BackNow domestic aluminum industry faces coal woes
The domestic industry says that it does not have enough fossil fuel to fire its smelters.
PremiumNew Delhi: With coal supplies being augmented for power generation plants, the impact of the shortage of the mineral is now being felt by other coal-fuelled industries such as aluminium. This comes at a time when the prices of the non-ferrous metal are high.
“The recent decisions for stoppage of secured coal supplies and rakes for non-power sector is detrimental for Aluminum industry and will jeopardize the sustainability as these continuous process-based plants are not designed for adhoc shut down and start of operations," lobby group Aluminium Association of India wrote in a letter to state-run Coal India Ltd (CIL) on Wednesday.
While aluminium prices have risen on the London Metal Exchange (LME), the domestic industry says that it does not have enough fossil fuel to fire its smelters. This assumes significance given that coal accounts for 40% of the production cost.
“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 6 months rendering heavy losses and restart expenses, and once restarted will take almost a year to get desired metal purity," the letter added.
Even as a shift is happening towards meeting environment, sustainability and governance (ESG) compliance, country’s such as India will continue to depend on coal to form a major chunk of its energy mix. India has the world’s fourth largest reserves and is the second-largest producer of coal.
“Aluminium smelting requires uninterrupted quality power supply for production which can be met only through in-house CPPs which operate 24/7 and 365 days, and have signed FSA (Fuel Supply Agreement) with CIL and its subsidiaries for assured long term coal supply," the letter added.
India’s demand for electricity is growing with the country’s daily electricity consumption having crossed 4 billion units (BU) daily, with the electricity consumption during August-September increased from 106.6 BU per month in 2019 (normal non covid year) to 124.2 BU per month in 2021. This has resulted in an 18% spike in coal consumption during August-September compared to the corresponding period in 2019.
“The entire industry has been brought to a standstill and left with no time to devise any mitigation plan to continue sustainable operations. The coal stocks of operational plants have depleted to alarmingly low critical stocks of 2-3 days, from the level as high as 15 days in the month of April," the letter added.
CIL is to deliver an additional 200,000 tonnes of coal every day through 60 rakes so that total fossil fuel supplies to power plants get ramped up to 2.1 mt per day starting 20 October, according to the plans discussed at the PMO on Tuesday. CIL’s annual production target is 670 mt for this fiscal, while coal offtake is expected to be 740 mt.
With global shift to green energy to address growing environmental concerns, the Indian government is trying to harness coal reserves within the next three decades.
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