The continuing iron ore shortage has driven the MSME industries in the State's steel and mines sector to the brinks of closure.
Steel, pellet and sponge iron units have been hit hard due to the high price and low iron ore availability in the State. Out of 109 sponge iron plants, 44 units have already been closed. Most of the MSME units depend upon merchant mines to meet their iron ore requirements. But increasingly, merchant mines are diverting a large share of iron ore produced in Odisha outside the State.
For instance, in the financial year ( FY) 2019-20 and FY20-21, dispatch of iron ore outside the State was 58 per cent and 60 per cent, respectively. This has created a massive gap in demand and supply, leading to a steep rise in iron ore prices and fall in iron ore availability for State based plants.
As per the Indian Bureau of Mines (IBM), the average sales price of 62-65 per cent iron ore lumps in Odisha has increased by 176 per cent from May 2020 to May 2021, and that of fines have increased by 352 per cent.
The price rise is the highest in India. “Odisha has witnessed the highest ever surge in iron ore prices than any State in last 12 months, and iron ore in Odisha is costlier than that in any other Indian States. The impact of the iron ore crisis is already visible in MSME iron and steel industries,” said Utkal Chamber of Commerce and Industry (UCCI) president Brahma Mishra.
Recently, more than 15 sponge iron and pellet making companies have applied to the Steel and Mines Department to provide the iron ore under the pre-emption policy of the State Government.
The MSME sector in Odisha, in which pellet and sponge iron industries share a sizable part, makes a significant contribution to the Odisha economy in terms of employment generation and revenue. Closure of these units will leave thousands of people unemployed, which will add to the burdens of the State, especially in the Covid-19 hit economy.
Industry experts and numerous associations have called for proactive action by the State Government to address the issue and ensure iron ore supply to these steel sector and MSMEs.