Mumbai: India’s biggest state-run producer of aluminium, National Aluminium Co. Ltd, or Nalco, may be forced to shut down its 1.6 million tonnes (mt) alumina refinery in a few days because of a coalshortage.
Daily output at the Damanjodi plant in eastern Orissa state has halved to about 2,000 tonnes since 26 July, said chairman C.R. Pradhan in a phone interview. The refinery burns 2,500 tonnes of coal everyday to make 4,500 tonnes of alumina, he said.
Restricted supply: Nalco chairman C.R. Pradhan. He says government was getting more stringent with coal allocation to metal companies
This is the second time in as many months that Nalco has been forced to cut production because of a coal shortage, mirroring problems faced by its bigger Asian rivals.
Aluminium Corp. of China Ltd and 19 Chinese producers on 10 July agreed to reduce output by as much as 10% because of a nationwide power deficit.
“The situation is serious and our coal reserves have dwindled to a near-zero position,” Pradhan said. He declined to say how the company plans to overcome the shortfall.
Thermal coal prices have surged fivefold in the past five years because of Asian demand and infrastructure bottlenecks in Australia, the world’s biggest supplier of the fuel. Companies including Xstrata Plc. won a 125% gain in contract prices in the year that started 1 April to $125 a tonne.
Nalco’s aluminium output declined 30% for six days in June after supplies from Coal India Ltd, a state-run monopoly, to its 960MW plant were disrupted by a strike.
The shortfall may persist because the government has said it will give companies building large electricity plants priority access to coal pits to overcome shortages of as much as 15% during peak hours.
“Coal is a constant problem and with the government getting more stringent with coal allocation to metal companies, we may have harder days ahead,” Pradhan said.
Nalco plans to import 100,000 tonnes of the fuel to prevent another disruption at the power plant, Pradhan said on 17 July.
The company, which makes 345,000 tonnes of aluminium and 1.6mt of alumina annually, is developing a 2 million tonnes thermal coal mine to secure fuel supplies. The company requires 14,000 tonnes of the fuel daily to run its power plant. Electricity accounts for about 30% of costs for aluminium smelters.