Graphite India’s thermal plan gets green burial

Graphite India Ltd, the largest manufacturer of graphite electrodes in the country, has scrapped its Rs214 crore captive coal-based power plant project following objections raised by the West Bengal pollution control board over having a power plant within city limits.

Graphite India, which its expanding its electrode plant at Durgapur, had in January 2010 announced a plan to set up a 50 mw power plant there to take its power generation capacity from current 33 mw to 83 mw. The move was aimed at optimising cost of production and securing quality power supplies.

“Unfortunately we have not been able to make progress (in the power project) primarily because environmental clearance couldn’t be secured as the policy says that we can’t have a coal-based power plant within Durgapur municipal area. We have started looking at alternatives,” chairman KK Bangur said.

The environmental department has asked Graphite to shift the project, a prospect, which Bangur said, appears bleak. “Shifting the project means we would need land at a new location at a distance away from our plant, and, as you know, land is a hot subject at this point in time.

It’s not easy acquiring land so we are just trying to seek clarity as to how we can go about it,” Bangur said, adding that the company needs about 50 acres, should it decide to relocate the project.

Graphite electrodes, mainly used as a consumable in steel making through the electric arc furnace route, is a power intensive industry and Bangur said of late supplies had turned erratic which has been hurting Durgapur plant’s output.

“For us it’s important to have good quality and regular supply of power. We can’t afford interruptions. That’s why we decided to go for captive power plant,” Bangur said.

Following this development, Graphite may altogether scrap the plan to go for thermal power generation and is now considering generating power from alternative sources including gas.

Accessing coal-bed methane, which is now available commercially in Durgapur as a source of generating power, however, has been ruled out due to pricing issues.

“We are looking at various options and not necessarily looking at coal as an only source of fuel. Even renewable sources are being considered and we will shortly come to a conclusion,” Bangur said.

Graphite’s current capacity is 78,000 tonne a year including 60,000 tonne in India spread over Durgapur, Bangalore and Nasik and another 18,000 tonne in Germany where the company acquired the graphite electrode division of Conradty Group in 2004.

Graphite has decided to invest €20 million in some cost-cutting initiative at its German facility, Bangur said.

Its plan to expand capacity at its Durgapur plant by 20,000 tonne a year is expected to get commissioned by fourth quarter of the 2011-12.

Bangur expects graphite electrode prices to start showing upward movement from now after stabilising in the first quarter following continuous downtrend during the whole of 2010-11.

“World’s two largest graphite electrode makers, Graftech and SGL Group, have recently announced price increase of about 15% after a long gap. We are hopeful this will get transmitted to markets across the globe,” Bangur said.

The company is also expecting a higher capacity utilisation of about 85-90% during 2011-12 against 70% in 2010-11.

For April-June 2011, Graphite India’s gross sales rose 23.6% year on year at Rs335 crore driven by higher demand for its products in the Indian markets. Net profit increased by a just 7.2% due to little growth in realisation and rise in interest costs from Rs0.52 crore to Rs2.64 crore year on year.