustainability effort to enable the company to effectively pass on the message of environmental sustainability. According to the CEO of Novelis Philip Martens, sustainability is driving the company’s business strategy because, a growing number of people want to buy products that lower their carbon footprint. The company is rightfully cashing it on the growing ecological concern of the consumers.

“By dramatically increasing the amount of recycled content in our aluminium sheet and applying innovation to our product development, we enable consumers to make sensible, environmentally sustainable purchasing choices,” adds Martens.

Novelis presently has a number of aluminium re-cycling projects at hand in Brazil, Korea and the US. It is planning to invest considerable amounts of funds in the current year for building up new facilities and developing new technologies for processing aluminium scrap. The company has also set up a Novelis Sustainability Council. It has withdrawn from the Evermore Project, a joint venture with Alcoa and set up an independent beverage can procurement organization in North America. In the last week of October, Novelis officially opened an aluminum recycling and casting center at its Yeongju, South Korea, facility. The new operation will be the largest aluminum beverage can recycling center in Asia and it will process used aluminum beverage cans and other aluminum scraps for casting into a range of aluminium flat products.

John Gardner, chief sustainability officer for Novelis is optimistic about using recycled aluminium in the beverage and automotive industries. Automotive majors are working in close collaboration with Novelis to manufacture lightweight cars with more aluminium content to help cut fuel consumption and carbon emission from the road transport sector.

For Novelis, the concept of sustainability covers different areas like economics, environment, business and also the social impact. Their business decisions are taken considering all the mentioned aspects. Sustainability is important for them from the prospect of a long term business goal. Therefore, Novelis emphasizes that its sustainability efforts make sense ecologically as well as a good business strategy.

Using scrap aluminum or recycled aluminum as input material for producing value-added products as compared using virgin metal, is a well established economical route for achieving distinctive cost advantage. With Novelis bringing in the technological advantage to the secondary metal operations of the Hindco conglomerate, the group has not only managed to keep its head above waters in a turbulent business environment, but also has been working towards a steady profitable operation regime. Therefore, against all previous pronouncements, the subsidiary is currently proving to be a major growth driver for the Hindalco group.

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