Hindalco share gains 1% as Novelis to double automotive aluminum capacity in China

Hindalco Industries share price gained a percent intraday on Thursday as its subsidiary Novelis is going to double its automotive aluminum capacity in China.

"Novelis Inc, the world leader in aluminum rolling and recycling, will invest approximately $180 million to double its automotive aluminum body sheet capacity at its Changzhou facility in China," the aluminium major said in its filing.

The investment will be a continuous annealing solution heat (CASH) treatment line that will add approximately 100 kilotonnes of capacity and will include a high-speed slitter as well as a fully automated packaging line, it added.

Novelis expects to begin expanding its existing facility in 2018 in order to be operational by 2020. Upon completion, Novelis expects to create approximately 160 full time jobs.

"By adding another strategic asset to expand its operations in China, Novelis continues to leverage the strength of the Aditya Birla Group as the global leader in aluminum rolling," said Kumar Mangalam Birla, chairman of the board of directors of Novelis Inc. and chairman of the board of directors of Hindalco Industries.

Worldwide, automotive aluminum demand is projected to nearly triple over the next eight years with the largest growth potential to be in China, as both domestic and global automakers increase aluminum penetration and production in the market, the company said.

Since commissioning its initial automotive finishing line in Changzhou in 2014, Novelis has fully contracted its capacity.

The timing of this investment is closely aligned with key customer product launches slated for 2020-2021 from both traditional automakers as well as electric vehicle startups, Hindalco said.