Odisha: Decrease in Iron Ore Production Drives Sponge Iron Plants Into Crisis

At a time when businesses are striving to get back on track, a shortage of iron ore coupled with an unexpectedly steep price hike has hamstrung Odisha’s mineral industry. As a result, the secondary Iron and Steel industries in Sundargarh and the rest of Odisha, mostly comprising of the MSME sector, have sent an SOS to the state government. The stakeholders seek the help of the government to relieve them of this situation.

It has been alleged that this ‘artificial shortage has been created due to the uncontrolled diversion of Iron ores to other states and price manipulation by the merchant mines. The affected industries which include the sponge Iron plants and downstream industries like induction furnace units and rolling mills have come together under the banner of Odisha Sponge Iron Manufacturing Association (OSIMA) and written to the Principal Secretary of Steel and Mines Department demanding assured availability of Iron ore at a reasonable price.

Commenting on the situation, OSIMA Chairman Yogesh Dalmia said that immediate pre-emptive measures should be taken to help the struggling small and medium industries who are engaged in value-addition and generating bulk employment as well as revenue for Odisha.

“Despite everything, the total production capacity of merchant mines in Odisha is about 105 MTPA against 81.40 MTPA demand of Odisha-based plants”, said the Chairman, adding that the State government has the power to regulate the Iron ore supply and prices in favour of end-use plants.

Notably, iron ore production in Odisha has dipped by 26 per cent in 2020-21 at 107 MTPA against 145 MTPA in the preceding year. This has been the effect of the permanent closure of several mines in March 2020. Several merchant mines with a combined capacity of 72 MTPA were auctioned, but only two mines of OMC Ltd with 11.98 MTPA capacity commenced operations.

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