Steel prices have been on a rollercoaster ride in the past few weeks, sending shivers through the global steel market. This trend was shaped by the Beijing Olympics. Post-Olympics, the world’s biggest steel consumer, China, has slowed down its steel imports. At the same time, less demand for construction steel around the world has taken much of the heat out of the steel market, although the market in India has not been too greatly affected owing to steady domestic steel consumption and easy availability of sponge iron (also called direct-reduced iron) that is used to make steel.

India’s sponge iron industry has sustained secondary steel producers who use electric arc furnaces or induction furnaces to make steel. Sponge iron has in fact become a perfect substitute for scrap, the availability and price of which have greatly hampered steel production.

Post-2001, India has emerged as the world’s largest producer of sponge iron, accounting for 20% of global output. According to the Joint Plant Committee, formed in 2005 to assess the status of the sponge iron industry in India, there are over 250 plants operating in the country; 225 are under commission and 77 are undergoing capacity expansion. In 2007-08, India produced close to 20 mt of sponge iron.

The cost of this spectacular growth, however, is being borne by people living in the states that produce sponge iron, as sponge iron units are responsible for unprecedented levels of pollution. Thick black smoke, contaminated water, depleting vegetation, falling agricultural yields, premature death of domestic cattle, and poor human health conditions are just some of the impacts. The plants are located deep inside forested regions that are rich in iron ore and have already been devastated by the mining industry. They include the states of Orissa, Chhattisgarh, Jharkhand, West Bengal, Goa, Maharashtra and Andhra Pradesh.

The situation in Karnataka is alarming. The fifth largest iron ore contributor in India, Karnataka’s Bellary district, thus far known for its extensive iron ore mining, has become the country and the state’s sponge iron hub. With around 31 units currently in operation, the district is looking forward to another 25 units this year.

Iron ore, the mineral required for the sponge iron industry, is abundant in this region. The first plant in Bellary was set up around 20 years ago. In 2004, Benaka Steels set up the second plant. After 2005, the number of plants multiplied many-fold.

Non-compliance with pollution control norms

Kiran Kumar, assistant environmental officer of the Karnataka State Pollution Control Board (KSPCB), based at the office of the District Pollution Control Board (DPCB) in Bellary, explains that around a year-and-a-half ago, none of the sponge iron units had any pollution control equipment like electrostatic precipitating devices (ESP). These are highly efficient filtration devices that remove fine particulate matter like dust from the air stream. Persuasion by the board resulted in just four units operating within the Hospet Road area to regularly run ESPs. Kumar says: “I have been trying to convince the KSPCB to compel the units to install an interlocking system between the power supply and the kiln. This mechanism will ensure regular use of pollution control equipment because it automatically disconnects power supply to the kiln if the ESP is off.”

According to pollution control norms, sponge iron units are supposed to carry out ambient air quality checks every month, for 24 hours, and forward the data to the Pollution Control Board via testing centres. But there are always delays in submitting the reports, which, when they finally reach the office, are outdated. To avoid delays in monitoring, the DPCB came up with a facility allowing online reporting of air quality. But even this does not appear to be working, thanks to the conventional mindset of the industry. There is simply no interest being displayed by the sponge iron units to try and help control pollution.

“First of all they do not submit reports. Even if they do, the actual concentration of suspended particulate matter (SPM) is never brought out in the reports submitted,” says a senior official. He adds: “We all know that the concentration level is very high; anyone can feel it. But the reports show that everything is fine with the air quality.” The only testing lab in the area is in Dharwad where the ambient air quality standard data is sent.

Illegal iron ore mining

Hospet and Sandur are hotspots of illegal mining; they supply cheap iron ore to the sponge iron units in Bellary. During a raid on illegal iron ore mines, in the month of June, an investigating team comprising the deputy commissioner of the DPCB and other officials, also inspected Bellary Steel on Anantpur Road. The unit failed to produce a purchase invoice for the iron ore found lying around the plant’s compound. Most sponge iron units thrive on buying illegal iron ore in the open market. Some industries, mainly large ones like Jindal Steel Works, carry out captive mining in collaboration with the state mining corporation. In the raid, the deputy commissioner highlighted the fact that an estimated Rs 230 crore was being lost to roads that were destroyed due to heavy transport being used to carry the illegally mined ore.

Ahiraj, an activist and newspaper correspondent, says: “Since July 2006, there have been 221 iron ore crushers in the district. The report of a taskforce investigation, set up by the state government on illegal mining, highlighted the fact that the crushers operate without permission on agricultural land, and without proper machinery. Moreover, the overall iron ore feed source of these crushers is from illegal mining. The taskforce report declared that 150 crushers had violated the rules, and suggested their shutdown. Today, they operate in Malappangudi, in Andhra Pradesh, just 10 km from Bellary.”

The taskforce report may also have impacted political equations in the district and the state. The portfolios of the revenue ministry as well as the ministry of tourism and infrastructure development were shuffled in the May 2008 state assembly elections, says Ahiraj.

Local impact of the industry

Professor Satyanarayan, a retired English professor and ex-KSPCB member, is a concerned man. “The city of Bellary is finished. The air has become heavy due to extreme pollution from the sponge iron plants. Earlier, we were fighting against unregulated iron ore mining. Now the sponge iron industry has become a bigger menace. Black smoke, dust, road accidents, fast-depleting greenery, and excessive water use are just the tip of the iceberg.”

The village of Halkundi is situated just 10 km from the city centre, on the Bangalore-Mumbai highway (NH4). More than 13 sponge iron units operate here, barely a kilometre from the highway; one can in fact see a sea of coal dust from the highway. Environmental activist Santosh Martin says: “Most of the land in this village close to the plant has been bought by industrialists and put to industrial use without changing the status of land use from agriculture to industrial use. Excess land is being used as a dumping ground for raw and waste material. Moreover, none of the plants use the main stack to release air emissions but use ABC chambers (bypass pipes) that divert the emissions towards the ground, with the help of ID fans that diffuse the smoke. This serves two purposes -- one, it saves power and cost; two, it helps avoid the use of ESPs. But the pollution remains.”

Dr Arvind Patil, a general physician with a passion for tree-planting, claims that the sponge iron industry’s green area development record has been abysmal. The KSPCB’s condition of maintaining a minimum of five rows of trees inside and outside the boundary wall of the unit is not being seriously followed. “Regular attempts to convince the units to allow us to plant trees have proved unsuccessful, simply because they are not interested,” Dr Patil adds. He explains that the health of workers working in the units is dismal: their lungs are all but destroyed and their life expectancy low.

Groundwater extraction is another important issue. Due to units coming up within city limits, water scarcity has become the norm. Each sponge iron unit has three to five borewells. “Now, even the sponge iron plants are finding it difficult to get water because the number of plants has increased in recent years,” says Kotresh, Deputy Environment Officer, Bellary. “They were managing water supply through borewells and tanker water, but it is becoming expensive to buy tanker water for all the units.” The District Sponge Iron Industries Association (SIA) has come up with a plan to allocate sewage water to the sponge iron units, after it is treated. But the irrigation department is taking its time deciding on the matter as, in recent years, this has been a major source of water allocated to agriculture.

Kumar explains that, until recently, plants were using power from the Karnataka Power Transmission Corporation (KPTC), and generators. But after recent guidelines from the Central Pollution Control Board (CPCB), plants with a capacity of over 200 tonnes per day are going ahead with their own captive power plants. The CPCB guidelines will only enhance their profits as they will now sell the extra power to other industries. All plants in the district are coal-based; they import coal from South Africa. Kumar adds: “The game is played around money and political power only. We wanted to shut these SIUs on grounds of pollution and violation of norms, since we have a case against every operating unit. But political pressures work better than us.”

No let-up in environmental destruction

It is worth noting that the growth scenario in the sponge iron industry has not changed despite repeated threats of closure. Because of its pollution impact, the sponge iron industry falls in the ‘red category’ (highly polluting), in the Ministry of Environment and Forest’s (MoEF’s) list of industries.

Protests against the industry have sprung up across the country in the past five years. On June 2, 2008, a meeting of concerned citizens and the member secretary of the CPCB was held. The CPCB accepted the fact that the owners of sponge iron units had been unsuccessful in controlling environmental pollution. But, irrespective of the strong evidence and studies done on the issue by various regional pollution control boards, the CPCB has been unable to tackle the issue because of restrictions in its official mandate. Moreover, the guidelines for pollution control were notified only in May this year, after a delay of three years. And still they are not the same as were earlier proposed; they have been so badly diluted that they are now too weak to be of any use. Earlier amendments, in 2006, to the Environment Impact Assessment notification had already taken away the space for public participation in environmental clearances.

Against this backdrop, and considering India’s slack environmental norms and absence of strict pollution control guidelines, it is extremely hard to believe that the country chairs the Inter-Governmental Panel on Climate Change (IPCC) at the international level.

(Rifat Mumtaz works with the National Centre for Advocacy Studies, Pune, and has been campaigning against the impact of the sponge iron industry in India)

InfoChange News & Features, November 2008