NALCO may cut output by 25 pct due to coal shortages - director

By Jatindra Dash

BHUBANESWAR, India (Reuters) - NALCO may have to cut its daily aluminium output by 25 percent due to coal supply shortages caused by an accident at a mine that supplies fuel to the state-run aluminium producer, a company director said on Sunday.

The company has received just 10,000 tonnes of coal a day for the past 10 days from Mahanadi Coalfields Ltd (MCL), a unit of state-run miner Coal India , against a daily operating requirement of about 16,000 tonnes.

Supply disruptions started when operations at the Bharatpur mine in Odisha were shut after an accident on April 21 in which one worker was killed. Authorities have suspended operations at the mine indefinitely, declaring it unsafe.

"We don't know when the full supply will resume. We have no other option but to cut production," S.S.Mohapatra, production director at NALCO, told Reuters.

NALCO normally operates seven power units, producing about 800 megawatts of power to feed its smelter, which has an output of about 1,050 tonnes of aluminium daily. But the company does not have enough coal stocks to continue its normal operations.

"The aluminium smelter was operating 823 pots. We are planning to shut 200 of them gradually in next few days", Mohapatra said.

NALCO, the country's third-largest aluminium maker, produced 403,000 tonnes of aluminium out of its sole aluminium smelter at Angul in Odisha in 2012/13.

The disruption may affect the company's output this quarter but the shortfall may be made up later by ramping up production if normal coal supplies are resumed, Mohapatra said.

"Production may decline by around 10,000 tonnes this quarter," Mohapatra said, adding that the company could not buy costlier imported coal or coal auctioned in the open, domestic market, as this would mean incurring heavy losses.

NALCO has already been cutting domestic prices of its aluminium products in recent months, during which global prices have fallen.

(Editing by Matthias Williams)