MAC: Mines and Communities

It's All Mine

Published by MAC on 2005-12-25
Source: Telegraph


Telegraph, Bhubaneswar

25th December 2005

Orissa may reduce the prices of iron ore to give a breather to the sponge iron units that are looking down the barrel following a sudden fall in steel prices in the international market.

"During the past one year, sponge iron prices have come down by 35 per cent from Rs 10,500 per tonne to Rs 7,600 per tonne due to a global slowdown in the iron and steel market," said G.S. Agarwal of the Orissa Sponge Iron Manufacturers' Association.

The fall in steel prices in the international market, coupled with rising input prices, has put 79 sponge iron units in Orissa in a sticky situation. To make a tonne of sponge iron, 1.5 tonnes of ore and a huge amount of coal are needed. The plants with a total annual production capacity of 6.9 million tonnes require about 17 million tonnes of ore and 13 million tonnes of coal. These plants appear to be on the verge of closure.

Orissa steel and mines minister Padmanav Behera indicated that the iron ore price would be brought down at the next board meeting of the Orissa Mining Corporation (OMC). The corporation supplies ore to most of the sponge-iron makers in the state.

Behera said the government would not jeopardise a large section of the steel industry as they use sponge iron as a raw material to produce steel.

Currently, the OMC prices for iron ore ranges between Rs 1,260 per tonne (62 per cent iron content) and Rs 2,123 per tonne (65 per cent iron content). "The government will take all steps to protect the industry and its people. The price will certainly come down at the next meeting of OMC," Behera said.

The state has already reduced the price of chrome ore, a raw material for stainless steel, from Rs 5,300 per tonne to Rs 3,200 per tonne, he added.

Sponge iron, a metallic product formed by treating iron ore at temperature just below the fusion point of iron, is the basic input to make steel. It is used as a substitute for scrap for making steel.

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