NALCO awaits rise in global prices to resume full operations

BHUBANESWAR, India (Reuters) - National Aluminium Co Ltd (NALCO) , India's third-largest aluminium maker, may operate its sole smelter at 75 percent capacity until global prices of the metal recover or availability of cheap domestic coal increases, a company director said on Friday.

The 460,000 tonne per annum capacity plant at Angul in eastern Odisha state has been operating at reduced capacity since May 12 after its coal supplier Mahanadi Coalfields Ltd shut a mine following an accident on April 21.

The smelter has been receiving 12,000 tonnes of coal daily on an average since April 24, about three-fourths of its requirement, said S.S. Mohapatra, production director at NALCO.

NALCO does not want to operate the plant on expensive imported coal at a time when global aluminium prices at the London Metal Exchange are at their lowest level in three years, at about $1,800 a tonne, he said.

"We would have purchased imported expensive coal to resume full production but if we do that we would incur a loss of 20,000 rupees (conversion) for every tonne of aluminium," he pointed out.

NALCO has also been cutting local prices of its aluminium products in recent months in line with global trends.

"The company may review the situation and consider using imported coal to increase the output if the LME prices are up beyond $2,200 per tonne," Mohapatra added.

He said Mahanadi Coalfields may resume full coal supplies in the next 4-5 months if it meets conditions of the regulatory authority.

A.K. Tiwari, director of operations at Mahanadi Coalfields, said 94 percent of its supply commitment to NALCO during April and May had been met.

(Reporting by Jatindra Dash; Editing by Anand Basu)