India to hit steel capacity target ahead of time; infra bottlenecks persist

There is no longer any official prevarication about the country achieving 300 million tonne (mt) crude steel capacity target by 2030-31 that the government was bold enough to incorporate in the steel policy announced in 2017. India’s present capacity now is close to 140 mt. Steel Minister Birender Singh is using every forum, as he recently did at NMDC diamond jubilee celebrations, to say that India is well on course to be a 300-mt steel capacity country, next only to China, in another 12 years. 

The most bullish of them all, JSW Steel Chairman Sajjan Jindal, citing the Chinese example of building capacity of over 1 billion tonnes (bt) and then producing 832 mt last year and using most of that domestically, says, “India too will cause a global sensation by arriving at that magic 300 mt figure ahead of due date.” 

Robust demand for steel sustaining prices at remunerative levels and the country’s compulsion to build a strong infrastructure are drawing significant investments in the steel sector. Intense competition among business groups to buy the insolvent steel assets and then initiate major brownfield capacity expansions are indicative of what the future holds for this basic industry. The immediate past steel secretary Aruna Sharma explains: “If annual steel demand growth is sustained at around 10 per cent, then lifting our per capita steel use from 69 kg now to the targeted 160 kg by 2030-31 is eminently possible.” At the same time, there remains a growing industry concern as to whether the infrastructure to support raw materials movement to steel producing units from far away mines and ports in the case of coking coal will be sufficiently beefed up to support crude steel production of 255 mt on a capacity of 300 mt by 2030-31. 

Let’s see how the raw materials figures stack up. The steel policy says achieving the 2030-31 capacity and production targets will call for the use of 859 mt of raw materials, including 437 mt of iron ore, 136 mt of non-coking coal for direct reduced iron production and for use as pulverised coal injection in blast furnaces, and 161 mt of coking coal for which the country is becoming increasingly import dependent. As is reported at regular intervals, iron ore producers find it an uphill struggle to evacuate the mineral from mines using road and rail for domestic use. Miners in Odisha and other iron ore bearing states will more often than not put up with shortages of rakes leading to piling up of ore at mine-head, inviting rebukes from environmentalists.

On more than one occasion, miners in Goa, Karnataka and Odisha were censured by the Supreme Court for causing much damage to the environment. In fact, ahead of the court cancelling all the 88 leases in Goa by a February 7 order as the local government made the mistake of giving second renewal of leases instead of holding fresh auctions, the state had a court directed production cap of 20 mt against its peak output of 38 mt in 2010. Karnataka too has a 35 mt cap. In the court’s assessment, the available infrastructure in the two states could support iron ore production only up to the cap points without harming the environment. 

The challenge for miners then is to avoid inviting any further wrath of the court and state regulatory agencies but still be able to meet the steel industry’s growing demand for iron ore. It will be a sad day for the country if steel mills close to the ports make it a practice to use growing quantities of imported ore taking advantage of the low 2.5 per cent customs duty. After all, India is sitting on iron ore resources of 33 bt. A time-tested way out from a crisis developing in ore despatches is to build growing numbers of slurry pipelines (SPs) between the points where the mineral is beneficiated on excavation and where the fines are turned into pellets. SPs have been globally found ideal from Australia and Brazil, the world’s two major mining nations to some European countries for transportation of low value, high volume concentrates such as iron ore and bauxite. 

Quite appropriately, the credit for building the world’s first pipeline to carry slurry iron ore concentrate in 1967 goes to Australia, which has a growing profile in ore production and exports and also discovery of new deposits. It was 39 years since then that Essar commissioned India’s first slurry pipeline linking its ore beneficiation plant at Kirandul in Chhattisgarh with its 8 mt pellet unit at Vizag. The 267-km Essar SP traverses some very tough terrain through three states but making minimum impact on the environment. In another eight years, Essar built a 253 km SP connecting its ore processing facility at Dabuna in Keonjhar district with a 6 mt pellet plant at Paradip. In both cases, the pellet plants are in proximity to all weather ports where the sponge iron making material is sent through conveyor for sailing to Essar steel complex at Hazira in Gujarat. The country’s largest iron ore producer, NMDC, is building a 455-km SP connecting Kirandul first with Nagarnar, where the company is about to commission a 3 mt steel mill, and then with Vizag.  

Even while transportation of water mixed ore concentrate through SPs over long distances makes minimum impact on the environment and has the potential to remove a big load on the country’s road and rail systems, it is only now after government prodding that the steel industry and miners are looking at the option with some seriousness. Besides freeing road and rail network of iron ore load, SPs allow the dusty material to move silently. 

Ore concentrate being encased in pipes, there is no emission of dust damaging public health and the environment. To the extent the pipes remain underground, the land above can be used for growing crops. Sending ore in slurry form will give users a cost advantage of at least 50 per cent over rail transportation and over 80 per cent when trucks are used. In order to bring down cost of transferring ore from mines at Keonjhar to its 6 mt steel mill, covering a distance of around 250 km, JSPL is building an SP. A few more such initiatives are in discussion stage. 

Building blocks

Steel capacity: 300 mt by 2030-31

Current capacity: 140 mt

Raw material  requirement: 859 mt 

Iron ore: 437 mt 

Non-coking coal: 136 mt