Indian Aluminium Producers Feeling The Squeeze From Cuts In Coal Supply: AAI

Indian Aluminium Producers Feeling The Squeeze From Cuts In Coal Supply: AAI

Indian aluminium producers are feeling the squeeze of cuts in coal supply to captive power plants. So says the Aluminium Association of India (AAI), noting the continuing rationing of the fossil fuel in favor of the coal-fired plants operated by India’s power sector.

Such rationing and the consequent shortages has forced aluminium producers to scour sources overseas, which is all but certain to come at a higher cost, the AAI warned.

“Primary aluminium producers are facing severe coal crisis. There is a severe fall in coal supply. Sufficient amount of coal is not being supplied to the captive power producers,” explained an unnamed AAI official to a domestic media outlet last week.

In addition to the scarce availability of affordable coal, the AAI revealed that the domestic aluminium trade is battling against a sharp rise in power rates from the country’s electrical grid.

Per the unnamed official, the average cost of production of one metric ton of aluminium has risen by US$237 in recent weeks due to both challenges.

“Spot power prices are getting out of hand. On Monday they touched over an eight-year high of Rs 14.08 per unit in the day,” said the AAI official.

The official went on to call upon the government to address these twin problems facing the industry. He continued by noting the significant amount of domestic coal that is being funneled to India’s independent power producers (IPPs) at the expense of aluminium producers.

The AAI official’s comments are but the latest in a steady drumbeat from the Indian aluminium industry for relief from coal rationing. Earlier this month the AAI published a letter to the Indian government challenging its decision to direct Coal India to supply coal from subsidiaries Mahanadi Coalfields Ltd (MCL) and South Eastern Coalfields Ltd (SECL) to power sector plants and not to captive plants that power aluminium operations.