Aluminium industry staring at just 3-5 days of coal inventory

With Coal India having significantly reduced coal supplies and rail rakes for captive power plants (CPPS), the domestic aluminium industry is staring at a meagre three-five days of coal inventory.

“Despite the FSA (fuel supply agreement), we face this issue of coal supply cut from Coal India almost every monsoon. The years 2018 and 2019 were no different. What is the purpose of the FSA then?” said an aluminium industry executive.

The aluminium industry’s CPPS sign FSAS with Coal India and its subsidiaries for assured long-term coal supply. Any abrupt stoppage of this secured coal supply brings the industry to a grinding halt and has a severe impact on small and medium enterprises (SMES) in the downstream sector.

This results in increased prices of finished products, burdening end consumers.

Aluminium smelting requires uninterrupted and high-quality power supply for production which can be met only through in-house CPPS.

Alongside, Aluminium Association of India (AAI) has also made representations, seeking support from Coal India, asking it to resume adequate coal supply against secured linkages for sustainable industry operations. It also called for allocating railway rakes on a priority basis for coal dispatch to the aluminium industry and allocate coal dispatches through rakes in proportion of 75 per cent (for power) and 25 per cent (nonpower), in accordance with the ministry of coal (MOC) circular for auction linkage.

The association has also requested that 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 well in advance to devise mitigation plans for coal or power imports, it said.

“It is difficult to arrange for imported coal in such a short notice. Coal mines get flooded every monsoon and supplies are cut for the aluminium industry because it has to get diverted to power plants,” said the industry official.

Aditya Birla Group company Hindalco Industries, Anil Agarwal-led Vedanta and stateowned National Aluminium Company (NALCO) are the top producers of the metal in the country. Aluminium is a continuous process-based highly power-intensive industry wherein coal accounts for 40 per cent of aluminium’s production cost.