Aluminium industry writes to the PMO about deficit of coal supply; AAI demands resumption in allocation

The Aluminium Association of India (AAI) has reportedly drawn the attention of the Prime Minister’s Office (PMO) to the critical coal shortage situation. The government had decided to allocate more coal-bearing railway rakes to the electricity generation sector which in turn has affected the power-intensive aluminium industry.

In a letter written to the PM’s Office, the aluminium industry has demanded the resumption of regular fuel supply as per the contracted quantity and also complained about the reduction of supplies without prior notifications.

AAI points out that coal rakes allocated to the segment has not been more than 15 per cent since July 2017. In June 2018, it was less than 9 per cent. Out of 63 million tonnes of requirement, the aluminium sector had reportedly received 40 million tonnes in FY 2018. Captive power consumers, who mainly run their generation units to cater to own industrial production demand, have fuel supply agreements contracted with Coal India. In 2016, the coal ministry had clarified that non-power users should get 25 per cent of the fuel.

About 40 per cent of the aluminium production cost goes for power. To produce one tonne of the refined metal, a smelter requires some 14,500 units of electricity that can be generated from burning 11.7 tonnes of coal. The aluminium industry has set up about 9,500 MW of captive power capacity.