Ferrosilicon industry faces demand and cost constraints

Abstract

The ferrosilicon industry is caught in a vortex of demand recession, power shortage, and escalating cost of both power and charcoal — the two crucial inputs. Against an installed capacity of 91,200 tonnes, the demand is about 52,000 tonnes. Because of power cuts in Karnataka (40%) and Orissa (50%), the demand is just met at an overall capacity utilization of 54%. However, at 80% utilization under fortuitous power situation, a surplus production of 40% could result. India has successfully exported to Japan in the past. Export was banned in 1979. Therefore, power shortage and inflationary costs, not technology, are constraints on export today. Cost-competitiveness can be realised by controlled cost of inputs, liberalised credit and subsidy.As a typical case, the situation in Karnataka is cited. Power tariff in Karnataka has risen from 5.75 p/kWh (1977) to 25.95 p/kWh (1981), an increase of 351% in five years. Power cost per tonne of ferrosilicon is Rs. 2371, representing 28% of the current price; charcoal cost is Rs. 2131, representing 26% of price. The diminishing availability of charcoal owing to ecological compulsions continues to push the cost up. But more seriously, it is compelling a search for alternative reductants. Quality preference is discussed. Import of a suitable reductant seems inevitable. Under crisis ridden circumstances, it is vital that the Government takes an integrated approach to pull the industry out of its present malaise so that it can continue to support the iron and steel industry.