According to India’s leading business association, a severe coal shortage has put aluminium companies in a “precarious situation” as fuel reserves are at dangerously low levels.
B.K. Bhatia, additional secretary general of the Federation of Indian Mineral Industries, stated over the phone that the majority of aluminium enterprises, which have their own power generation plants, have stocks for only one to two days. While aluminium output hasn’t been impacted thus far, he warned that if coal supplies don’t improve by the end of the month, production may be reduced.
India is experiencing a power crisis as a result of decreasing coal supply because the country depends on the fuel to generate around 70% of its electricity. According to the Aluminium Association of India, a power outage lasting longer than two hours can cause the molten metal in the potline to solidify, requiring the smelting unit to shut down for at least six months.
Since the key coal reserves at aluminum and steel factories are “abysmally low,” FIMI has written to India’s coal ministry requesting that supplies be restored as quickly as possible. According to the report, the power plants must lower their output and run a “great risk” of shutting down.
According to the letter, the limited supply has “nearly brought the business to a stop and left with little time to create any mitigating plan to continue sustainable operations.”
The combined annual capacity of India’s aluminum producers, which includes Vedanta Ltd., Hindalco Industries Ltd., and the government-run National Aluminium Co., is over 4 million tons of the basic metal.
According to the report, importing coal—which accounts for around 35% of the cost of making the metal—would not be a practical way to make up the difference because of the exponential rise in global prices and the record-high cost of ocean freight.