Coal short supply hits aluminium companies

Our Bureau Mumbai | Updated on August 30, 2021

Imports at short notice not possible, says industry body

Coal India’s decision to cut supplies and shortage of rail rakes for captive power plants has hit the highly power-dependent aluminium industry. Aluminium smelting requires uninterrupted power supply for production which can be met only through in-house captive power supplies.

The reduction in coal supplies, without any advance notice, has bought the industry to a standstill as it has been left with no time to devise any mitigation plan to continue sustainable operations. Also, resorting to imports at such a short notice is not feasible, the Aluminium Association of India said, in a letter to the company and Coal Ministry.

The aluminium industry CPPs have signed FSA (Fuel Supply Agreement) with CIL and its subsidiaries for assured long-term coal supply. Any abrupt stoppage of the secured coal supply brings the industry to a grinding halt and has a severe impact on the SMEs in the downstream sector resulting in increase in prices of finished products and burden on end-consumers, it said.

Aluminium is a continuous process power intensive industry where coal accounts for 40 per cent of aluminium production cost. The industry has invested ₹1.2 lakh crore to double domestic production capacity to 4.1 mtpa to cater to the country’s increasing demand.

The industry has set up 9,000 MW CPP capacity to meet power requirement for smelter and refinery operations and reduce dependence on power grids.

Power failure

Any power failure for two hours or more results in freezing of molten aluminium in the pots which leads to shutting down of the aluminium plant for at least six months rendering heavy losses and restart expenses, and once restarted it takes almost a year to get the desired metal purity.

The high incidence of unrebated Central & State taxes and duties, which constitute 15 per cent of aluminium production cost, have adversely impacted the sustainability and competitiveness of the industry, the association said.

Besides requesting to restart coal supply, the association has urged the company not to stop or curtail secured coal supplies on an adhoc basis and sought a three-month notice, in case of supply disruption, to devise mitigation plans.

Published on August 30, 2021

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