Business Standard reported that the sponge iron industry in Karnataka, which accounts for about 22 % of the state’s total iron and steel industry, is in doldrums owing to acute shortage of iron ore.
As per report, while a majority of sponge iron units have downed shutters, the remaining have turned non performing assets due to financial crunch.
Mr Srinivas Rao president of Karnataka Sponge Iron Manufacturers’ Association said “Sponge iron makers in Karnataka are able to produce only for about 15-20 days in a month due to the shortage of iron ore presently. NMDC sells its ore at INR 4,200 per tonne to INR 4,800 per tonne for lumps and INR 2,200 per tonne to INR 2,600 per tonne for fines. Being small and medium firms, sponge iron units cannot afford to buy at such a high price.”
Mr Rao urged the state government to consider the applications of sponge iron units for captive mining leases for which they had applied about seven years ago.
He also asked the government to allot a minimum of 50% of iron ore mined by the mining lease holders to medium scale industries as a majority of mine owners export iron ore.
There are as many as 53 small and medium scale units, with a combined production capacity of 12,600 tonnes per day about 4.6 million tonnes per annum. Of these, 40 have already closed their operations. The remaining units, however, are operating for about 15 to 20 days in a month, running at 27% of their installed capacity.
As of now, the integrated steel plants are running at average 68% of capacity utilization and pig iron units are running at 21%.
