The Hindu Business Line : Ministry asks Indal not to use Talabira coal

THE Union Ministry of Coal has advised Indian Aluminium Company Ltd (Indal) not to use coal from its own captive coal mine (Talabira-I) in Orissa till it completes the ongoing expansion programme of its captive thermal power plant at Hirakud.

Talabira-I is a virgin coal block with about 23 million tonnes of coal reserve. It was allotted to the company a few years ago to be developed for meeting the requirement of Indal's existing 67.5-MWcaptive power plant at Hirakud.

In fact, the Government guideline for captive coal mining mentions that the allotment for captive block is done keeping in view the requirement of coal of a particular "plant" of the end-user company. Moreover, supply of coal from the captive block to more than one plant of the end-user company can be allowed. The guideline also mentions that once coal production is available from the captive block, the coal linkage from the state-owned mines would stop. This suggests that the owner of captive coal mine, once ready for production, should not have access to coal from other coal mines.

The fact remains that Indal has developed Talabira-I virgin coal block at an investment of about Rs 30 crore in a record time following constant request by the Screening Committee of the Union Coal Ministry that Indal should start operating Talabira-I as early as possible. The mine is now ready for operations. Hence, the Ministry's directive not to use Talabira coal would only force Indal to keep the coal surface exposed for long.

The committee concerned in the Union Coal Ministry has subsequently advised Mahanadi Coalfields Ltd (MCL) not to ask Indal to take coal from it , especially as the company's captive mine was ready and it would give advantage to Indal compared to using MCL coal. This means the MCL coal meant for Indal could be diverted to other users in the country.Indal, an Aditya Birla group company, has argued that the coal supply from its captive Talabira-I block is vital to ensure the viability of the company's aluminium smelter also at Hirakud, particularly when the company is in a position to source less-costly coal from Talabira vis-à-vis the MCL coal meant for it.

It is pointed out that for an aluminium smelter, power cost constitutes about 60 per cent of the total cost of aluminium production and a 10 paise increase in power cost increases the smelting cost by over Rs 1,500 per tonne. Similarly, coal cost at present constitutes about 65 per cent of the cost of power generation at Hirakud. In the given scenario, the company's power plant needs Talabira coal to generate comparatively cheap power for its aluminium smelter, which has a smelting capacity of about 65,000 tonnes of virgin ingot per annum.