Bharat Aluminium Company, a subsidiary of the Vedanta Group, has started the procedure to close its plant at Korba, Chhattisgarh. The move will result in the loss of around 1,000 direct and indirect jobs. The company has sought the government’s permission to close the unit by December 8.

Ramesh Nair, CEO of Balco, said the plant closure was necessary due to the crash in aluminium prices and the high cost of domestic coal to feed the power plants. “Worldwide, there has been a fall in energy costs, but for Balco the absence of linkage coal and regulatory issues on starting our coal mines are making operations economically unviable,” he said. The closure will be as per the provisions laid down in the Industrial Disputes Act 1947.  Producing aluminium in the country is becoming increasingly unviable due to the falling prices of the metal and rising power costs, which account for about half the production cost.

Balco requires 30,000 tonnes of coal to operate the plant at its peak capacity. While the coal auctions benefited the company in terms of allocation, the new block will meet only 10 per cent of the peak capacity, said the company.

Balco’s current coal requirement is being met by auctioned coal and imports. Chotia Coal Mines, which the company bagged in the recent auction, is yet to become operational due to delays in clearances. Aluminium prices have fallen to $1,600 (₹1.05 lakh) a tonne this month from over $2,200 (₹1.42 lakh) at the start of 2015.  While the export option is ruled out due to the high cost of production, cheap aluminium from China and West Asia has captured the domestic demand.

About 55 per cent of domestic aluminium demand is met through imports, forcing domestic players to operate at half their installed capacity.

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