Ministry panel favours extension of Nalco's coal linkage for three years

The Standing Linkage Committee (long-term) of the union ministry of coal has recommended the extension of bridge coal linkage for National Aluminium Company (Nalco). The coal linkage is recommended for three years considering the projected delays in captive mining from Nalco's Utkal-D and Utkal-E coal blocks.

As per the revised mining plan submitted by Nalco, approval to open the mine is scheduled by March 2020. Production from the Utkal-D coal mine is expected to start from March 2021. In the first year of operations, coal output is envisaged at one million tonne- this will be ramped up to 1.5 million tonne and two million tonne in the second and third year respectively. The existing bridge linkage for Nalco's ninth and 10th units of Captive Power Plant (CPP), each of 120 Mw capacity that feed the company's Angul smelter, lapses on May 1, 2019.

Nalco had asked for bridge linkage for 890,000 tonnes of coal per annum. The navratna PSU could not stick to its original timeline to commence coal production due to constraints faced in obtaining environment and forest clearances, non-transfer of railway siding land from Odisha Industrial Infrastructure Development Corporation (Idco) to Nalco, non-mutation of R&R (rehabilitation & resettlement) colony of Utkal-D in favour of Nalco and pending approval of reduction of mining lease areas submitted by the company.

The Union mines ministry opined that the grounds furnished by Nalco for delay in start of captive coal mining are beyond normal. The ministry at a recent meeting of the  SLC advocated extension of bridge linkage to Nalco till the Utkal-D coal block is operational.

The SLC concurred with the ministry's views, recommending extending bridge linkage to Nalco's ninth and 10th units of CPP up to March 2021.

Nalco feels captive coal production could be a game changer as it will pare aluminium smelting costs by $500 per tonne. Presently, the company's aluminium making cost hovers around $2000 a tonne. Typically, power as an input in aluminium making contributes 40-45 per cent of the production cost and the steep cost of electricity was a dampener in Nalco's aluminium operations.