Aluminium’s energy nightmare
Business Starndard / Kunal Bose / Jan 17, 2012, 00:33 IST
The point Ahluwalia made at the annual Nalco lecture is that for the country to grow at nine per cent annually, the corresponding growth of the energy sector will have to be 6.5 per cent. The problem is Indian energy prices, in most cases, are at a large discount to world prices. Logically, we should all be braced for energy prices revision across the board in the post elections to five states.
Nalco Chairman B L Bagra, however, says We are already feeling the heat of coal price rises. In February last year, coal prices for captive power plants (CPPs) were raised 36 per cent. And this month, we have been served notice for another 26 per cent hike in fuel rates. As a result, the share of energy in Nalcos total cost of aluminium production is to rise to 35 per cent from 30 per cent. In one push, the cost of making the metal goes up by Rs 3,500 a tonne. What, however, remains unexplained is why the price rise burden should be more CPPs that Nalco and many others own than independent power producers.
On completion of its last round of expansion, Nalco is owning 1,200 Mw capacity to support a smelter of 460,000 tonnes. Under a linkage plan, the company is to receive 14,000 tonnes of coal a day from Mahanadi Coalfields, a CIL subsidiary. Supply is normal now allowing Nalco to build coal inventory equal to 15 days requirements. But, coal supply became so erratic during the last monsoon that Nalco management was left with no option but to decommission some of its 960 operational pots. We still have 120 pots rested. I could have run these pots with expensive imported and e-auction coal or by buying very expensive grid power. But at the prevailing low aluminium prices, I will not find justification for that, says Bagra. As luck would have it, at the time of its founding, Nalco opted for coal linkages instead of owning coal blocks. For that one fatally wrong decision, the aluminium maker is now condemned to putting up with increasingly high energy bill.
Aluminium of late is encountering biggest cost push on energy account. At the same time, other inputs like coal tar pitch, carbon and caustic soda are becoming increasingly expensive. To give one instance, pitch prices are recently up 26 per cent. I dont think we are going to get relief from raw materials price rises anytime soon. Remember, it is because of the unremitting cost push that aluminium is seeing a new bottom at $2,000 a tonne, according to Nalcos director Ansuman Das. The Ahluwalia message of relentless pursuit of doing things with less and less energy seems to have gone down well with the Nalco board. Otherwise why should Bagra be straightaway closeted with his directors to do a review of areas where economy in energy use is still possible.
Nalco had a good start because both at alumina refinery and smelter it had the benefit of technology from Pechiney, now part of Rio Tinto. But have not some technology breakthroughs since Nalco was commissioned passed the company by? We had success in cutting energy use by extending the life cycle of anodes. Earlier anodes could be used for 68 tappings. Now we are doing 72 tappings before changing anodes in smelter pots. The cycle is further sought to be extended to 76 tappings, says Bagra. Anodes are large carbon blocks used as electrical conductors.
An area where energy is generally wasted is by way of leakage of heat in smelter pots. Bagra claims that such leakages at Nalcos smelter have been capped by tightening the lids on pots. We are driving longer pins through the lids to keep these firmly shut. What all the three aluminium makers in the country Hindalco, Vedanta and Nalco should have are resource efficiency maps covering areas like energy use and water consumption and greenhouse gas emissions. International Aluminium Institute says most smelters operated by its members are using powerful scrubbing equipment to remove emissions from pots.According to Ahluwalia, since water is becoming a highly scarce commodity, the industrys challenge is to do with less and less water and also invest adequately in its recycling. At our power complex, we are doing 100 per cent water recycling by sending out ash in slurry form. But when we bring back the quenched water from ponds through a pipeline, we lose a portion of that because of tapping by villagers for farming, says Bagra. Should Nalco be taking this as part of its contribution to community welfare?