Ballari's sponge iron plants face closure

Ballari's sponge iron plants face closure

A sponge iron manufacturing plant on the outskirts of Hosapete, Ballari district. Most of the 70-plus plants in the iron ore-rich district may shut shop owing to the cascading effects of the economic slowdown. DH FILE PHOTO

The pellets and sponge iron plants in the district are feeling the heat of economic slowdown.

There are a total of 70 small and medium sponge iron, also known as direct reduced iron (DRI), manufacturing plants in the district. Several of them are running under heavy losses and are on the verge of closure while a few others are slashing jobs to contain mounting losses. If the situation continues, many skilled and unskilled workers may lose jobs in the days to come.

The DRI plants receive iron ore directly from the mines. The plants manufacture pellets and sponge iron and supply the same as raw material to the companies involved in construction, automobile and steel rod manufacturing plants. The DRI plants in the district get bulk orders from Bengaluru, Chennai, Mumbai, Hyderabad and tier-II cities. But owing to the slowdown, the demand for pellets and sponge iron has come down by 50 to 70%, hitting the DRI plants hard.

Srinivas Rao, president, Karnataka Sponge Iron Manufacturers’ Association, told DH, “The DRI plants in the district are reeling under crisis owing to a drastic fall in the demand. Most of them are struggling to pay wages to their workers. Several plant owners are paying their staff by selling their immovable property and gold jewellery while a few owners have decided to shut shop.”

The governments - state and the Central - are not bothered to promote and protect the small and medium enterprises. If the situation continues, the owners will shut their industries. In future, no one will come forward to open industries, he rued.

Activist Shivakumar Malagi recalled many ancillary units in the region had shut shop during the previous global slowdown years back. “Now, the situation is more serious than the previous slump. sponge iron manufacturing plants are like startups. The government should take urgent measures to protect them. This will keep many industries afloat,” he said.