The sick sponge iron units in the district here now hope for a turnaround as the State Government has taken some initiatives recently to revive the iron and steel industries.
Sources said Odisha has become largest sponge iron producer of country since 2000 with total 104 sponge iron plants out of which 45 are from Sundargarh district situated at Kalunga Industrial Estate, Rajgangpur, Kuanrmunda, Bonei and at other places of district.
The owners of the units were going through good times due to hefty profit. About 9,000 persons had been directly employed in these units and about 14,000 persons had been indirectly employed.
But suddenly due to high cost of iron ore over last four years, the plants incurred huge loss. Now about 60 induction furnace units and 12 large steel re-rolling mills in Sundargarh district have been affected.
According to sources, out of 45 sponge iron units, five units have been completely closed down and other 40 units are struggling for survival as they are running with 30 to 40 per cent production.
While these units were severely affected, thousands of heavy vehicles engaged in transporting the material also were severely hit and several owners of heavy
vehicles sold their vehicles given the pathetic condition of the sponge iron units. Meanwhile, a large number of persons who were working in these units became unemployed.
According to sources, on September 2 last, when Minister of Steel and Mines Prafulla Mallick had visited Rourkela, some industrialists engaged in producing sponge iron here had met him and apprised him about the scenario and their difficulties in running the units. As per the direction of the Minister, the owners of sponge iron units of Sundargarh district met him at Bhubaneswar on September 10.
In the meeting, Steel and Mines Secretary and Director(Mines) were also present. The industrialists has raised issues like escalation ore cost and transportation cost, besides scarcity of ore.
Mallick advised private iron ore mine owners to augment production and move out unsold stocks at a reasonable price. The Government feels rise in production and dispatch of iron ore would additionally enhance revenue in shape of royalty and VAT. Odisha Mining Corporation (OMC) was also advised to
augment iron ore supplies to Odisha based industries, the Minister said.
"Sponge iron price has been reduced by Rs 5,000 per tonne and iron ore price has come down to Rs 2,900 per tonne from Rs 5,700 per tonne. Given the huge profit margin, iron ore cost should stabilise at Rs 2,500 per tonne for survival of industries," said GS Agarwal, former chairman of Odisha Sponge Iron Manufacuers Association (OSIMA).
According to sources, at least one sponge iron unit and eight induction furnace units in Sundargarh district were dismantled and sold in scrap for loan defaults.