BHUBANESWAR: Drastic fall in demand for iron ore in domestic market due to closure of secondary steel making industries and export orders not forthcoming amid coronavirus scare across the globe, merchant miners of the State are staring at an uncertain future.
Mining operations have come to a halt despite Government exempting the sector out of the ambit of lockdown restrictions to keep normalcy in the metal industries by restoring supply of raw materials. “The merchant mines are operating at less than 30 per cent of capacity due to low demand in export as well as domestic markets. The operations are limited to mechanised mining as most of the workers are not reporting to work due to family constraints,” said Prabodh Mohanty, general secretary of Eastern Zone Mining Association (EZMA).
The merchant miners export 50 per cent of their production while the rest is consumed in domestic market. Sponge iron plants and pellet manufacturing units are the major consumers in domestic market.
The good news for the merchant miners is that China, the breeding ground of coronavirus, has started importing iron ore fines after removal of lockdown there. Miners with prior export commitment have started exporting to China but the demand is low. “We hope it will pick up in coming days,” EZMA general secretary added.
“Almost all the secondary steel making units in the country are closed after the lockdown. With no cash inflow, these industries will have a tough time in arranging working capital to run their units after lifting of lockdown,” Mohanty feared. Besides, they have recurring overhead costs like payment of salary to employees without any income. With the financial sector equally hit, all the industries badly required bail out package for resumption of manufacturing.
Major steel plants of the State, including Tata, Jindal and Sail Authority of India Limited (SAIL) are having captive mines which are running smoothly notwithstanding the lockdown.
Of the 126 operating mines in the State, 24 iron ore and manganese mines whose leases expired on March 31, are in a transition phase with successful auction of 20 mines. Around 80 blocks of the total operating mines are in the hands of private lease holders. Director of Mines Deepak Mohanty said the production has been limited due to fall in dispatch of ores. Only 45 per cent of the minerals extracted are being dispatched due to lack of road transport. All dispatch is only through railway, he added.