Coal paucity may force Nalco’s alumina refinery to shut down

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New Delhi, Jul 29: India’s second largest aluminum producer—National Aluminium Co (Nalco)— may be forced to shut down its alumina refinery in Orissa within a few days due to acute paucity of coal. “We have received no coal from Mahanadi Coalfields Ltd (MCL) for the past seven days. Though we have managed to acquire 3,000 tonne of coal via e-auction route, it will only last for next two days,” said Nalco CMD CR Pradahan. He pointed out that the quality of coal received was very poor and contained stones too.

Daily output at the Damanjodi refinery has more plummeted to 2,000 tonne in the last few days. The Nalco refinery uses about 3,000 tonne of coal everyday to produce 4,500 tonne of alumina. “At present only one boiler is running with 1,000 tonne capacity reducing the production capacity to half. The present scarcity is on account of power stations being given first preference for coal and the directive to meet 100% requirement of the power plants,” Pradhan said.

The Navratna company is currently implementing its expansion plans and has been repeatedly hit by coal shortages. In June the company faced similar problems with its production having dipped by about 30%.

Earlier last year, the mines ministry has sought Prime Minister Manmohan Singh’s intervention in bailing out aluminum giant after it had to close down two of its captive power plants and talked of laying off its employees.

The company had recently entered into the fuel supply agreement (FSA) with Coal India Ltd (CIL). This too, however, failed to ensure regular availability of coal. Under the FSA, Nalco is assured 50% of the contract volume below which the trigger level would set it.

Pradhan, however, was not very enthusiastic about the system and has sought the ministry of mines intervention to resolve the issue. “Today we have got an assurance that coal supplies will normalise within a few days,” Pradhan said.