India’s energy crisis forces metal makers to import fuel

11 May 2022 CW Team

India’s battling an energy crisis that is threatening to cut production in the world’s biggest sponge iron industry. The coal crisis in India has forced producers of sponge iron, a steelmaking feedstock to hunt for supplies overseas in order to keep their mills running. Importing the supplies is adding to inflationary pressures as they turn to pricier.

Industries are running out of the fossil fuel, as state-run behemoth Coal India diverts most of its output to power plants to keep the lights on amid worsening blackouts. The situation has been made worse as global coal prices have surged on tight supply, adding to the persistent inflation pressures in the country.

In the central state of Chhattisgarh, a hub for iron ore and steel-making, sponge iron makers are running at about 60 per cent of usual levels, the Chhattisgarh Sponge Iron Manufacturers Association said last month.

As per reports, Jindal Steel & Power, which is running its sponge iron plants at 40 per cent capacity as it doesn’t have enough of the fossil fuel, has contracted orders for 150,000 tons of thermal coal each for the months of May and June from South Africa and Mozambique.

India’s sponge iron industry may ship in as much as 35 million tons of coal this financial year, 30 per cent more than a year earlier, according to the Sponge Iron Manufacturers Association reports. Sponge iron is a steel-making raw material produced after heating iron ore at high temperatures using carbon in the form coal or gas.

The country should also speed up environmental clearances and set a production deadline for miners that have won leases in auctions to bring more output quickly. The faster the mines start production, the better it is for the country.

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