COVID-19 impact: Iron and steel sectors limping back to normalcy

The iron ore mining and steel sectors are limping back to normalcy after the Karnataka government last month allowed continuous process industries to operate. The mining of iron ore and manganese has restarted and the production has touched about 50% of the capacity, while the steel mills are struggling to regain their capacity.

NMDC Limited, India's largest iron ore miner, is operating one and a half shifts at its mines in Chhattisgarh and Karnataka. In the absence of the Supreme Court-appointed Monitoring Committee to conduct e-auction of iron ore, the company conducted auctions online last week.

"We are operating at 50% of our capacity in Karnataka Chhattisgarh by maintaining social distancing as per the norms. All our regular employees are working, while contract workers have been rested," an NMDC spokesperson told DH. About 4,500 workers are operating in both states.

The company sold 4 lakh tonnes of iron ore at the auction last week. JSW Steel purchased 3.5 lakh tonnes, while the rest was taken by other steel firms.

Other ministry of steel undertakings such as MOIL and SAIL are operating at 50% of their capacities and have deployed skeletal staff. "Mining comes under the essential services and we had closed only for about four days initially and later resumed our operations at a lower level," NMDC sources said.

The Karnataka government had issued a notification in March allowing continuous process industries such as steel, cement, paper and pulp, and glassware industries to operate during the lockdown.

JSW Steel, which operates India's largest single location steel plant with a capacity of 12 million tonnes at Toranagallu in the Ballari district had shut down two out of four blast furnaces. It is resuming the majority of its operations with the government allowing many industries to operate during the extended period of lockdown.

"We welcome the circular issued by the Ministry of Home Affairs today, to restart some select activities to mitigate the hardship being faced by the public. This will help restart some economic activity and also bring in much-needed liquidity, which will especially be helpful for the MSME sector," said Jayant Acharya, Director (commercial, marketing & corporate strategy), JSW Steel.

The company is also evaluating restarting its facilities in a phased manner within the protocols and guidelines defined, he said and added: “We are also awaiting the guidelines from respective states.”

The Sandur Manganese & Iron Ores Limited has seen severe disruption at its ferro alloys plant in the Ballari district. The company is currently producing only about 170-200 tonnes of Met Coke every day. It is currently facing Rs 66 crore worth of locked up raw material inventory. The company is also ready with about 4 lakh tonnes of iron ore for auction immediately.

"Although we are incurring about Rs 34 crore every month, we have not been able to generate sales of a single rupee since March 25 due to lockdown," the company's Managing Director Nazim Sheikh said in a letter to RBI.

The majority of private miners and sponge iron plants are yet to start their operations. About 50,000 workers in the private sector are currently jobless due to lockdown, added Basant Poddar, Managing Director, Mineral Enterprises Limited.