Aluminium producers draw PM’s attention to coal shortage

The Aluminium Association of India (AAI) has sought the Prime Minister’s urgent intervention for immediate resumption of “sufficient” coal supplies to the domestic non-power sector. 

As per AAI, an estimated 6,233 rail rakes, representing 25 million tonnes of coal, is owed as long-pending supplies to the non-power industries.

In a letter to the PMO, AAI highlighted that the challenges faced by the non-power sector continued despite significant improvements in Coal India’s (CIL) production performance. 

“Between April and July in FY23, CIL enjoyed a growth of 24% in production over the previous year, which encouraged a growth of 10% in the total supply from its reserves. This led to a 21% increase in CIL’s supplies to the power sector,” AAI said in the letter. “However, during the same period, supplies to the non-power sector plummeted by a massive 28%. The scenario persists due to continued prioritisation of coal supplies to the power sector, to the detriment of several others,” it added.  “This is in spite of coal stocks greatly improving to over 13 days for the power sector,” it further said.

The domestic non-power sector includes steel, cement, aluminium companies which are operating captive power plants.  AAI said its members had been struggling to secure sufficient supplies of coal for their operations, with supplies continuing to plummet since August last year.

AAI said though several fuel supply agreements were already in place for meeting 100% of the requirements of the non-power sector, the overall materialisation for the non-power sector had dropped to 55%, much below the trigger level of 75%, “while rail supplies are now almost non-existent.”

“The aluminium sector is a continuous-process industry requiring a steady supply of power. Any prolonged power interruption in an aluminium smelting operation for more than 2 hours can lead to the freezing of molten aluminium within the smelting pots, which takes almost a year to rectify and optimise, causing enormous production, cost and supply disruptions,” AAI said in the letter.

“This has led the aluminium industry to collectively set up captive power plants of over 9,400 MW with an investment of over ₹50,000 crore. These captive power plants are larger in size, more efficient, located closer to coal pit heads, and could therefore better utilise the coal supplies from CIL,” it added in the letter. It said forcing its members to draw power from the grid has led to cost escalation.