Aluminium industry body urges PMO to ensure coal supply on priority

The Aluminium Association of India (AAI) on Wednesday said that non-power industries, including aluminium companies, has been "plagued" by a protracted coal shortage for the past seven months and urged the Prime Minister's Office (PMO) to ensure on priority a supply of at least 25-30 coal rakes per day to the sector.

The Association warned that disruptions in the aluminium sector's production will have a negative effect on India's industrial landscape.

To highlight the severity of the crisis, the AAI has written to the Prime Minister's Office seeking an urgent and immediate resumption of coal supplies to ensure the survival of the domestic industry.

The ongoing V-shaped recovery of the Indian economy could receive a severe blow due to the situation faced by the aluminium sector, it said.

"For the past seven months, the non-power sector across the country, of which aluminium companies are a key part, has been plagued by a protracted coal shortage.

"As the most widely used non-ferrous metal globally and a critical input for several core industries in India, any disruptions in the sector's production will undoubtedly have a negative effect across the country's industrial landscape," AAI wrote to the Prime Minister's Office (PMO).

The continued coal shortage being faced by the country's highly power-intensive aluminium industry has now put lakhs of jobs in jeopardy.

"With CIL continuing to give unjustifiable priority to the power sector despite improvement in coal stocks, the supplies to the non-power sector have declined by a staggering 18.2 per cent in the last few months (September 2021-January 2022) compared to the same period last year," the AAI said.

It added that during the same period, coal stocks for the power sector have improved by 20 per cent.

According to industry bodies, in the absence of adequate coal supply by Coal India Ltd (CIL) and its subsidiaries, several aluminium plants in the country are staring at imminent closure.

The aluminium industry and its allied small and medium enterprises (SMEs) in India provide jobs to lakhs of people.

With the industry's captive power plants (CPPs) left with critically low coal stocks of only 3-4 days as against the prescribed level of over 15 days, there is a possibility that those employed at the plants and the several thousand ancillary and downstream industries may struggle to remain gainfully employed in the coming days.

The aluminium industry requires an uninterrupted power supply through in-house CPPs operating round-the-clock for 365 days.

According to the AAI, the industry has invested over Rs 50,000 crore to set up CPPs near the coal mine pit heads that are designed to operate on domestic coal grades from these mines.

Therefore, the coal demand for these CPPs cannot be suitably met simply through imports, due to both economic and technological constraints.

The logistics involved in sourcing coal is also prohibitive as the large quantities could lead to the congestions of the rail networks and ports in India.

Producing a single tonne of aluminium needs nearly 14,500 units of continuous power.

Any outage of more than two hours can cause the molten aluminium in the smelting pots to freeze, leading to plant shutdowns of nearly six months and a further year to begin generating the metal at the desired purity levels again.

"With CPPs already facing a backlog of over 1200 rakes, the AAI has urged the PMO to ensure on priority a supply of at least 25-30 coal rakes per day to the sector," it said.

The current situation threatens to stop the country's booming manufacturing sector in its tracks as the shortage of raw materials and aluminium inputs to other key industries may lead to increased imports and a massive loss in export earnings.

With the revival of the economy in the post-pandemic phase, CPP-dependent industries cannot manage without uninterrupted coal supplies, the Association said.

It added that the power sector's situation has now improved significantly to 9-10 days of coal stocks. "There is no feasible reason why CIL and its subsidiaries should not increase supplies to the non-power sector to resolve the challenge phase it is undergoing.