Nalco scrip surges after union coal ministry allowed to mine coal block allocated to it

BHUBANESWAR: The union coal ministry has allowed state-run National Aluminium Company, or Nalco, to mine the coal block allocated to it, signaling large gains for the aluminum company which used to buy coal from overseas markets to fire its captive thermal power plant.

Nalco said that the Utkal coal block at Angul with reserves of 70 million tonnes and spread over 212 hectares, will be used to generate power for the aluminum smelter and will replace costly coal bought through e-auctions and through imports.

Shares of Nalco surged 11% at 66.50 on the BSE as investors bought into the state-run company on hopes that the move would boost profits. Nalco has two units of 120 MW each, commissioned in 2009 and 2010, "have been operating from coal procured by us through e-auction and imports," said Nalco chairman B.L. Bagra.

The linkage with Mahanadi Coalfields was valid up to the scheduled commencement of production from Utkal-E Coal Block, which was delayed due to environmental nod and land acquisition. Nalco will soon sign the mining lease deed.