Government restores coal supply to Nalco, averts refinery closure

Mumbai: The government is understood to have bailed out National Aluminium Company (Nalco), whose 1.6 million tonne alumina refinery in Orissa was on the verge of closure due to an acute shortage of coal.

The coal ministry is reported to have arranged regular supplies from the Mahanadi Coalfield (MCL) to the alumina unit so that Nalco gets over the problem.

Nalco, meanwhile, has arranged 7,000 tonnes of coal from a unit of Coal India Limited. That will last for three days. Nalco needs around 2,500 tonnes of coal daily to produce 4,500 tonnes of alumina.
 
Alumina out put at Nalco's Damanjodi plant in Orissa has halved to about 2,000 tonnes since 26 July.

The coal ministry had, on 21 July asked MCL to supply all its coal to power utilities in South India, where there was an acute shortage of power, which led to the drying up of coal supply to the Nalco unit.

MCL was dispatching 25 rakes (of 3,500 tonnes each) of coal daily to the power utilities in the South. This has now been reduced to 21 rakes, the rest being allocated to other industries, including Nalco.

This is a second time in as many months that Nalco has been forced to cut production because of a coal shortage.

Nalco produces 345,000 tonnes of aluminum and 1.6 million tonnes of alumina annually. It requires 14,000 tonnes of coal daily to fire its 960 megawatt power plant. Electricity accounts for about 30 per cent of costs for aluminum smelters.

Aluminum smelters in many Asian countries have been facing similar problems. Aluminium Corporation of China Limited and 19 other Chinese producers are reported to have cut production by as much as 10 per cent because of power shortage.