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Aluminium makers send SOS to PMO over coal shortage


NEW DELHI: Aluminium manufacturers on Wednesday sent an SOS to the PMO (Prime Minister’s Office) for resumption of coal supply, saying shortage has pushed the industry to the brink which could adversely impact some 5,000 MSMEs (medium and small scale enterprises) in the downstream sector at a time they are coming out of the pandemic pangs and hit over 10 lakh jobs. Coal stocks at aluminium plants turned critical after the government in August halved the supply from Coal India and further pared it to just 10% as rakes were diverted to shore up inventories at power plants. Coal supply was curtailed in spite of aluminium production being declared as a public utility service as it is of strategic importance and an essential commodity for diversified sectors that are crucial for the economy. The shortage is now putting at risk investments of Rs 1.4 lakh crore, or $20 billion, the industry made to double the domestic capacity to over 4 million tonne per annum – or second largest capacity in the world. Given the dire situation, the Aluminium Association of India, representing the entire gamut of producers, in its submission to the PMO explained that coal was crucial since there was no alternative to captive power as aluminium production is a continuous process requiring 15 times more energy than steel and 145 times more than cement. “Any power failure of more than two hours would result in the shutdown of plants for at least six months and render heavy losses, restart expenses and prolonged metal impurity. The industry invested Rs 50,000 crore for setting up 9.4 GW CPPs which is 6% of the country’s total demand and 123% of the total energy traded on the Indian Energy Exchange (7.6 GW in 2021). Therefore, technically it is not feasible to get this massive power from the national grid or any other alternate source,” the association said. By the association’s reckoning, a tonne of aluminium production requires 14,500 units of continuous power against 1,000 units for making a tonne of steel and about 100 units for cement. Ironically though, in spite of the curtailment to the aluminium industry, about 10% of the 209 GW (gigawatts) coal-based generation capacity in the country is still vulnerable to outages amid surging demand for coal, CRISIL Ratings said on Wednesday. Despite a 10% dip in power demand due to recent rains, coal shortage persists with inventories for about five days. Since these plants do not have supply linkages and coal prices remain elevated in the open or import market, these plants could look at backing down as operating cost outweighs revenue, the agency said.


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