Coal shortage hits aluminium units

Power outages could result in shutting down of a unit for at least six months.   | Photo Credit: Reuters

The Aluminium Association of India (AAI) has written to the government asking it to stop prioritising coal supply to power plants. The exclusion of other industries that required coal was depriving them of the much-needed raw material essential for their functioning, the association said.

The government on September 22 directed State-run coal companies to first send coal rakes to power plants as they were facing acute shortage of coal.

Struggling with scrap

The issue has come at a time when the aluminium sector is already struggling with the dumping of scrap from the U.S. and China, as both countries have raised import tariffs on each other’s products. “As per recent developments, the coal supplies and rakes for CPPs (captive power plants), especially from MCL, SECL, CCL, etc, are again being diverted to power sector resulting in coal- crunch situation for aluminium sector,,” the AAI wrote in a letter to the Coal Secretary, a copy of which is with The Hindu.

“This new ad hoc decision without any advance notice has brought the industry to a standstill and industry has been left with no time to devise any mitigation plan to continue sustainable operations,” AAI added. The decision to prioritise coal supply to power plants was made during a high-level meeting on September 22 and communicated via an internal order to all the general managers of the public sector coal companies.

“In the VC meeting held on September 22, 2018 chaired by Hon’ble Minister of Railways, Coal & Finance and in view of acute shortage of coal in power plants, it has been decided to load rakes only for power plants and after meeting the requirement of power plants, CPSUs like RINL, NALCO and SAIL (RSP) are to be loaded till the crisis is over,” Mahanadi Coalfields Limited (MCL) wrote to its general managers on September 28.

“The issue with coal supply to power plants has two parts,” said Sabyasachi Majumdar, senior vice-president at ICRA.

“Electricity demand has grown strongly and so the power plants’ coal off-take has also increased. There are also some logistical issues affecting coal supply to these plants.”

The association said that aluminium smelting required uninterrupted power supply and that any power outage of two hours or more would result in the freezing of the aluminium pots and shutting down of the plant for at least six months. But, this isn’t all that is affecting the industry.

“One major issue affecting the industry is that, since the U.S. and China have levied import tariffs on each other, the other large economy they can send their aluminium scrap to is India,” a senior official of one of the largest aluminium companies in India said on condition of anonymity.

“There is wide-scale dumping happening now, which is badly hurting the domestic players.”

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Printable version | Dec 3, 2021 11:36:05 AM |

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