The global slowdown seems to have impacted the finances of steel plants in Odisha. First, the State Government early this month decided to close down a 30,000 MTPA pig iron plant at Barbil, about 70 km from here, from September 1. The factory’s closure will render more than 1,200 people jobless.
The news about the fate of the 56-year- old plant, initiated by late Biju Patnaik in 1959 with German technology, coincided with the Vedanta group announcing the shutdown of its refinery at lanjigarh in Kalahandi district.
Sources in the district administration here said the decision to shut down the factory functioning under Kalinga Iron Works limited (KIWl) was taken at a meeting at the Industrial Development Corporation Odisha limited (Idcol) on July 22 last.
Official sources said the factory’s total loss has since exceeded `63 crore, making it completely unviable. In 1963, Idcol had taken over the plant located at Matakambeda near Barbil. Even the plant was expanded with three more blast furnaces and other facilities, making it the top Foundry Grade Pig Iron plant in Asia.
Similarly, Mesco Steel has reported in excess of `20 crore loss in last three months. Mesco currently is producing only pig iron has acquired Maithan Ispat in April last in a view to produce steel. It is learnt that the loss of Mesco Steel has gone up after the acquisition of Maithan Ispat, which was at the verge of collapse at time of accusation.
Interestingly, both KIWl and Mesco Steel have captive iron ore mines and yet have not been able to make profit due to falling steel price due to sharp decline in demand and dumping of steel at cheaper price in the country by China. A mine was also taken on lease from the Odisha Mining Corporation (OMC) to meet the raw material need of KIWl.
In September 2010, the Government made a move to hand over the plant to SAIl.
Similarly, the mining activity at Mesco’s captive mine was stopped for more than a year for want of execution of the renewal lease deed. Mesco has been procuring its iron ore requirement from the open market. Of late, the mines have been opened, but the low price of the steel has had a cascading impact on the finances of Mesco. Mesco Joint Managing Director PC Sahu defends the company’s decision to acquire Maithan saying that it was on the verge of collapse which could have resulted in loss of livelihood for about 900 families.
“We have mortgaged our plant with the bank to bail out Maithan Ispat which was standing on the verge of financial collapse. Every month we are trying to repay the banks as per schedule. We have also taken steps to control the black smoke generating from the furnaces thus reducing the pollution level of the plant which was earlier quite high,” Sahu said.
Despite the operation of three furnaces of Maithan Ispat, it is making loss since April last. Sahu, however, hopes to bring down the losses in the coming months with higher production and stabilisation of steel prices in the international market.