ROURKELA: Sponge iron industries in Sundargarh district are staring at a difficult time amid a countrywide shortage of domestic coal though they have kept their furnaces burning by paying exorbitant costs for coal. Coal is a major raw material for sponge iron making as 1.75 tonnes of local coal is required for making one tonne of sponge iron.
Former president of Odisha Sponge Iron Manufacturers’ Association (OSIMA) and industrialist Yogesh Dalmia said domestic coal supply shortage had been felt in Odisha some eight months ago and after the Ukraine war in February 2022, coal imports also got badly hit.
The situation gradually became untenable for domestic industries with the Central government instructing diversion of domestic coal to power plants as smaller players like the sponge iron industries in the Micro, Small & Medium Enterprise (MSME) segment were most hit. “During the peak coal crisis the coal price had jumped up to four-five times higher due to coal shortage and inadequate quantity offered in e-auctions to ultimately increase the cost of production of sponge iron,” Dalmia stated.
He also claimed that a few local sponge iron plants having coal linkages with Mahanadi Coalfields Ltd (MCL) were not immune to the crisis with the MCL reducing supply to 75 per cent. “The industries are worried as they have no idea if the government has any plan of making coal available to the iron and steel industries at affordable prices” he rued.
Sources said though around 43 sponge iron plants in the district are running without profits, they further plan to cut short production. Another industrialist and former president of OSIMA Gouri Shankar Agarwal said during the peak coal crisis the domestic coal price had shot up to around Rs 12,000 per tonne from the standard level of Rs 2,500-3,000. “Recently due to ramping up of domestic coal production and import, the coal prices have come down to the level of Rs 7,000-8,000 per tonne,” said Agarwal.