Audit Reports


Report No.6 of 2019 - Operational Performance and Productivity of the Refinery and Smelter Plants of National Aluminium Company Limited, Union Government (Commercial), Ministry of Mines

Date on which Report Tabled:
Wed 17 Jul, 2019
Date of sending the report to Government
Thu 27 Jun, 2019
Government Type
Union Department
Sector General Sector Ministries and Constitutional Bodies


National Aluminium Company Limited (NALCO) is a Central Public Sector Enterprise under the administrative control of Ministry of Mines. NALCO is an integrated company involved in the excavation of Bauxite and production of Alumina and Aluminium. NALCO also had a captive power plant to ensure supply of power to the Smelter and Alumina Refinery.

A Performance Audit was conducted covering the production performances of the Mines, Alumina Refinery, Smelter Plant and Captive Power Plant of NALCO for the period from 2012-13 to 2016-17. The objectives of the Performance Audit were to assess whether the Mines and the Captive Power Plants were operating in the manner and at the level required for the optimum operation of the Alumina Refinery and Smelter Plants respectively. The Performance audit was also to see whether the Alumina Refinery and Smelter Plants were operating at the required capacity to produce the desire product in a cost effective manner.

The Performance Audit report highlights the following:

There was shortfall in production of 96.31 lakh tonnes Alumina Hydrate in the Refinery primarily due to under-performance of mining and allied activities. Lower production of bauxite at Mines caused non-maintenance of required stock level of Bauxite at Refinery end. This constrained NALCO in blending the Bauxite for feeding the same with even silica content to the Refinery causing excess consumption of 1.46 lakh tonnes of Caustic Soda in the Refinery valuing Rs.426.27 crore during the period 2012-13 to 2015-16. There was delay of 57 months in awarding the work order for processability study.

NALCO was not able to develop the Coal Blocks allotted by Government of India for supply of coal to the Captive Power Plant for generation of required power for Smelter Plant.  The capacity utilisation of Smelter Plant remained lower than the installed capacity primarily due to non-availability of adequate power from the Captive Power Plant. There was shortfall in production of 4.93 lakh tonnes of Aluminium in the Smelter Plant during the period from 2012-13 to 2016-17 for want of required power. As a result, NALCO lost the opportunity of earning incremental contribution amounting to Rs.1,086.63 crore during the above period. NALCO incurred additional expenditure of Rs.326.62 crore towards excess consumption of coal in the Captive Power Plant during the period from 2012-13 to 2016-17 due to higher Station Heat Rate as compared to the norms. NALCO was not able to detect slippage of quality of coal due to non-availing the facility of joint sampling of coal at the loading point. This has resulted in avoidable expenditure of Rs.239.23 crore towards grade slippage of coal during the period 2012-13 to 2016-17.

NALCO observed that the transportation of excavated Bauxite in South Block Mines by dumpers to the crushers in Central and North Block Mines, instead of transporting the same through the conveyor belt, was not in conformity with the conditions of Environmental Clearance granted for operation of South Block Mines.

C&AG observed that the daily discharge of Red Mud and Red Mud Pond Effluent from the Refinery was consistently higher than the corresponding limits specified by the Odisha State Pollution Control Board during the period from 2012-13 to 2016-17.

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