AAI seeks a rise in coal supply for aluminium sector

In its representation to the ministry, AAI said that while the efforts taken by the government and Coal India to revive coal production and ease coal supply crisis for the power sector are commendable, it has, on the other hand adversely affected the captive power plants (CPP)-based industry and the worst impacted is the Indian aluminium industry.

"The aluminium industry continues to see depleting coal stocks of only 3-4 days, abysmally low compared to the prescribed level of 15 days for the sector. Struggling to cope with this prolonged crisis since the second quarter of this fiscal year, the AAI has now sought the Ministry's support to ensure adequate supplies to the CPPs by earmarking at least 25-30 coal rakes per day to ensure viable industry operations," the association said in a statement issued here.

According to AAI, since August 2021, the non-regulated sector has been facing uncertainties in securing sufficient coal rakes for continued operations, with supplies limited to just 40-50% of the required coal.

"This has led to a backlog of over 6000 coal rakes as most of the available coal and rakes are being diverted to the power sector as 'priority coal supplies', even despite their coal inventory situation drastically improving," the association said.

Stating that the need for the CPPs is especially urgent, given that aluminium production is a continuous process that requires huge volumes of uninterrupted quality power supply, AAI said, "This quantum can only be met through the in-house CPPs set up by all the aluminium smelters plants to meet this specific requirement."

The industry has established captive power plants of nearly 9,400 MW capacity, comprising 34 per cent of the cumulative thermal CPPs capacity domestically, to supply continuous power for aluminium operations.

"Even though the government has reiterated that there is now an improved availability of coal in the country overall, the non-availability of rakes for the non-regulated sectors remains a major concern. Curtailing coal supplies to CPPs has directly resulted in a coal crunch situation for the aluminium sector. Also, the crisis further aggravates with the last-minute cancellation of coal auctions for non-regulated sectors, giving no relief for the domestic industry to secure coal for manufacturing and CPP-based industries," it said.

AAI further said that with the ongoing revival of the economy and increased post-pandemic industrial activity, the CPP-based industries are highly dependent on uninterrupted coal supplies which is vital for sustainable operations and the continued cost-competitiveness of power intensive industries vis-à-vis global players.

"Any production curtailment by this sector will have a cascading effect on consumption and downstream supply chain, thereby adversely impacting the nation's GDP growth," the association added.