Aluminium industry sends SOS to CIL, says facing severe shortage of coal

• CIL has regulated coal supplies to non-power sector in order to ramp up supplies to the power sector
• 'Ad-hoc decision for stopping/drastically curtailing coal supplies and rakes for non-power sector (NRS)' is pushing the aluminium sector into a coal crunch situation, Aluminium Association of India has said

New Delhi: Aluminium manufacturers have sounded an SOS and urged state-run Coal India Ltd (CIL) to resume coal supplies to the industry immediately as they face a severe shortage of thermal coal, which has now begun to disrupt their operations. The statement comes as Coal India Ltd (CIL) has regulated coal supplies to non-power sector in order to ramp up supplies to the power sector, which is currently reeling under a shortage of coal. The government had asked Coal India Ltd to increase coal despatch to the power sector in order to ensure sufficient availability of the dry fuel for power generation at a time when the peak power demand is expected to increase.

Aluminium sector facing coal shortage: Industry body

In a letter to CIL Chairman Pramod Agarwal, industry body Aluminium Association of India (AAI) has said that the coal PSU's "ad-hoc decision for stopping/drastically curtailing coal supplies and rakes for non-power sector (NRS)" is pushing the aluminium sector into a coal crunch situation for their captive power plants (CPPs). 

Aluminium industry CPPs have signed fuel supply agreements (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 (small and medium enterprises) in the downstream sector, resulting in increased prices of finished products with the burden on end consumers," AAI wrote in the letter.

Aluminium is a continuous process-based highly power-intensive industry wherein coal accounts for around 40 percent of aluminium production cost.

MCL has restricted loading of coal rakes to non-power sector

The letter comes in the backdrop of Coal India subsidiary Mahanadi Coalfields Ltd (MCL) deciding to restrict the loading of coal rakes for the non-power sector. In a recent letter to the Chief Freight Traffic Manager at South East Central Railways in Bilaspur, the company had requested that coal supply to non-power customers be restricted to a maximum of two rakes from the sidings of its Ib Valley Coalfield in order to maximise dispatch to powerhouses having less than l0 days' stock. MCL has said that it is a joint decision taken after discussions with ministries of coal, power and railways and other stakeholders. 

'Can't import coal at such short notice'

In its letter, the aluminium industry body has stressed that the only solution is for CIL to increase coal supply to the sector as resorting to imports at such short notice is not feasible. "There are various constraints for the aluminium industry for getting power from discoms…(including) network constraints to cater high power requirement of aluminium smelters," AAI said. The organisation has also sought immediate rake allocation for the industry on priority. 

The AAI has sought allocation of coal dispatches through rakes in the proportion of 75 percent for the power sector and 25 percent for non-power sectors in line with a coal ministry circular dated February 15, 2016. "Any decision for stopping/curtailing secured coal supplies should not be taken on ad-hoc basis," it has said. The curtailment of coal supplies is likely to impact big aluminium companies like Vedanta and Hindalco and steel companies dependent on thermal coal. 

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