Companies

Nalco output drops on coal short supply

Jayanta Mallick Kolkata | Updated on March 12, 2018 Published on April 06, 2012

Lower supplies from Mahanadi Coalfields affected primary metal production of National Aluminium Co (Nalco) last fiscal. Aluminium output dropped in 2011-12 to 4.13 lakh tonnes against 4.44 lakh tonnes in the previous financial year.

The energy-intensive aluminium production at Nalco's Odisha facilities fell as annual power generation declined to 6,200 million units from the previous year's 6,608 million units.

“Power generation and consequently metal production were down owing to lower than contractually linked supply of coal, forcing us to shut down 10 per cent of our smelting capacity,” Mr B.L. Bagra, CMD, Nalco, told Business Line.

Mahanadi is mandated to supply 48 lakh tonnes of thermal coal to Nalco a year. “Till the end of December last year, the coal supply backlog was significant forcing us to depend more on import. But in the January-March quarter, Mahanadi stepped up supplies bringing down the annual shortage to 4 lakh tonnes,” Mr Bagra added.

By the end of Q3, Nalco imported 10 per cent of its yearly coal requirement. Improved supply in Q4 from the Coal India subsidiary led Nalco to stop import after January.

LME price

Low ruling LME metal price also did not support power generation with expensive imported coal.

“As a result of lower production of aluminium and need to meet the export commitments, Nalco was forced to cut supplies to the domestic market,” the PSU official said.

The current aluminium price of around $2100 a tonne on LME allows Nalco to recover all variable costs in full. For the domestic market, Nalco charges a premium (between $90 and $100 a tonne) over LME-linked and currency-adjusted price for aluminium.

Nalco has managed to build a thin coal stock for the forthcoming long lean supply season (summer and monsoon). The stock at end of FY12 stands at 3.3 lakh tonnes, just enough to support 20 days' consumption.

During 2011-12, a relatively less power-consuming mine production, however, showed growth over the previous year. Bauxite output was at 50.03 lakh tonnes (48.24 lakh tonnes). Alumina hydrate production also improved 16.87 lakh tonnes (15.56 lakh tonnes).

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Published on April 06, 2012
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