Chhattisgarh Chief Minister Bhupesh Baghel has sought the Centre's immediate intervention to make iron ore available at concessional rate to sponge iron makers operating in the state.
In a letter to Steel Minister Dharmendra Pradhan, the chief minister requested to roll back iron ore price fixed by NMDC in January 2020, saying that due to the said hike, steel and sponge iron players and other small industries are facing huge difficulty in procuring iron ore from NMDC mines in Chhattisgarh, which has interrupted steel production in the state.
Sponge iron or direct reduced iron (DRI) is used in producing semi-finished steel items, ingots and billets, which are further used to make various finished steel items.
Iron ore and non-coking coal are main raw materials used to produce sponge iron.
In a filing to the BSE filing on January 20, NMDC had informed the exchange about increasing price of lumps or high-grade iron ore by Rs 400 to Rs 3,200 per tonne from Rs 2,800 per tonne.
The price of iron ore fines, which are inferior grade ore, was also increased by Rs 350 to Rs 2,910 per tonne from Rs 2,560 per tonne.
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However, since then NMDC has made several reductions in its prices. In the latest revision announced on Tuesday, price of lumps lowered by Rs 400 to Rs 2,250 per tonne. The rate of fines was also reduced by Rs 400 to Rs 1,960 per tonne.
In the letter dated May 12, Baghel has sought "an immediate roll back of increased iron ore prices by NMDC to ensure regular supply of iron ore to local sponge iron industry and demanded fixing long term concession rate for iron ore.
"Due to unprecedented hike in the price of iron ore by NMDC effected from January 20, 2020, local small industries as well as steel and sponge iron industries are facing huge difficulty in procuring iron ore from NMDC mines in Chhattisgarh which has further interrupted steel production".
He said due to the lockdown in Chhattisgarh, economic activities in the state have been badly affected - especially iron ore-based sponge iron units, which are on the verge of closure due to non-availability of iron ore, as per requirement, from NMDC mines at concessional rates.
This development, the chief minister said, is leading to unemployment and exodus of labourers.
He further pointed put that the state government recently had extended the lease of four NMDC iron ore mines for 20 years to facilitate regular supply to iron ore-based industries operating in the state.
"Chhattisgarh has an immense resource of various minerals, of which iron-ore is a prime ore. World class iron-ore mines are situated in Dantewada district, where NMDC is operating five commercial mines. There are iron-ore based small and sponge iron plants in various industrial areas of the state, which procures iron-ore from NMDC mines at concession rates," he said.