“Pig Iron production in the South West region of India is being killed” – Industry official

According to a senior official at a major Pig Iron producing plant in the South West region of India, “Pig Iron production is being killed in the South West Region of India” and supporting his statement, the senior official shared the following with SteelMint.

1. India is probably the only country in the world where the basic raw material i.e. iron ore for the Iron & Steel Industry is being e-auctioned on “As is Where is Basis”, leaving a large scope for manipulations in mixing fines with lumps and no control on the Fe content which is so important for cost effective production.

2.  Iron ore lumps bought in e-auction by most of the plants  are said to receive ~ 30-45% of iron ore fines , which is a huge value erosion for the Pig Iron plants.

Considering the price difference between iron ore lumps and iron ore fines for the same Fe content, one cannot rule out deliberate attempts to mix and e-auction the iron ore lumps. Moreover, any material bought from the e-auction cannot be sold outside.

Hence, Pig Iron plants without sinter feed are left with stocks of iron ore fines purchased at prices of iron ore lumps and are ultimately unable to even recover part of the cost incurred, which otherwise could have been recovered by selling the fines.

3.  As a matter of discipline and to ensure that no malpractice are done , the lots allotted in the e-auction should be analyzed at the time of dispatch for under size and oversize in the presence of a reputed third party inspection agency acceptable to buyer.

Any undersize > 5% and oversize < 5% should be issued free of cost or at a substantial discount over the fines price so that there is a reason for the seller to control the under size in the lumps being auctioned.

4. Similar stand should be taken for the Fe content. In case, the Fe content varies more than 1% from what is declared and as analyzed by an independent reputed 3^rd Party , an appropriate penalty should be applied in presence of the buyer and seller.

Considering the operating Pig Iron plants in the country, if these logical steps are not taken to prevent the huge losses incurred by the plants and consequently huge gains to the raw material suppliers, it would not be very far for closure of many more plants in the country.