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Novelis Asia President Sachin Satpute

Novelis, a global producer of rolled aluminum and recycler of aluminum beverage cans, has been forging stronger ties with Korean automakers as its lightweight automotive aluminum helps power the driving distance of electric vehicles (EVs), according to the head of the firm's Asia-Pacific business.

In the past, consumers were reluctant to switch to EVs and other eco-friendly vehicles due to their shorter driving distances, compared to those of vehicles using internal combustion engines. Carmakers had to reduce the weight of car bodies to prevent their efficiency from dropping.

In a recent interview with The Korea Times, Sachin Satpute, senior vice president of Novelis and president of its Asian operations, said his company's aluminum can achieve dramatic weight loss as a lightweight material for automotives.

"Aluminum has many advantages over steel," he said. "For example, for the Ford F-150 pickup truck, which is one of the best sellers in America, steel is used only in 8 percent of the truck in total body structure, while aluminum is used in 92 percent. Through this, the F-150 reduced its weight by an average of 45 percent. Every 10 percent of weight reduction improves fuel consumption by 5 to 7 percent. Also, lightweighting solutions in EVs enable you to drive your car a longer distance on a full battery charge."

He mentioned the Hyundai Ioniq as another example, saying his company's high-strength aluminum alloy, which was used for the car body of the Korean company's first eco-friendly hybrid model, reduced the weight of the body by approximately 45 percent in comparison with steel.

The Indian businessman also said automotive aluminum is good for the safety of vehicles.

"Aluminum provides vehicle safety based on its crash energy absorption properties," he said. "The superior energy absorption of aluminum contributes to overall safety as it can be designed to fold predictably during a crash allowing aluminum to absorb twice as much energy as steel. In fact, the F-150 is the first-ever truck that achieved a five-star safety rating from the National Highway Transportation Safety Administration."

Satpute added aluminum improves vehicle performance.

"Compared to other competing materials, aluminum has a clear advantage in strength-to-weight ratio," he said. "In addition, the rigidity of aluminum structures gives drivers a better feel for the road, more precise control, better stability and quicker responsiveness compared to steel."

Thanks to the advantages, Novelis has maintained strong relationships and partnerships with Korean automakers.

"Our partnerships with Korean carmakers are steady and growing," Satpute said. "Since 2008, Novelis has maintained a consistent and collaborative relationship with Hyundai Motor beginning with providing aluminum material for the hood of the Genesis model in 2008, the Equus hood in 2009, the Ioniq, the G70, the K7 and currently the Kona EV in 2018. We look forward to delivering our aluminum solutions continuously to the Korean automotive industry."

Industry pioneer 

Novelis could achieve success as it foresaw aluminum replacing steel in making automotive sheets.

Over the past seven years, the Atlanta-based company has increased the metric tons of aluminum sheets it produces for the automotive industry from 300,000 to 750,000. It also achieved record shipment levels and increased its automotive aluminum portfolio to 20 percent of total volume from 7 percent four years ago.

The world's leading aluminum maker has continued its investment especially in Asia, expecting double-digit growth in the ratio of aluminum market in the region over the next decade.

On Oct. 10, Novelis broke the ground to expand its automotive aluminum manufacturing facility in Changzhou, China. The $180 million investment is expected to double the facility's production capacity of heat-treated aluminum sheets by 100,000 metric tons.

"Of the estimated 1.5 million metric tons of global automotive aluminum sheet demand today, Asia accounted for only about 10 percent, or about 150,000 metric tons. However, Asia is expected to be the fastest-growing region matching European demand by 2025. By then, the total global demand will reach 3.5 million metric tons and Asia will be expected to have one third of the total," Satpute said.

"To fulfill the ever-growing auto demands in Asia, Novelis has developed a supply chain structure between the Ulsan and Changzhou plants to take care of the growing needs of auto customers. The Ulsan Plant now produces cold rolling coils and the Changzhou Plant does the heat treatment finishing with the cold rolled coils from the Ulsan Plant and ships them to the automotive customers."

He added Novelis always seeks investment opportunities but puts more emphasis on building the market. 

"As we increase our market share in Asia, our two operation bases will be growing accordingly," he said.

Impact of tariffs

Despite the bright outlook, Novelis is facing unfavorable factors due to U.S. protectionist policies. The company is tasked to cope with President Donald Trump's imposition of tariffs on aluminum imports.

In March, Trump slapped a 10 percent tariff on aluminum imported to his country.

Before the enforcement, Novelis CEO Steve Fisher said he opposed the plan as his company's customers are concerned about price inflation. Fisher said Trump's proposed blanket tariffs on steel and aluminum could add $3 billion to the car industry through higher steel and aluminum prices.

Marco Palmieri, senior vice president of Novelis and president of its North American operations, also said his company opposes Trump's 10 percent tariff on aluminum imports, even though the U.S. president finally excluded Canada from countries subject to the tariff. Canada is the company's main supplier of the metal.

Satpute admitted his company is currently facing several issues in the geopolitical environment related to metal supply and trade and the issues may impact the company temporarily.

However, he said Novelis is confident it can identify and secure alternative sources of metal to ensure supply chain continuity, if needed.

"As the world's largest buyer and recycler of aluminum, we can also rely on our internal supply of recycled content and leverage our global footprint to meet the needs of our customers regionally in order to avoid the costly financial impact of importing and exporting aluminum. Also, through our trade associations around the world, we will continue to advocate for policies that support the long-term competitiveness of the aluminum industry in order to protect jobs and provide customers with the highest quality aluminum products," the president said.

"Novelis is well positioned to navigate economic volatility. With a broadly diversified product and geographic production footprint, Novelis has local assets that can serve local markets in the event of trade measure escalation."

He emphasized that the long-term potential and fundamentals for the growth of automotive aluminum are still very strong, so the recent geopolitical factors will not change his company's strategy or market dynamics.

Source : http://m.koreatimes.co.kr/pages/article.asp?newsIdx=256794