Aluminium cos say coal curtailment brought industry to standstill

Aluminium companies have said drastic curtailment of coal supplies by Coal India Ltd (CIL) without advance notice have brought the industry to a standstill as it has been left with no time to devise any mitigation plan to continue sustainable operations.

Coal India Ltd (CIL) has significantly reduced coal supplies and railway rakes for captive power plants (CPPs), resulting in coal crunch for the aluminium industry, Aluminium Association of India said in a press statement.

“Aluminium is a metal of strategic importance and an essential commodity for diversified sectors, crucial for the nation’s economy. Aluminium smelting requires uninterrupted and high-quality power supply for production which can be met only through in-house CPPs,” it said.

The Aluminium industry CPPs have signed Fuel Supply Agreements (FSAs) with CIL and its subsidiaries for assured long-term coal supply. Any abrupt stoppage of this secured coal supply has a severe impact on the SMEs in the downstream sector resulting in increased prices of finished products and burdening end consumers.

The association said aluminium is a continuous process based highly power intensive industry wherein coal accounts for 40% of production cost.

Huge investments of Rs 1.2 lakh crore ($20 billion) have been made to double the domestic production capacity to 4.1 mtpa to cater to the country’s increasing aluminium demand.

The Indian Aluminium industry has set up 9000 Mw CPP capacity to meet its power requirement for the smelter and refinery operations and reduce dependence on power grids.

“Any power outage/or failure (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 Indian Aluminium industry is already struggling to remain globally competitive due increasing production costs in India primarily due to increased power cost over the past few years with rising coal prices, increase in various duties, cess and RPO.

Also, the high incidence of unrebated Central & State taxes and duties, constitutes 15% of aluminium production cost which is amongst the highest in the world.

The association has sought resumption of adequate coal supply against secured linkages for sustainable industry operations and allocation of railway rakes on priority for coal dispatch to the industry.

Also, any decision for stopping or curtailing secured coal supplies should not be taken on an ad-hoc basis. The CPP based industry should be given notice 2 -3 months in advance to devise mitigation plans for coal or power imports.