Sponge iron units of the country are facing an acute coal shortage, said an industry official.
“Of the 450 direct reduced iron (DRI) units that produce sponge iron in the country, 105 are located in Chhattisgarh. All units have just 10 days of stocks compared with 60 days normally. The situation is not any better in units located in other parts of the country,” said Anil Nachrani, president of Chhattisgarh Sponge Iron Manufacturers’ Association.
India’s sponge iron capacity currently stands at 35 million tonnes per annum (mtpa) of which 16 mtpa is produced in Chhatisgarh alone. Sponge iron is used mainly by the secondary sector steel producers in the induction or electric arc furnace to produce ingots and billets, primary inputs to produce rebars mostly used in the construction sector.
Nachrani blamed state-run Coal India’s (CIL) inadequate distribution infrastructure for the current shortage. It takes 1.65 tonnes of coal to produce one tonne of sponge iron. He also said CIL should allocate more coal to the secondary steel producers.
“CIL should allocate 15% of its production to secondary steel producers from the current level of 5%. Coal mines should be given to the secondary steel producers in the consortium,” Nachrani said.