Iron ore shortage closes 25 units in Chhattisgarh (Lead)

August 14th, 2008 - 8:22 pm ICT by IANS  

Raipur, Aug 14 (IANS) A shortage of iron ore Thursday forced 25 sponge iron units in Chhattisgarh to stop production, and an industry official said Thursday that more of them could follow suit. “The sponge iron industry is facing the worst raw material crisis as the NMDC (National Mineral Development Corp) is refusing to increase our quota,” Anil Nachrani, president of the Chhattisgarh Sponge Iron Manufacturing Association, told IANS.

The state-owned NMDC, with three mines in Chhattisgarh, is the traditional supplier of iron ore to these units.

The state has 125 sponge iron units, which require 12 million tonnes of iron ore a year. Against this, according to Nachrani, these units get only three million tonnes from NMDC.

Sponge iron is an alternative to steel scrap and is used as a raw material for manufacturing steel products.

The iron ore shortage threatens to derail India’s sponge iron production as Chhattisgarh contributes about 35 percent of the total annual output of nearly 20 million tonnes.

But NMDC spokesman Kumar Raghvan said the corporation supplies to sponge iron units in Chhattisgarh had gone up five times, from 0.5 million tonne a year to 2.5 million tonnes now.

“We provide raw material to them (sponge units) through the State Investment Promotion Board. In fact the units failed to make use of supply we provide,” Raghvan told IANS from Hyderabad, where the NMDC headquarters is located.

The closed 25 units together produce about 1.5 million tonne of sponge iron a year. Earlier these units were getting some raw material from Orissa but with the demand in the neighbouring state on the rise, those supplies have been stopped, further aggravating the crisis.

The association has urged the steel ministry and the Chhattisgarh government to intervene.

“The iron ore crisis problem is very serious. If something is not done urgently to increase the NMDC quota for Chhattisgarh, all the sponge iron units will have to be closed down,” Nachrani said.

NMDC, India’s largest iron ore producer and exporter, has three mines in the Bailadila hills in Chhattisgarh’s Dantewada district that produce 20.5 million tonnes of its total annual production of 27 million tonnes.

But the bulk of NMDC’s production goes to domestic steel majors, with some being exported to Japan and other Asian countries.

“Sponge iron manufacturers in Chhattisgarh have for long been demanding that the quota for the local units be increased, but NMDC has ignored our demand,” Nachrani said.

In September 2006, the state’s sponge iron units faced a similar shortage, and 30 units had to stop operations.

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