By Bizodisha Bureau, Bhubaneswar, April 18, 2020: The public sector metal giant, National Aluminium Company (Nalco) has got the mining lease (ML) to develop its captive Utkal-D coal block.

Odisha government on Thursday granted the ML over an area of 301.28 hectares across Kosala, Nandichod, Similisahi and Raijharan villages under Chhendipada tehsil of Angul district.

Sridhar Patra, chairman & managing director (CMD) of Nalco said, “For a power-intensive industry like aluminium, it is very essential to have a secure supply of coal. I hope with the mining lease in place, it will usher in a new era of development for the company”.

This is an important milestone for Nalco as captive coal production can cut aluminium smelting costs by 25 per cent.

In fact, Nalco has battling to bring down the cost of aluminium making as it was dependent on costly coal to produce power escalating manufacturing cost. However, the metal behemoth ranks amongst the most cost competitive producers of bauxite and alumina. Notwithstanding its cost advantage, Nalco bled rare back-to-back quarterly losses in Q2 and Q3 of FY20 as coal supplies turned truant, forcing the Navratna company to source expensive power from the Odisha grid.

On top of it, the Covid-19 pandemic had adverse repercussions on global aluminium demand and prices. Aluminium prices on the London Metal Exchange (LME) have tumbled to $1,482.50 per tonne for the cash buyer (as on April 17), the lowest since June 2016. Depressed international prices and flagging domestic consumption has posed a challenge for the Indian primary aluminium companies to stay profitable.

Nalco has announced its physical performance for Q4 while the financial results are still awaited. Production from Utkal-D coal block could assuage coal supply woes for the government controlled aluminium maker.

Earlier in May, 2016, the Utkal-D coal block was allocated to Nalco. Now the PSU is in the process of obtaining ML grant for Utkal-E, a coal block granted concomitantly with Utkal-D. The combined coal production from the two coal blocks is envisaged at four million tonnes per annum.