AAI writes to PMO on alarming situation for aluminium industry

New Delhi, March 2 Aluminium Association of India (AAI) has written to the Prime Minister's Office (PMO) on the alarming situation for the highly power intensive aluminium industry due to critical coal shortage.

To avoid closure of Aluminium industry and save lakhs of livelihoods and SMEs, AAI has requested PMO intervention to normalise the precarious situation with immediate resumption of coal and rakes supply for highly power intensive Aluminium industry CPPs, and earmarking at least 25-30 coal rakes per day for economically viable and sustainable industry operations.

AAI has sought immediate support for resumption of uninterrupted coal supplies and rakes for highly power intensive Aluminium industry Captive Power Plants (CPPs), which are facing alarmingly depleted coal stocks of 3-4 days as compared to the prescribed level of over 15 days.

With untiring efforts of Coal India and subsidiaries, the Power Sector situation has improved significantly with 9-10 days' stocks from as low as 3-4 days in August-September, 2021. However, this has come at an enormous cost to the Non-Power Sector and the worst impacted are the CPPs of the Aluminium industry, which continues to struggle for getting uninterrupted coal supplies resulting a backlog of over 1,200 rakes.

Most of the available coal and rakes are being diverted away to the Power Sector as "priority coal supplies", while the CPPs are starving and facing acute coal crunch. The coal supply to non-power sector has been significantly declined by 18 per cent for non-power sector over September-January period, AAI said in the letter to the PMO.

Although, the overall coal supply from CIL has started improving currently, still the dispatch from major CIL subsidiaries like MCL, SECL, etc., is not sufficient to cater the requirement of non-power sector / CPPs and needs to be ramped up to cater requirement of industry for continued sustainable operations.

The coal demand for these CPPs cannot be catered with imports, as even usage of imported coal is not feasible technically as well as economically, and logistics constraints are also huge challenge for transportation of such large quantity leading to congestion of rail network and ports infrastructure, AAI said.

The country's booming manufacturing sector also stares at a possible derailment if the present situation is not addressed immediately and may lead to collapse of domestic industry and associated SMEs.

Further, the shortage of raw materials and Aluminium inputs to other key industries will lead increased imports and loss of export earnings.

With the revival of economy and post-pandemic industrial activity, the CPP-based industries are highly dependent on uninterrupted coal supplies, which is vital for the sustainable operations and cost-competitiveness of power intensive industries vis-a-vis global players. Any production curtailment by this sector will have cascading effect on consumption and downstream supply chain, thereby adversely impacting the nation's GDP growth, AAI said.