Sterlite Industries (India) Limited - Sterlite Industries India Ltd.

Market Outlook
Global Zinc Outlook
According to Brook Hunt, the combination of stronger economic growth and restocking will result in zinc consumption growth increasing to
an average of 6.5% per annum in 2011 and 2012. This increase in consumption will compensate for the current downturn and result in global
zinc consumption growing at an average rate 1.5% per annum over the period from 2008 to 2012. The rate of consumption growth is forecast to
decrease in subsequent years with global consumption forecast to contract by 1.6% in 2019, the year in which Brook Hunt also forecasts the
next global economic downturn. For the period from 2012 to 2020 consumption growth is forecast to average at 3.7% per annum. As a result of
these growth rates, global zinc consumption is forecast to reach 16.0 million tons in 2020, an increase of 4.6 million tons from 2007.
In 2008, several mining companies were committed to mining projects that the previously strong resources sector and high metals prices
made feasible, but the global economic crisis and concentrate supply shortages caused many of these mining companies to shut down or reduce
the scale of their operations instead. Smelter expansions have also continued worldwide, but major smelter expansions and construction of new
smelters have been deferred, except in China and India. Global zinc production is expected to decrease from 11.5 million tons in 2008 to
10.7 million tons in 2010, as smelters exercise producer discipline and match output to market demand.
Indian Zinc Outlook
The Indian market outlook is expected to remain positive, with strong growth in key user segments such as sheet galvanizing and zinc alloys
for the construction segment. Domestic consumption increased by 2.0% to 479,000 tons in 2008 and consumption growth for the period from
2008 to 2010 is forecast to average 7.3% per annum.
Aluminum
Global Aluminum Market
Background
Aluminum is lightweight in relation to its strength, durability and resistance to corrosion. It can be extruded, rolled, formed and painted for a
wide variety of uses. According to Brook Hunt, four end-use sectors accounted for approximately 77% of aluminum consumption globally in
2008: construction, transport, packaging and electricals. The remaining 23% is accounted for by a wide variety of applications including
machinery and equipment and consumer durables. Aluminum is also increasingly substituted for steel in the automobile industry to reduce
weight and improve fuel economy.
The raw material from which aluminum is produced is bauxite, which is a very common mineral found mainly in tropical regions. It
normally occurs close to the surface and can be mined by open-pit methods. The bauxite is refined into alumina. Typically, bauxite ranges from
35% to 60% contained alumina. There are several different types of bauxite, and alumina refineries are usually designed to treat a specific type.
The majority of alumina refineries are therefore integrated with mines.
Aluminum Consumption
According to the Brook Hunt Aluminium Metal Service Report, May 2009, world primary aluminum consumption increased from
34.4 million tons in 2006 to 38.0 million tons in 2007, an increase of 10.4%, and then remained at this level in 2008. This growth was primarily
due to increased demand in China, which between 2005 and 2008 saw demand increase at a compound annual growth rate of 22.0%, compared
to a a decline of 1.2% for world demand excluding China. Demand in North America rose just 0.6% between 2005 and 2006 and then
decreased by 7.2% from 2006 to 2007 while in Western Europe the compound annual growth rate in demand between 2005 and 2007 was
4.9%, in both cases reflecting the impact of a slowing economy in these regions. From 2007 to 2008, primary aluminum consumption in North
America and Western Europe decreased by 8.2% and 3.9%, respectively, reflecting the effects of the global economic crisis.
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