The wounds of the global economic slowdown, and India’s own slump in the loan-driven automobile industry run deep. Sliding steel prices hit by cascading demand woes in autos has crippled scores of sponge iron units and induction furnaces spread across the mineral rich twin Singhbhum districts of Jharkhand.
Sponge iron is an alternative to steel scrap as a raw material for the manufacture of various steel products. Furnaces melt steel. Smaller ancillary industries linked to large companies like Tata Steel produce help produce goods that go into steel or fashion end-products based on steel.
Singhbhum’s ancillary units supplying spare parts to several automobile giants in India and abroad including Tata Motors, Daewoo Motors, Ford Motors, General Motors and few other multinationals are severely hit.
Well placed sources in the industry told Hindustan Times that in the past one month, 18 of the 32 sponge iron units spread across Singhbhum East and West and Seraikela-Kharswan have downed shutters, while five more could close down over the next week.
“Compared to last year, our production targets this fiscal has been slashed by 50 per cent. Some 5,000 temporary and casual labourers have lost their jobs. Beginning October month, Tata Motors had a target to produce to 1,050 vehicles this fiscal. Within a week’s time, the target was slashed to 7000 vehicles. There is no demand for commercial vehicles,” said Vikas Mukherjee, industrialist and leader of Singhbhum Industries Association.
The Singhbhum belt has more than 30 per cent of India’s iron ore reserves.
“Entrepreneurs are unable to pay back their loans, foot the power and transportation bills, and pay workers’ salaries on time,” said the Singhbhum Chamber of Commerce and Industry’s (SCCI) vice-president, Suresh Sonthali.