COAL SHORTAGE: Aluminium companies seek intervention of PMO

The ongoing V-shaped recovery of the Indian economy could receive a severe blow due to the near-calamitous situation faced by the aluminium sector. For the past seven months, the non-power sector across the country, of which aluminum 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.

The continued coal shortage being faced by India's highly power-intensive aluminium industry has now put lakhs of jobs in jeopardy. According to industry bodies, in the absence of adequate coal supply by Coal India Limited (CIL) and its subsidiaries, several aluminium plants in the country are staring at imminent closure. To highlight the severity of the crisis, the Aluminium Association of India (AAI) has written to the Prime Minister's Office (PMO) seeking an urgent and immediate resumption of coal supplies to ensure the survival of the domestic industry.

The aluminium industry and its allied 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. 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% in the last few months (Sept 2021-Jan 2022) compared to the same period last year. At the same time, coal stocks for the power sector have improved by 20% for the same reporting duration.

The aluminium industry requires uninterrupted power supply through in-house CPPs operating 24/7 for 365 days. According to 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.

To produce a single ton of aluminium needs nearly 14,500 units of continuous power. Any outage of more than 2 hours can cause the molten aluminum in the smelting pots to freeze, leading to plant shutdowns of nearly 6 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. 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 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.

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