The Indian state-owned National Aluminium Company (Nalco), has overcome the supply interruptions with sufficient coal stocks stacked up at the site of its smelting complex at Angul.
Nalco’s aluminium smelter can produce 0.46 million tonnes and it is carrying out its uninterrupted operations. The appreciation for coal inventory which can last for three months.
The intermittent disruptions phases of coal despatches are due to sporadic stirs at mines under the command area of Mahanadi Coalfields Ltd (MCL), a Coal India Ltd (CIL) subsidiary; coal supply position enhanced substantially post monsoons. Coal is a critical input in aluminium smelting and accounts for 40-45% of metal production costs.
The all-through Q2 and Q3 of this current fiscal year, Nalco as well as other coal consuming industries in Odisha had to wrestle with coal crunch. Nalco was even imposed to source expensive power from the state grid to keep its smelter operative, a step that nibbled at its margins, contributing to its rare back-to-back losses in Q2 and Q3.
The streamlining of coal supplies has enabled “navratna” producer Nalco to tide over supply glitches in the wake of the outbreak of global pandemic Covid-19.
The Prime Minister of India Narendra Modi has declared a nationwide lockdown till 14th April ’20, counselling people to stay indoors to stave off the spread of the deadly contagion. Odisha, too, has announced the lockdown for all its 30 districts and pledged to build 1000-bed hospitals for exclusive treatment of patients testing positive for Covid-19.
The government has also eased its restraining orders for operative iron ore, chromite and coal mines and process plants, lack of ample availability of trucks and manpower as well as curbs on inter-state movement of freight has hurt supplies of critical materials. One industry source has pegged that transportation of raw materials in Odisha has diminished by half since the announcement of the lockdown.
A Nalco official said: “Adequate stockpiling of coal has helped us to run our smelter without ado. Moreover, we are also operating our alumina refinery at Damanjodi at its rated capacity. To run both plants, we have the permits of the local authorities.”
Nalco posted a loss before taxes of INR 53.22 crore for the quarter ended December 31, 2019, as against a profit before tax of INR 470.05 crore it registered in the comparable period of FY19.
Nalco’s Q2 and Q3 performance was affected by the rapid increase in power & fuel costs as a result of lower coal supplies from the MCL. Nalco is dependent on MCL to source coal for the Angul captive power plant. Supplies from Mahanadi, however, got disturbed from Q2 of FY20 due to heavy monsoon and labour strikes, which required Nalco to purchase power externally and curtail aluminium production.
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