Chhattisgarh sponge iron units face closure

Sponge iron units in Chhattisgarh are reeling under severe raw material crisis, which, if continue, will force the industrialists to close the units after Independence Day.

“Most of the units are left with the raw material stock of 12-15 days. If the crises continue, most of the units will be left with no option than to close the production,” President of Chhattisgarh Sponge Iron Manufacturing Association Anil Nachrani told Business Standard.

The state has 125 sponge iron units. As against the demand of 12 million tonnes, these units get only 2.5 million tonnes of iron ore from National Mineral Development Corporation (NMDC), which has major mining facility in Dantewada district of the state.

Of the three fully mechanised mines of the NMDC, two are located in Bailadila pockets of Dantewada district and one in Donimalai in Karnataka.

The company produces 20.5 million tonnes of iron ore from the Bailadila mines while the company is presently producing 27.07 million tonnes of iron ore. A major part of the iron ore is exported to Japan and other countries.

“The local industrialists had been demanding that the quota of iron ore released by the NMDC for the local units should be increased to 4 million tonnes that could give some respite. But no heed was paid,” Nachrani said, adding that it was not possible for the sponge iron unit owners to purchase raw material from the open market and run the units.

In September 2006, the sponge iron units in the state faced similar crises and about 30 units had to close down the operations. After the state government intervened, the NMDC increased the quota by 500000 tonnes (the quota was 2 million tonnes at that time) that helped the units to revive and go on full stream.

The units are once again on the verge of closure as the raw material stock is fast depleting. “A delegation has met the Chief Minister and urged to immediately intervene in the matter for the survival of sponge iron units,” Nachrani said.