Sponge iron manufacturers, mostly in the small and medium-scale sector located in the eastern Indian state of Odisha, have sent an ‘SOS’ to the state government seeking immediate intervention regarding the iron ore shortage and sharp spike in prices threatening operational viability of units, according to a statement issued by the Odisha Sponge Iron Manufacturers’ Association (OSIMA) on Thursday, June 3.
In communication to the government, OSIMA has sought immediate correction measures against the “artificial shortage created by rampant diversion of iron ore to other states and price manipulation by merchant miners.”
The association said that sponge iron plants and downstream units including induction furnaces and rerolling mills need urgent pre-emptive measures to help struggling small and medium units.
Plants based in Odisha without captive iron ore mines need about 81 million mt of iron ore per year but the bulk of the iron ore is reaching other states for value addition, and merchant miners are reaping very high revenues from such sales, the association said.
Iron ore production in Odisha dipped by 26 percent in 2020-21 to 107 million mt against 145 million mt in the previous year, following the permanent closure of several mines in March 2020. Several merchant mines with a combined capacity of 72 million mt per year were auctioned, but only two mines have started operation.
Despite everything, the total production capacity of merchant mines in Odisha is about 105 million mt per year, against the demand totaling 81.40 million mt per year from Odisha-based plants, the association said.
