Balco to restart production at Korba rolling mill in July

Bharat Aluminium Company (Balco), part of Vedanta Group, plans to restart production at its Korba rolling mill in Chhattisgarh by July with aluminium prices on the London Metal Exchange showing signs of revival and cost of production in India easing marginally.

Production at the rolling mill and foundry was suspended last September leading to job loss for over 1,000 workers. The company intends to reinstate 300 workers and produce about 40,000 tonnes this fiscal, much lower than its installed capacity of 70,000 tonnes.

Ramesh Nair, Chief Executive Officer, Balco, said after a thorough inspection of the machines and completion of maintenance, operations at the rolling mill would start from July 1 and normal production is expected from July 15.

The company shut production at the rolling mill, blaming the prohibitive cost of coal to run the power plants and falling aluminium prices. Suspension of production by Balco, one of the three large aluminium companies in India, had led to short supply and thus increasing premium on domestic deliveries.

Incidentally, aluminium LME price, which was on a downtrend, has improved to $1,500 a tonne from $1,400 a tonne in last few months. Aluminium prices in the global market was hovering around $2,200 a tonne at the beginning of last year.

Though restarting production at the rolling mill may not add huge profit to the company due to volatile aluminium prices and uncertain demand revival, it is being done to provide some relief to the workers, sources said.

To protect domestic producers, Budget 2016-17 increased the import duty on primary aluminium to 7.5 per cent from 5 per cent and on aluminium products to 10 per cent from 7.5 per cent.

Though Balco has started production at the Chotia coal mine, which was won in the recent auction, it is sourcing coal from the open market due to cost advantage.

The company buys coal from Coal India-owned South Eastern Coalfields at ₹4,200 a tonne as supply from its captive mine would cost ₹4,600 a tonne, said sources.

The price difference in coal is largely due to transportation costs. While the South Eastern Coalfield is located just 20-30 km away, the distance between the Chotia mine and its factory is 65 km, he added. The company has to scout for a bauxite mine soon as the captive supply would sustain only for the next 3-4 years.