Covid-19: Nalco's Angul smelter runs smoothly with 3 months' stock of coal

After intermittent disruption in coal despatches due to sporadic stirs at mines under the command area of Mahanadi Coalfields Ltd, supply position improved substantially post monsoons

National Aluminium Company (Nalco) has overcome supply disruptions with adequate coal stocks piled up at the site of its smelting complex at Angul, some 160 km from here.

The 0.46 million tonne capacity aluminium smelter of the state-owned producer is carrying on uninterrupted operations, thanks to the coal inventory which is enough to last for three months. After phases of intermittent disruption in coal despatches due to sporadic stirs at mines under the command area of Mahanadi Coalfields Ltd (MCL), a Coal India Ltd (CIL) subsidiary, coal supply position improved substantially post monsoons. Coal is a critical input in aluminium smelting and accounts for 40-45 per cent of metal production costs. Through Q2 and Q3 of this fiscal, Nalco as well as other coal consuming industries in Odisha had to wrestle with coal crunch. Nalco was even forced to source expensive power from the state grid to keep its smelter operative, a step that nibbled at its margins, contributing to its rare back-to-back losses in Q2 and Q3.

The streamlining of coal supplies has enabled navratna producer Nalco to tide over supply glitches in the wake of outbreak of global pandemic Covid-19. Prime Minister Narendra Modi has declared a nationwide lockdown till April 14, counselling people to stay indoors to stave off the spread of the deadly contagion. Odisha, too, has announced the lockdown for all its 30 districts and pledged to build 1000-bed hospitals for exclusive treatment of patients testing positive for Covid-19.

Though the government has eased its restraining orders for operative iron ore, chromite and coal mines and process plants, lack of ample availability of trucks and manpower as well as curbs on inter-state movement of freight has hurt supplies of critical materials. One industry source has pegged that transportation of raw materials in Odisha has diminished by half since the announcement of the lockdown.

“Adequate stockpiling of coal has helped us to run our smelter without ado. Moreover, we are also operating our alumina refinery at Damanjodi at its rated capacity. To run both plants, we have the permits of the local authorities”, said a company source.

Nalco posted loss before taxes of Rs 53.22 crore for the quarter ended December 31, 2019 as against a profit before tax of Rs 470.05 crore it registered in the comparable period of FY19.

The CPSE’s (central public sector enterprise) net loss (after taxes) stood at Rs 33.96 crore in Q3 of FY20, the company's steepest since it started commercial operations. In the same period of FY19, the navratna company had recorded Rs 301.76 crore net profit.

The aluminium maker’s Q2 and Q3 performance was affected by the sharp increase in power & fuel costs as a result of lower coal supplies from the MCL. Nalco is dependent on MCL to source coal for the Angul captive power plant. Supplies from Mahanadi, however, got disturbed from Q2 of FY20 due to heavy monsoon and labor strikes, which required Nalco to purchase power externally and curtail aluminum production. Unlike its peers Hindalco Industries and Vedanta Ltd, Nalco doesn’t fall back on imported coal supplies.