Hindalco to seek coal linkage for Mahan project

Hindalco Industries will apply for a ‘coal tapering linkage licence' to feed its 359,000-tonne greenfield aluminium smelter project at Mahan, Madhya Pradesh.

The smelter plant has a 750 MW captive power plant catering to its requirement.

A tapering licence from the Government assures coal supply from other sources till such time the allotted coal block becomes operational. The quantity of supply starts tapering to extent of the mine output.

The Government had allotted the Mahan coal block at Singrauli in Madhya Pradesh to Essar Power and Hindalco for their 1,200-MW and 750-MW projects.

Eco clearance

Mr D. Bhattacharya, Managing Director, Hindalco, said the Government earlier threatened to cancel the coal block allotment if work was not expedited. Now, the project is nearing commissioning, while the environment clearance for the mine has not been given.

The coal mine was allocated in 2006, for which environment clearance was given in December 2008. Development work was halted after the area was declared a no-go zone in January 2010. The Forest Advisory Committee considered the proposal four times between July 2008 and December 2009, but it could not arrive at a final decision “given the complexity of the issues involved.”

“We will apply for tapering licence to ensure adequate supply at least for the first phase of 200,000 tonnes, which will go on stream by early next year,” he said.

Short supply

Many power projects with assured coal linkage through the country's largest producer Coal India are suffering from short supply. This has led to large-scale coal imports at a much higher price. The rupee depreciation against dollar has further added to their woes.

Essar has an offtake agreement for 60 per cent or 5.4 million tonnes per annum (mtpa) of coal from the Mahan block to feed its power plant. Hindalco was to get the remaining 3.6 mtpa. The mine has proven reserves of 150 million tonnes of coal.

Raising concern over the spurt in coal prices, Mr Bhattacharya said despite crude prices falling globally, coal in India continues to move up defying all logic. Aluminium production is more dependent on power and alumina, which together account for about 70 per cent of cost.

Hindalco plans to invest Rs 10,500 crore in the Mahan smelter project. It has tied up Rs 7,800-crore debt and drawn Rs 4,400 crore as of the September quarter. The company has a debt of Rs 12,400 crore.

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