NEW YORK – Aluminium flat-rolled products maker Novelis plans to build a $300-million plant in Kentucky targeted at automotive customers looking to minimise vehicle weight amid more stringent efficiency rules.
“It just reiterates the industry’s view on this very strong penetration as the material of choice on vehicles,” Novelis CEO Steve Fisher said in a telephone interview. “We don’t see it as a leap of faith.”
The facility in Guthrie will create about 125 jobs and have capacity of 200 000 metric tons. Novelis, the US unit of Hindalco Industries, expects to complete the project by 2020 as its Indian billionaire owner Kumar Mangalam Birla expands his overseas operations.
Automotive companies continue to expand the amount of aluminium used in vehicles, in particular in trucks and SUVs. An industry report projects that aluminium content in North American passenger vehicles will increase 42% by 2028 from 2015.
Last April, Braidy Industries announced plans for a $1.3-billion aluminium mill in eastern Kentucky, which CEO Craig Bouchard said at the time would be the first of its kind in three decades in the US. Two years ago, as the aluminium price was near the lowest in almost seven years, Fisher said in an interview that he didn’t expect any near-term relief from a China-led glut that was keeping the metal in a bear market.
But Chinese smelting cutbacks have helped send prices back to the highest since 2012, providing incentives for producers in the US and elsewhere up and down the supply chain to restart capacity or undertake new projects.
Via Novelis, Hindalco is among bidders for US producer Aleris, according to people with knowledge of the matter.