Orissa Government is likely to promote a Cluster Development Programme (CDP) at Bonai in Sundergarh district of the state.

About 11 sponge iron units located in about 5 km radius of Bonai are likely to be covered under the CDP. The programme is part of the Green Technology Cell of Industrial Promotion and Investment Corporation which aims to reduce the consumption of raw materials like coal and iron ore by the sponge iron plants and to reduce the pollution by these units to make the production process sustainable.

As part of the Technical Assistance Programme, the United Nations Industrial Development Organisation (UNIDO) will carry out a study on Bonai cluster and suggest adoption of new technology to reduce carbon emission. However, the sponge iron cluster will be formed first after which a diagnostic study for these units is likely to be taken up by UNIDO. While a SPV will be formed to implement the project, the Bonai Sponge Iron Association is likely to be roped as partner for the project.

Presently, these sponge iron units are producing about 2,000 tonne char per day having low calorific value. The proposed project is likely to utilise the char generated by these units to generate about 60 - 70 MW power. Further, it also envisages using pellets from these units to increase their efficiency.