The aluminium industry has sent an SOS to Coal India, demanding the immediate resumption of supplies for survival of the industry that is facing an ‘alarming’ situation following coal shortage.
“The current acute coal crunch has created an immensely precarious situation, majorly for the highly power-intensive industries like aluminium wherein coal accounts for about 40% of the production cost,” Aluminium Association of India president Rahul Sharma wrote in a letter to Coal India Ltd. (CIL) CMD Pramod Agrawal.
“Aluminium smelting requires uninterrupted quality power supply for production which can be met only through in-house captive power plants (CPPs) which operate 24/7 and 365 days, and have signed fuel-supply agreement with CIL and its subsidiaries for assured long term coal supply,” he said.
The group noted that the recent decision to stop secured supplies and rakes for the non-power sector was detrimental for the industry and would jeopardise sustainability as these continuous process based plants were not designed for ad hoc shut down and start of operations.
“Any power outage/failure (2 hours or more) results in freezing of molten aluminium in the pots which will lead to shutting down of plant for at least six months rendering heavy losses and restart expenses, and once restarted will take almost a year to get desired metal purity.”
The industry had been brought to a standstill and left with no time to devise a mitigation plan.
“The coal stocks of operational plants have depleted to alarmingly low critical stocks of 2-3 days and plants are forced to operate at reduced power generation with huge risk of closure and threat of loss of huge employment and deterioration of MSMEs,” it said, adding the ongoing global aluminium shortage due to supply-demand mismatch was also adding to the woes.
The group said import sourcing was completely unviable in this emergency situation to meet coal requirements on account of the exponential rise in global coal prices as well as ocean freight rates, which were at all-time high.
The industry group has sought immediate resumption of coal supply for CPPs against secured linkages for economically viable industry operations. It has also sought “rakes allocation on priority for optimum coal materialisation (and) expediting coal linkage/exclusive e-auctions for CPP sub-sector through rail mode at the earliest to provide some relief for the consumers.”