Infra hurdles & growth needs

It is not a day too soon that Prime Minister Manmohan Singh felt the need to involve himself in sorting ministerial differences on implementation of major infrastructure and industry-related projects. With such projects not getting commissioned on schedule, the 12th Plan (2012-17) growth target of nine per cent annually will remain elusive.

Delays in implementation of projects of size are of national concern. The Aditya Birla Group’s flagship Hindalco Industries is simultaneously executing five new projects, three smelters and two alumina refineries. All are located in remote parts, where bauxite and coal are found. On their completion, the company will have annual alumina refining capacity of six mt and aluminium smelting capacity of 1.7 mt. The country will need all this extra aluminium from Hindalco and whatever the growth plans of National Aluminium Company (Nalco) and Vedanta would generate. This is because demand for the metal will continue to grow at a double digit rate for many years.

The immediate trigger for Hindalco’s complaint is delay in securing forest clearances for opening mines in the Mahan coal block in Madhya Pradesh. Fuel for the 1,000 Mw captive power plant (CPP) of the 359,000-tonne smelter of the Mahan Aluminium project is to be drawn from Mahan coal mines, to be run as an equally owned joint venture between Hindalco and Essar. As it stands, the Mahan smelter and CPP would be up and running well ahead of the mines opening (assuming mandatory clearances will be available).Till such time the mines start operating at full capacity, the CPP will need coal from external sources.That will raise power cost, impinging on smelter operation margins. Power being the most significant cost factor in aluminium production, smelters across the world seek space close to coal deposits or where gas-based or hydel power is available cheap.