Economic downturn hits Jharkhand sponge iron factoriesOctober 22nd, 2008 - 5:02 pm ICT by IANS
Ranchi, Oct 22 (IANS) Thanks to the economic downturn, most of the sponge iron factories in Jharkhand are either closing down or reducing production drastically.Out of the 40 small and large scale sponge iron factories operating in the state, 10 have already stopped production.
“The sponge iron factories are facing their worst time due to slump in global market. The prices of sponge iron have come down by 40 percent, which caused huge losses to companies,” Jharkhand Small Scale Industries Secretary Sharad Kumar Poddar told IANS.
“The production cost of one tonne of sponge iron comes around Rs.17,000 and the market price is now around Rs.12,000 to Rs.13,000,” he added.
As the companies are considering different options to withstand the current crisis, the employees of these units are under stress. Due to closure of 10 units and production cut in others, around 5,000 workers are facing unemployment threat.
More than 30,000 people are employed in the 40 sponge iron companies in the state. Besides, these companies are indirectly providing employment to more than 100,000 people.
The closed companies have so far not removed any employee but if the factories remain closed for a long time, the workers will be in danger.
“We are seriously contemplating to stop production. It is difficult to survive in the present scenario where sponge iron prices have reduced drastically. We are not able to even recover the production cost,” a senior official of Shivam Iron Steel Co said.