The Indian aluminium producers have urged Coal India Ltd for immediate resumption of coal supplies to the metal industry as they are countering an extreme dearth of thermal coal that has initiated to impede their operations for the production of aluminium. 

On 21st September 2021, the Aluminium Association of India (AAI) in a communication to the Chairman of Coal India said: “The state-run coal miner’s ad-hoc decision for stopping/drastically curtailing coal supplies and rakes for the non-power sector (NRS) is pushing the aluminium sector into a coal crunch situation for their captive power plants (CPPs).”

The production of aluminium is a constant process-deployed highly power-intensive industry, where coal reckons for around 40% cost of aluminium production.

AAI further added: “Aluminium industry CPPs have signed fuel supply agreement (FSA) with CIL and its subsidiaries for assured long-term coal supply.”

“Any abrupt stoppage of this secured coal supply brings the industry to a grinding halt and also have a severe impact on SMEs in the downstream sector, resulting in increased prices of finished products with the burden on end consumers,” AAI wrote in the letter.

Coal India’s arm Mahanadi Coalfields (MCL) decision to limit the loading of non-power category rakes to enhance dispatches to the power sector.

The development comes after Coal India arm Mahanadi Coalfields (MCL) said it has decided to restrict the loading of non-power category rakes to augment dispatches to the power sector.

MCL forwarded a letter to the chief freight traffic manager at South East Central Railways in Bilaspur with a request: “Supply to non-power category customers be restricted to a maximum of two rakes from the sidings of its Ib Valley Coalfield to maximise dispatch to powerhouses having less than l0 days stock.”

MCL said: “This was a joint decision taken after discussions by the coal players and ministries of coal, power and railways.”

As per the industry experts, this decision is probable to impact top aluminium producers like Hindalco and Vedanta who are dependent on thermal coal.

AAI stated: “The only solution is CIL increasing the supply of coal as resorting to imports at such short notice is not feasible.”

“There are various constraints for the aluminium industry for getting power from discom network constraints to cater high power requirement of aluminium smelters,” AAI added.

However, the industry body seeks immediate rakes allocation on priority for the sector.