Bihar Sponge shuts plant due to non-supply of coal by CIL arm

Bihar Sponge Iron Ltd (BSIL) has shut down its operations in Jharkhand following non-supply of linkage coal from Coal India subsidiary, CCL.

"Central Coalfields Ltd (CCL) has stopped supply of linkage coal to the company from February 5, 2013. Coal is the main raw material for production of sponge iron and due to non supply of coal by CCL, operations of the company has been adversely affected during the quarter...The plant has been shut down and the operations has been suspended wef August 9," the company said in a filing to the Bombay Stock Exchange.

The company said 2,52,000 tonne coal per annum was hitherto being obtained from CCL against long-term linkage sanctioned by Coal Ministry since the inception of the plant till February 5.

It said it has also challenged CCL's decision to stop coal by way of a writ petition before Jharkhand High Court which is pending.

BSIL, located in Sarikela Kharsawan district of Jharkhand, claims to be the first merchant sponge iron plant in India.

The company, promoted in the joint sector by Bihar State Industrial Development Corp, Modi Group, German Investment and Development Company and International Finance Corporation in technical collaboration with Lurgi Metallurgy Germany, is designed to produce 150,000 tonnes of sponge iron per annum.

The shares of the company closed at Rs 2.15 apiece on BSE, down 4.44% from the previous close.