In precision non-ferrous casting and high-volume die-casting operations, thermal energy conversion represents one of the largest controllable operating expenses. In modern aluminium foundries, where margins are squeezed by primary metal price fluctuations and stringent customer cost breakdowns, even a modest INR 1–2/kg variance in liquid metal melting cost can translate into tens of lakhs of rupees in annual cost differences.
A rigorous, transparent should-cost benchmark is therefore essential for procurement teams, foundry managers and strategic sourcing leaders.
This analysis examines a baseline should-cost model for a 1,000 kg/hour aluminium shaft or tower furnace in an industrial foundry. It compares liquefied petroleum gas (LPG), piped natural gas (PNG) and electric energy across capital investment, depreciation, direct energy use, operating expenses, overheads and metal oxidation losses.
o establish an equitable benchmark across energy sources, the model standardises the facility’s operating parameters and furnace throughput. The evaluated system is a vertical shaft tower furnace with a nominal melting capacity of 1,000 kg/hour.
The model assumes 300 operating days per year and a 20-hour daily duty cycle, giving 6,000 operating hours annually. Total annual melted output is modelled at 3,000 tonnes, equivalent to an effective throughput of 500 kg/hour and 50% utilisation of the furnace’s nominal hourly capacity.
The economic framework assumes a 15-year asset life, a capital discount rate or weighted average cost of capital of 10% per annum, factory and administrative overheads of 12% applied to subtotal conversion costs, and a P1020 primary aluminium reference price of INR 354.95/kg.