 "SAIL has to focus on value addition")
Chandra Shekhar Verma was made chairman of Steel Authority of India Limited (SAIL) in June 2010, an inflection point for the company. Capacity expansion and modernisation of SAIL's steel mills and captive mines had started gaining pace, but left room for Verma to increase focus on induction of new technologies, raise the share of value-added products in saleable steel production and build raw materials security for a much larger steel production base.
Unlike India's other leading steel groups, SAIL operations are multi-centric, with four integrated mills, three special steel units and a ferroalloys plant. More, it operates mines in more than a state. Verma is using the Rs 72,000-crore investment in capacity expansion and modernisation as a learning curve for the bigger task ahead of achieving hot metal production of 50 million tonnes (mt) by 2025. In the World Steel Association (WSA)'s chart for 2013, SAIL is 26th, with yearly crude steel production of 13.5 mt. Except ArcelorMittal (production of 96.1 mt) and Nippon Steel & Sumitomo Metal Corporation (50.1 mt), first and second on the WSA list, none of the 50 leading steelmakers is in the exclusive 50-mt producers group.
"Historically, except for IISCO at Burnpur, SAIL has much surplus land at its other integrated steel mills. Considering the challenges of acquiring large land stretches to host new mills, we have the most important enabler, that is, space to expand capacity to at least 50 mt. The current expansion will take our capacity to 23.5 mt. Taking it further, to 35 mt by 2020-21 and to 50 mt by 2025-26, principally through the brownfield (expansion) route will call for investment of Rs 2 lakh crore. Our next two-step expansion will synchronise with the country's vision to lift capacity to 300 mt from 96 mt now. This will present SAIL with the opportunity to induct path-breaking technologies and make steel products for which we remain import-dependent," says Verma.
Due to our growing dependence on imports of metallurgical coal and compulsion to use iron ore fines in much larger quantities than at present, SAIL is according high priority to developing alternative iron-making technology, based on fines and non-coking coal. The new technology will recommend itself on grounds of economy of land use, environment friendliness, comparatively low cost of hot metal plant building and its blast-furnace route. As the process does not require sintering and coke making, emissions of sulphur oxide and nitrogen oxide will be greatly reduced and that of dust will largely be done away with. In the downstream will be mini flat mills, allowing continuous direct casting and rolling. Technology permitting, major compaction of mill operations has already been perfected by South Korean steelmaker Posco.
Verma, therefore, has to decide whether SAIL should go through the process of developing a technology already in existence or again attempt to partner Posco in a joint venture to make steel here, using the Finex. SAIL has already achieved high levels of land-use efficiency in some areas by installing blast furnaces of 4,060 cubic metres each at three mills, by dismantling smaller ones and steel rolling. Incidentally, Posco wants to employ Finex technology at its proposed Odisha venture.
Building new steel capacity is one strand of Verma's strategy. But to run a several-times-bigger SAIL by 2025 efficiently, he will do well to take a cue from the recommendation of Prime Minister Modi that "skill development" be given priority. So, the other pillar of strategy is to ensure different skills, from mining to making steel products, are available to SAIL.
The sector is facing skill deficiency at many levels. Unless corrective steps are taken early by way of adopting industrial training institutes (ITIs) under the public-private partnership model, this shortage will assume alarming proportions. Thankfully, some mills have started partnering ITIs to strengthen their infrastructure, faculties and courses. But these will be expected to do more in skill development, availing of the demographic advantage of a high percentage of young population. In the meantime, SAIL, to improve profitability, will have to raise the share of value-added steel in its products portfolio. Last year, its production of value-added steel rose six per cent to 5.3 mt. Later this year, this will get a boost, with the commissioning of a new 1.2-mt cold rolling mill at Bokaro. Also, SAIL must pursue improving blast-furnace productivity, reducing the energy consumption and coke rate, and recycling of waste products.
STEELING UP
| Unlike India's other leading steel groups, SAIL's operations are multi-centric, with four integrated mills, three special steel units and a ferroalloys plant.
| It operates mines in more than a state
| The Narendra Modi government wants chief executives of public sector undertakings to act like entrepreneurs
Unlike India's other leading steel groups, SAIL operations are multi-centric, with four integrated mills, three special steel units and a ferroalloys plant. More, it operates mines in more than a state. Verma is using the Rs 72,000-crore investment in capacity expansion and modernisation as a learning curve for the bigger task ahead of achieving hot metal production of 50 million tonnes (mt) by 2025. In the World Steel Association (WSA)'s chart for 2013, SAIL is 26th, with yearly crude steel production of 13.5 mt. Except ArcelorMittal (production of 96.1 mt) and Nippon Steel & Sumitomo Metal Corporation (50.1 mt), first and second on the WSA list, none of the 50 leading steelmakers is in the exclusive 50-mt producers group.
| STEELING UP |
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"Historically, except for IISCO at Burnpur, SAIL has much surplus land at its other integrated steel mills. Considering the challenges of acquiring large land stretches to host new mills, we have the most important enabler, that is, space to expand capacity to at least 50 mt. The current expansion will take our capacity to 23.5 mt. Taking it further, to 35 mt by 2020-21 and to 50 mt by 2025-26, principally through the brownfield (expansion) route will call for investment of Rs 2 lakh crore. Our next two-step expansion will synchronise with the country's vision to lift capacity to 300 mt from 96 mt now. This will present SAIL with the opportunity to induct path-breaking technologies and make steel products for which we remain import-dependent," says Verma.
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The Narendra Modi government wants chief executives of public sector undertakings to act like entrepreneurs, caring for "innovativeness, cost competitiveness and return on investments". Verma has floated a few ideas which, if these materialise, will put SAIL at the fore of 'frontier technology'-driven steelmakers.
Due to our growing dependence on imports of metallurgical coal and compulsion to use iron ore fines in much larger quantities than at present, SAIL is according high priority to developing alternative iron-making technology, based on fines and non-coking coal. The new technology will recommend itself on grounds of economy of land use, environment friendliness, comparatively low cost of hot metal plant building and its blast-furnace route. As the process does not require sintering and coke making, emissions of sulphur oxide and nitrogen oxide will be greatly reduced and that of dust will largely be done away with. In the downstream will be mini flat mills, allowing continuous direct casting and rolling. Technology permitting, major compaction of mill operations has already been perfected by South Korean steelmaker Posco.
Verma, therefore, has to decide whether SAIL should go through the process of developing a technology already in existence or again attempt to partner Posco in a joint venture to make steel here, using the Finex. SAIL has already achieved high levels of land-use efficiency in some areas by installing blast furnaces of 4,060 cubic metres each at three mills, by dismantling smaller ones and steel rolling. Incidentally, Posco wants to employ Finex technology at its proposed Odisha venture.
Building new steel capacity is one strand of Verma's strategy. But to run a several-times-bigger SAIL by 2025 efficiently, he will do well to take a cue from the recommendation of Prime Minister Modi that "skill development" be given priority. So, the other pillar of strategy is to ensure different skills, from mining to making steel products, are available to SAIL.
The sector is facing skill deficiency at many levels. Unless corrective steps are taken early by way of adopting industrial training institutes (ITIs) under the public-private partnership model, this shortage will assume alarming proportions. Thankfully, some mills have started partnering ITIs to strengthen their infrastructure, faculties and courses. But these will be expected to do more in skill development, availing of the demographic advantage of a high percentage of young population. In the meantime, SAIL, to improve profitability, will have to raise the share of value-added steel in its products portfolio. Last year, its production of value-added steel rose six per cent to 5.3 mt. Later this year, this will get a boost, with the commissioning of a new 1.2-mt cold rolling mill at Bokaro. Also, SAIL must pursue improving blast-furnace productivity, reducing the energy consumption and coke rate, and recycling of waste products.
STEELING UP
| Unlike India's other leading steel groups, SAIL's operations are multi-centric, with four integrated mills, three special steel units and a ferroalloys plant.
| It operates mines in more than a state
| The Narendra Modi government wants chief executives of public sector undertakings to act like entrepreneurs