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Indian Aluminium Industry at Standstill After Coal India Stops Supplies, Prices Shoot

State-run Coal India Ltd. on 14th October 2021 said it had temporarily stopped supply of Coal to non-power customers. Potentially hurting metal manufacturing companies like Aluminium, Steel etc. and  other industries which are dependent on captive power plants for their energy needs.

Coal India Ltd CIL logo

This move comes amid the Coal supply shortage in the country, making India face one of its worst power supply deficits in years.

Coal India said in a statement that it had stopped all online auctions of Coal except those meant for independent power plants.

The statement further read “This is only a temporary prioritisation, in the interest of the Nation, to tide over the low coal stock situation at the stressed power plants and scale up supplies to them”.

Coal Supply Shortage to Effect Metal Prices, Aluminium Industry to be Worst Hit

India is the World’s second largest Coal producer, but a surge in power demand post Covid-lockdown stressed Coal supplies from state-run Coal India Ltd., the World’s biggest Coal miner.

This supply shortage had already instilled low production and price hike fears among the metal refining industry especially Aluminium which is a high energy dependent industry, and relies mostly on it’s captive plants for power supply. Now this complete supply ban to their plants could force many Aluminium plants to close operations.

The Aluminium Association of India (AAI), apex body of Aluminium manufacturers in India has sought immediate resumption of full supplies.

AAI in a statement said “Coal India’s move was detrimental to the industry which needs an uninterrupted supply of power.”

It further said several Aluminium plants are already operating at a low capacity as their Coal stocks have depleted to 2-3 days worth from about 15 days in April.

The Association said “The entire industry has been brought to a stand still and left with no time to devise any mitigation plan to continue sustainable operations” adding that Coal accounts for about 40% of the industry’s production costs.

The prices of Aluminium has also increased drastically on LME from USD 2,857 on 1st October 2021 to USD 3,171 on 15th October 2021. Government needs to devise a strategy for metal industries too as any disruption in their production will add to price rise and hence inflation.