Thaindian News

Raipur, Jan 15 (IANS) As many as 105 sponge iron units face a serious threat of being shut down amid deepening raw material crisis in Chhattisgarh that has roughly 20 percent of India’s iron ore reserves, a trade body chief has said.

“Some 20 sponge iron units have been shut down since October 2011 and others have cut short production up to 60 percent as sponge units are just getting 4 MT (million tonne) iron ore as against the requirement of 12 MT per annum,” Chhattisgarh Sponge Iron Manufactures’ Association chief Anil Nachrani told IANS.

Sponge iron goes into the making of steel as a substitute for scrap. Chhattisgarh accounts for nearly 30 percent of India’s total sponge iron output, according to Nachrani.

“The future of sponge iron units in the state looks very bleak all of a sudden. The production has come down to a meagre 2.5 MT per annum from the earlier figure of around 8 MT per annum,” Nachrani said.

He said the massive decline in sponge iron production was mainly due to the Odisha government’s decision to close down dozens of iron ore mines since July 2009 in a bid to cleanse the state of tax evaders and those mining without licences.

“Some two years back, the iron ore availability was satisfactory as we were getting 9 MT per annum from Odisha and 3 MT per annum from NMDC (National Mineral Development Corporation) from its mines in Dantewada district.

“But after the crackdown on mines in Odisha, the iron ore availability has come down to just 1 MT while the NMDC is still managing the figure of 3 MT,” said Nachrani.

Nachrani, who owns Sunil Sponge Pvt Ltd, a sponge unit on the outskirts of Raipur, said his unit was working at 40 percent of its production capacity because of recurring raw material crisis.

Chhattisgarh’s majority of sponge units are based in the industrial clusters of Raipur, Raigarh and Bilaspur districts where nearly 250,000 people are employed.

“I don’t see any improvement in the sponge iron industry in the near future. If things do not improve fast, then all units will have to be shut down. After all, how long will industrialists run loss-making units?” Nachrani rued.

A delegation of the Chhattisgarh Sponge Iron Manufactures’ Association met Chief Minister Raman Singh Jan 6 and listed its demands.

“The core demand is that I should persuade NMDC to increase its supply by at least 5 MT to Chhattisgarh sponge iron units to help them get over the crisis,” Raman Singh told IANS.

He said the “issue of increasing supply to sponge units from NMDC mines has already been taken by the state government to the level of the steel ministry in New Delhi”.

(Sujeet Kumar can be contacted at sujeet.k@ians.in)