Rio Tinto, AM Green plan to set up $6 billion green aluminium hub in India

An official announcement is expected today, where the two companies will unveil a joint agreement to explore setting up a large green aluminium project in India. 

This development assumes significance in the backdrop of several developed economies planning to impose carbon tax on imports, including the European Union’s Carbon Border Adjustment Mechanism (CBAM), bringing in stringent norms.

The plan includes building a 1 million tonne per annum (mtpa) aluminium smelter and a 2 mtpa alumina refinery.

The aluminium smelter will run entirely on 1.8 gigawatts (GW) of round-the-clock renewable power. The project will be developed through an equal joint venture between the two companies.

“While an investment of around $4 billion will be required for setting up the aluminium smelter, the alumina facility will require around $2 billion. in the first phase a 500,000 tonne per annum primary aluminium smelter will be set up,” said one of the two people cited above.

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India’ energy transition playbook has been attracting global investors. With operations in 35 countries, Rio Tinto is a global mining and metals major. Its primary products include iron ore, aluminium, copper, lithium among other minerals. AMG Metals & Materials is a subsidiary of AM Green set up by the founders of Greenko Group Anil Chalamalasetty and Mahesh Kolli.

Queries sent to AM Green’s spokesperson did not elicit a response. AM Green group president Mahesh Kolli and Rio Tinto’s spokesperson declined to comment.

India’s green metal map

India is world’s second largest producer of aluminium after China; and exports the commodity and derived products to the US and European Union. The current market size of aluminium in India is around 5 million tonne per annum. Companies in steel and aluminium businesses are looking at ways to decarbonize their operations and remain competitive globally.

AM Green is setting up production facilities for green molecules, including green hydrogen, green ammonia, biofuels, e-methanol, sustainable aviation fuels, and various downstream high-value chemicals, for decarbonization in hard-to-abate industries. 

In September last year, AM Green Ammonia B.V., another AM Green company tied up with Germany’s RWE Supply & Trading to supply green ammonia. Also, in January this year, AM Green partnered with global logistics giant DP World to set up advanced logistics and storage infrastructure for green hydrogen and green ammonia exports.

Mint earlier reported about Malaysia’s Gentari Sdn Bhd and Singapore’s GIC Holdings Pte Ltd plans to invest $1.75 billion in AM Green Ammonia Holdings, that ranked among the world’s largest energy-transition deals.

While Gentari, will invest $1.5 billion for 30% in AM Green Ammonia Holdings, the founders will hold the balance 70% along with Singaporean wealth fund GIC, which will invest $250 million.

A comparatively sustainable metal—aluminium—is used in several sectors ranging from power, packaging to construction. According to recent estimates by JMK Research, by 2030 the Indian aluminium sector is expected to integrate around 18-20 GW of solar and wind capacity. India aims to achieve 500 GW of non-fossil power generation capacity by 2030.

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