Hike in slag prices hits mini cement units, India

Slag-based mini cement units in north coastal Andhra Pradesh are going through tough times thanks to an increase in the prices of slag as well as the non-availability of clinker. Nearly 40 slag-based mini cement units have closed down while the remaining six to seven units are on the brink of closure.

PSR Raju, president of Portland Slag Cement Manufacturers Association, told Business Standard that after the Visakhapatnam Steel Plant (VSP) had set up operations, the state government and the VSP management encouraged entrepreneurs to set up slag-based mini cement plants.

VSP produces around nine lakh tonnes of slag annually. To dispose of this waste material, the steel plant had initially offered the slag at throw away prices to these units. In a bid to attract the entrepreneurs to set up the slag-based cement plants, the state government, on its part, has also announced several incentives and tax concessions.

Encouraged by the incentives, around 50 slag-based mini cement plants, each with an investment of Rs 1 to 1.5 crore, were set up in Visakhapatnam, Srikakulam, Vizianagaram and East Godavari districts during 1995 and 1998. Initially, VSP had supplied slag at Rs 80 per tonne.

Later, it gradually increased the price to Rs 240 per tonne. In recent times it has reduced the price to Rs 160/t, but still there are no takers.

Because of the low operational costs, government incentives and cheap raw material costs, slag cement is available in the market for Rs 100 to 105 per bag, which is Rs 20-30 cheaper than other cements available in the market. "The slag-base mini cement units have been purchasing the required clinker from the big cement units in the state. The main problem is the non-availability of adequate quantities of clinker due to a cartel of major units who have stopped supplying clinker to small scale industries with an intention to force these units to close down. On several occasions, the cement majors have demanded higher prices for clinker," Raju alleged.

"To overcome these problems, we have urged the state government to allot some limestone mines for our association so that we could manufacture the required clinker on our own and meet the requirements of all the slag cement units. The state government has not yet responded to our request," he pointed out.