New Delhi: The country's sponge iron producers today sought government's intervention in ensuring assured supply of coke, iron ore and natural gas to fructify their additional capacities and enable India to achieve the steel production target of 300 million tonne by 2019-20.

"Sponge iron industry is fully geared up to meet the challenges ahead but is facing serious problems of continuous increase in prices and short supply of vital raw material inputs," Sponge Iron Manufacturers Association (SIMA) Chairman P R Dhariwal said in a letter to Steel Minister Ram Vilas Paswan.

He pointed out that state-run mineral giant NMDC has increased prices by 47.5 per cent from October 2007 and further upward revision of the mineral is expected from next month.

Similarly, private miners in Orissa, Jharkhand and Karnataka too have increased prices prices by over 73 per cent from April last year, Dhariwal said.

"We believe some formulae to define the prices of iron ore and value-addition by mine owners for better use of (iron ore) fines are becoming a necessity," the SIMA Chairman argued.

He pointed out that in order to meet the fast growing demands of steel sector, the country will have to ensure fresh sponge iron capacities.

"On account of difficult availability of steel melting scrap, limited reserves of coking coal, sharp and regular increases in the prices of all inputs, the steel industry in India depend on sponge iron for making steel through electric arc furnace route," Dhariwal said.

Seeking assured supply of raw material inputs, SIMA Chairman said only 70 per cent of coal supply for linked and agreed quantities are enshrined in the new Coal Distribution Policy and remaining 30 per cent are being procured from open market or through imports where prices are "prohibitively high and constantly rising".

Besides, ocean freight has also more than doubled thus adding further to the difficulties of the industry in using imported non-coking coal, Dhariwal argued in his letter.

Another critical input, natural gas was not available as per the contracted or committed supplies and all three gas-based plants were running below their installed capacities or are dependent upon imported LNG where spot prices have shot up by three times in the last one year.

"This has put tremendous pressure on the financial viability of gas based sponge iron units. There is no further fresh investments or expansion taking place in gas-based Direct Reduced Iron sector," the SIMA Chairman said.

Another sector where SIMA sought the Steel Ministry's support was infrastructure saying availability of railway rakes were inadequate leaving the producers no other option except to ferry their produce through road transport where freight rates have shot up high.

"You will appreciate and understand that all vital inputs in iron ore, coal, natural gas, transport and power are controlled by the government. Here we need your help and support to make these inputs available to the industry in adequate quantity at affordable prices on a long-term basis," Dharwial said in his letter.

Source : PTI