Aluminum smelters search for cheap power sources

 

 

Indian aluminum makers with linkages to coal mines but not ownership of coal blocks have time and again experienced irregular supplies, especially during monsoon months, forcing them to import and also buy the fuel through e auction at a hefty premium.

 

 

Mr SK Roongta now heading Vedanta group’s aluminum business after doing a turnaround at SAIL and launching its INR 72,000 crore expansion program sees irony in the country’s smelters finding an issue with coal supply and the escalating cost of energy when the country is counted among the leading owners of this mineral resource. At last count, India’s coal resources are approximately 277 billion tonnes including 66.3 billion tonnes in Orissa which will have an increasing share of our rapidly growing aluminum smelting capacity.

 

 

Mr Roongta said that being so richly endowed with the resource, aluminum smelters should ideally find coal a low-cost commodity. But, because of the widening gap between demand and supply, we perforce have to import the fuel at a high cost. But coal imports could be restricted by promoting mining of coal for captive use like by aluminum smelters, and also through merchant mining. Policies should facilitate allocation of coal blocks through transparent bidding. Our port, rail and road infrastructure is already stretched and moving imported coal from ports to merchant and captive thermal stations is a logistical challenge.

 

 

He said that being the repository of the world’s fifth largest bauxite reserves and 10% of coal reserves remains one of the more attractive centres to make aluminum. When you have coal and bauxite in abundance, you as the producer of alumina and aluminum can stay at the lowest end of the cost curve. In fact, the major portion of the aluminum industry here harnesses the resources in a way to be found in the lowest cost quartile of global production costs. Local aluminum making cost is to come down further, provided companies here come to own coal blocks to feed their captive power complexes with low cost fuel.

 

 

Aluminum groups here have come to realize that risk is involved in their building new smelters without first ensuring allotment of coal blocks. Balco in which Vedanta has 51% ownership through group company Sterlite is at an advanced stage of commissioning a new 325,000 tonne smelter at Korba to be backed by 1,200 MW captive power station.

 

 

The operation of the new smelter Balco is now running 245,000 tonne smelter should be setting a new benchmark in aluminum making cost here, since coal for the power complex will be available from captive mines. For its three new aluminum ventures of 359,000 tonnes each in Orissa, Madhya Pradesh and Jharkhand, Hindalco has first underwritten coal supplies for captive power complexes through mining JV with the likes of Tata Power and Essar Power. Nalco is keen to build 500,000 tonne smelter in Orissa. But it will commit the investment, provided it gets a coal block.

 

 

Mr Roongta said that “Rapid urbanization and growing use of the white metal in electricity, transport, packaging and construction will justify all the new aluminum capacity creation. Our per capita aluminum consumption at 1.5 kg is too low. Encouragingly however Indian aluminum demand is growing at a double-digit rate. Vedanta is committed to a sustainable nature and people-friendly growth of the entire aluminum industry value chain.”