As shutdown looms for Balco rolling mill, 500 set to idle

Vedanta-controlled Bharat Aluminium Company Limited (Balco) would shut down its rolling mill at Korba, Chhattisgarh, as the crises in the company reportedly deepened following recession in the sector. The rolling mill was commissioned in 1981-82. Besides the rolling mill, the company houses ingot and wire-rod mills in the facility. The closure of rolling mill would affect about 500 employees.

A Balco official, confirming the report, said, “The management has decided to shut down the rolling mill that has been the most loss-making unit.” The move was inevitable since continuing with the mill, which had been recording heavy losses for the past four years, would have pushed Balco on the verge of closure, the spokesperson added.
 

FADING TO BLACK

• Facing recession: Vedanta-controlled Balco to shut its rolling mill at Korba, Chhattisgarh, as the crises in the company reportedly deepened following recession in the sector
• 1981-82: When rolling mill was commissioned
• Other mills: Besides the rolling mill, the company houses ingot and wire-rod mills in the facility
• 500 employees To be affected by the closure of the rolling mill

Since the other two mills were running in profit, the management was operating the rolling mill despite incurring heavy losses. But the situation in the past six months had changed as the aluminium sector in general, and Balco in particular, had plunged into a worst-ever crisis, the spokesperson said.

Initially, the profit was marginalised following the increase in the price of aluminium. Later, a break-even level was reached when the company was neither in profit nor in loss. Now, the scene had changed.

The production cost of aluminium is $2,000 per tonne, while the price of aluminium in the international market has dropped to $1,600 per tonne, he added. The company was left with no other option other than shutting down the rolling mill.

The Balco management would be submitting an application to the authorities concerned in the Chhattisgarh government seeking consent. Once the state government grants permission, the mill would be closed.

Balco, which was incorporated in the year 1965 as a public sector undertaking, had been producing 300,000 tonnes of aluminium per year — about 15 per cent of the country’s total aluminium production. The central government divested 51 per cent equity in the year 2001 in favour of Sterlite Industries, a subsidiary of Vedanta Resources. The rest 49 per cent is with the government.