Bharat Aluminum Company Ltd (BALCO) has started the process to shut down its rolling product unit in Chhattisgarh’s Korba which will result in 1,050 people losing their job, a company official said on Monday.
The process of closure, initiated early September is supposed to be over by the end of October this year.
“Over the last four years, we were incurring loses to the tune of Rs. 15,000 per tonne of produce. Despite our efforts, we are left with no other alternative except shutting down the rolling products unit,” a company official told IANS over the phone.
However, its two other units – ingot and wire product – will remain operational in the Korba plant.
The official said trade unions have approached the management with demand for voluntary retirement schemes but it is yet to take a call on this.
“We will abide by the law over our dealings with the labourers and the trade unions,” the official said.
BALCO has 650 employees on its rolls while another 400 have been outsourced.
According to the company, three factors – Chinese dumping of cheap aluminum, steep fall in the metal’s global prices and problems with coalfield allocation – rocketed the problem which led to the closure.
“While the cost of production for LME bars is $2,000 per tonne, it is fetching only $1,600 per tonne now resulting in our losses being escalated,” the official said.
BALCO used to price these bars at $2,400 per tonne previously which fell to $1,900 per tonne in the recent past and now to $1,600 per tonne.
Further, the official blamed import and dumping of cheaper Chinese aluminum.
“The import duty is only five percent in India which is low. We need atleast 10 percent import duty to combat the menace of Chinese imports,” the official said.
BALCO – where the Vedanta group owns 51 percent of the stake with the rest owned by the government – had lost its coal linkage following the Supreme Court verdict in 2014 which cancelled these blocks.
Post its bid in the recent coal auctions, it was able to secure a linkage but it fell short of its need. While the company requires 3-4 million tonne of coal each year, the block capacity was just one million tonnes. Moreover, on account of “certain constraints”, the company wasn’t able to get this block at an operational stage.
“We were buying the coal from Coal India so long,” said the BALCO official.
The rolling product unit comprises just one-sixth of the entire plant output and produces 40,000 tonne of rolled aluminum each year. The total output from the Korba plant inclusive of the three units is 3.5 lakh tonne presently.
“We have written to the labour department in Raipur over the closure and as per law it will take a maximum time of two months to execute the closure,” the official said.