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Rediff.com  » Business » Nalco likely to shut down Orissa facility

Nalco likely to shut down Orissa facility

July 30, 2008 14:21 IST

National Aluminium Co (Nalco), a leading producer of alumina/ aluminium in the country, is facing a major coal shortage.

Currently, the company is running alumina refinery at half its capacity and may be forced to shut down the unit in a few days if the situation does not improve.

The company is incurring a daily cash loss of Rs 2.5 crore due to slashing of production.

"If the situation continues, the company may completely shut down the 1.6- million-tonne alumina refinery located at Damanjodi in south Orissa in a few days," said an official of the company.

The unit, on an average, consumes 2,500 tonnes of coal to generate heat for the refining process. But for last ten days, there is no supply of coal to the unit from the linked mines in Talcher and Brajarajnagar under Mahanadi Coalfields (MCL), which has precipitated the crisis.

The company has scaled down its refinery operations by more than 50 per cent. From a daily average production of 4,500 tonnes, it is now producing only 2,000 tonnes.

Similarly, its coal stock has dwindled from a confortable 60,000 tonnes a couple of months back to a low of 1,500 tonnes. The unit, at its present reduced capacity, consumes around 800-900 tonnes coal per day. This means, there is less than two days stock which raised the prospect of the unit coming to a grinding halt anytime.

Meanwhile, sources said, a railway rake carrying coal from Chhattisgarh has left for Damanjodi and may result in the stock going up marginally to 4,000 tonnes.

According to sources, Nalco's alumina refinery gets 75 per cent of its coal requirement from two linked mines of MCL, while the rest is sourced from open market through tender and auction.

Factors, such as less production at MCL's linked mines, unavailability of railway rakes and power utilities getting preference for coal supplies as per the direction of the Union government have resulted in the company receiving less than its normal coal supply since April.

It may be noted that the company's smelter and captive power plant at Angul was pushed to a similar crisis last month due to coal shortage arising out of strike by contractual truck drivers engaged by MCL.

The company was then forced to cut down aluminium production by about 30 per cent from its daily average output of 900 tonnes, resulting in huge losses to the company.

BS Reporter in Bhubaneswar
Source: