Mr T Srinivas Rao president of Karnataka Sponge Iron Manufacturers Association said that nearly 80% of the 65 sponge iron mills in Karnataka have either been shut down or are on the verge of closure.

Speaking on ‘The state of DRI (sponge iron) in Karnataka and pellets as an alternative raw material’ at a conference, Mr Rao said that “Ever since the Supreme Court imposed ban on iron ore mining and introduced e-auctions, sponge iron mills have been facing severe hardship.”

Mr Rao said that “Lumps are sold in the E auctions and are being cornered by big companies or large steel mills. We cannot match their pricing to buy ore.”

Mr Rao said that “Sponge iron mills earlier bought ore at around INR 2,000 per tonne, which included all charges. Now with the E auctions in place, we are forced to buy at around INR 4,000 per tonne along with 27% component involving forest development tax and royalty. This is unaffordable for us.”

He added that “The pricing is not so high in Odisha and Chhattisgarh. We have approached the Supreme Court for some relief.”

According to him, the sponge iron mills lost INR 1,000 crore and two lakh jobs in the last two years. The sponge iron industry produces around 12,000 tonnes daily. On annual basis, production is around six million tonnes after consuming around 12 million tonnes of iron ore.

Source - Business Line

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