New Delhi: Balco, part of Anil Agarwal-led Vedanta Ltd, on Monday said it has started the procedure to shut down its aluminium rolling business in Chhattisgarh - a move that will see 1,000 people losing jobs.
Last month, the aluminium manufacturer had announced its decision to shut down the rolling mill in Korba (Chhattisgarh) on account of "steep fall" in the prices of the metal besides dumping from China and falling margins.
"Balco has begun the official procedure to close down its Sheet Rolling Division and Foundry at Korba. The company has issued the information to the Secretary, Labour Ministry, Government of Chhattisgarh as well as the BSE and NSE," the company said in a statement.
Mining conglomerate Vedanta Ltd, earlier Sesa Sterlite, holds 51 per cent stake in Bharat Aluminium Company (Balco), while the remaining is held by the government.
It produces about 30,000 tonnes per annum of rolled products like aluminium sheets and coils.
Balco has sought permission from the central government to close the unit by December 8, 2015. The closure will be as per the provisions laid down in The Industrial Disputes Act, 1947, it added.
The shutdown of the rolling division is also a part of a restructuring exercise by Balco. This move will result in loss of around 1,000 direct and indirect jobs," it said.
On reasons behind the shutdown, Balco CEO Ramesh Nair said, "The closure of the rolling mill is in the backdrop of a crash in global aluminium prices and the prohibitive cost of coal to run our power plants.
"Worldwide, there has been a fall in energy cost but for Balco, the absence of linkage coal and regulatory issue for starting our coal mines is making operations economically unviable."
Although aluminium prices have plunged globally in the last few months, power costs are rising in India, a contrarian trend making the cost of production increasingly unviable for primary aluminium manufacturers, he added.
"To operate at peak capacity, Balco requires 30,000 tonnes of coal. While the coal auctions have benefited the company in terms of allocation, the new block will meet only 10 per cent of the peak capacity," Nair said.
