Seven units with a 75-MVA capacity have sprung up using the cheaper Damodhar Valley Power (DVC) which is priced around Rs 2.30 per kwh and are selling their high carbon ferro manganese and silico manganese at around Rs 1,000 lower than other producers in different states. Apart from cheaper power, they can also draw supplies of coke from neighbouring steel plants like Durgapur, IISCO and Bokaro which gives them the raw material advantage. Two more units with a capacity of 45 MVA are coming up in West Bengal almost immediately, which will add another 5,000 tonnes of monthly production, thus adding to the surplus in the country. The interesting thing is that most of the units have been able to get finance from public financial institutions as they are viableat least until the power rate is lower in West Bengal, than in other states and they can recoup their investments.

At present the installed capacity for manganese alloys is around 702,550 tonnes while the demand for the product is 340,000 tonnes. The total installed capacity of the industry is around 1.46 million tonnes against a demand of 551,000 tonnes, which includes an export demand of 172,500 tonnes. Capacity between different alloys can be freely exchanged and therefore a huge reserve capacity for all ferro alloys has sprung up in the country.Exports at present fetch Rs 500 crore a year and there is scope for higher exports, though current world prices are abnormally low, and there is no hope of a quick increase. The power rate of DVC is not low enough to promote exports and it is only NTPC power rate from older power plants with average rates being less than Rs 1.60 per unit which can make exports just viable.Sandur Manganese & Iron Ores Ltd which was getting some 20 MW of NTPC power at around Rs1.60 for some time could manage exports of ferro silicon and silico manganese but when the power rate was increased to Rs 2.32 it preferred to close down its furnaces rather than run them and loose money.Now Sandur has closed down the ferro alloys operations completely. In Karnataka, the other major ferro alloy unit VISL is also closed as the state power has gone up to Rs 4.20 per kwh and the market prices of ferro silicon do not cover the power cost. But now VISL has been merged with SAIL and SAIL losses will increase while VISL is saved.

In early nineties, MP was the destination of all ferro alloy producers and units sprang up with great rapidity there, with nearly 30 producing all the bulk alloys required. But today power is scarce in MP and costly too, and hardly two units are working while the rest are closed. What has happened to the monies invested by the banks and financial institutions in these ferro alloys companies now closed?

In Maharashtra, Universal Ferro which has been closed for two yearsis trying to open, if NTPC power is available and the State electricity board (MSEB) also gives some concessions. The milch cows of the electricity board the high tension consumers of electricity like ferro alloys, steel are closing down in Maharashtra and some concessions are being extended which may help. But the prices of ferro alloys being low, these concessions are not enough to save the units from losses and possible future closure.Therefore the future of the manganese alloys industry in India is being dictated by the West Bengal units and since their numbers and capacity are rising there is likely to be misery for the rest of the units in other states. Amidst this Manganese Ore India Ltd. has started commercial production of its five MVA manganese alloy unit in MP but with the prices at rock bottom, the unit will have a difficult time.

Some of the closed units want to take their furnaces to Gulf countries where power is said to be cheap. But the large project for ferro alloys in Saudi Arabia has notbeen a success as prices of ferro silicon and silicon metal are fallen too low in the world market. To transport the second hand furnaces and put up costly pollution control devices in Gulf may not turn out to be worthwhile economically.

Today ferro alloys is a globalised industry where bulk of the requirements met from low cost producers whether from South Africa, China or CIS countries. With import duties falling and power costs rising the prospects for India ferro alloy producers are not so rosy, if not down right bleak.