Sustainable Development in the Mining Industry - presentation at QCFI Bhilai
The Indian Ferro Alloy Industry
1. The Indian Ferro Alloy Industry
- Prabhash Gokarn & TS Sunderesan,
Indian Ferro Alloy Producers Association
About IFAPA
Indian Ferro Alloy Producers Association (IFAPA) is committed to the growth of the
ferro alloy industry in India. It represents the Indian Ferro Alloy Industry with almost
all ferro alloy producers being members of the association.
IFAPA imbued with the philosophy that while individual initiative, enterprise and
efforts are the foundation of a nation’s progress, a co-operative and complementary
functioning of the ferro alloy industry is needed for consensus in all its interfacing
activities with various outside agencies, like the government and other industry bodies
to avoid confrontational and conflicting facets.
IFAPA is the sole industrial body that interfaces with government, trade and other
industry bodies, educational and R&D institutions on — legal, tenurial, fiscal,
regulatory, forests and environmental — all matters connected with the functioning of
the ferro alloy industry on a continuing basis.
2. INTRODUCTION:
What are Ferro Alloys
Ferro Alloys are vital inputs for the production of all steel : carbon, low alloy
and high alloy steels, including stainless steel. Ferro Alloys are used during the
production of steel, as deoxidants, to make clean steels and as alloying agents.
Ferro Alloys are classified into two categories, based on the nature of
manufacture and useage pattern, namely :
1. Bulk Ferro Alloys viz., High Carbon Ferro Manganese, Silico Manganese,
Ferro Silicon, High Carbon Ferro Chrome etc., usually manufactured by
carbo-thermic reduction using submerged electric arc furnaces and,
2. Noble Ferro Alloys viz., Ferro Molybdenum, Ferro Vanadium, Ferro
Tungsten, Ferro Silico Magnesium, Ferro Titanium, Ferro Boron, etc.,
usually manufactured by alumino-thermic reduction in the Thermite
process.
The requirement of Ferro Alloys, both type and quantity, depends upon the
process of steel making and the type of steel being made. For instance, the
quantity of silico manganese and ferro silicon, traditionally used to make
killed and semi-killed steels and for aiding desulphurization had reduced as
steel plants adopted newer technologies (like Basic Oxygen Steelmaking,
external desulphurization using cored wire injection, and vacuum degassing).
However, with the steep increase in the demand for alloy steels, the specific
consumption of ferro alloys is on the increase.
Steel is alloyed to increases its resistance to Corrosion and Oxidation, to
improves its Hardenability and Tensile Strength, its High Temperature
Strength & Creep Resistance, to increase Wear and Abrasion resistance and
modify the nature of inclusions in steel, that decreases the tendency of steel to
crack during processing or during service.
3. The Indian Ferro Alloy Industry – the genesis
The Indian Ferro Alloy Industry in the organized Sector came into production
in mid sixties, at the behest of the Planning Commission, which thought it
proper that instead of raw materials abundantly available in the country being
exported at throw away prices, the country could build up the infrastructure
where it could use the natural resources of Ores like Manganese Ore, Chrome
Ore, Titanium Ore and produce value added products like Ferro Alloys.
In the Second Five Year Plan, the Planning Commission formulated a Policy
and suggested licensing units based on 50% of the production capacity for
exports, besides meeting the local requirements.
Initially, the Ferro Alloy Units came up in what are now the states of Orissa,
Karnataka, Maharashtra, and Andhra Pradesh mainly due to availability and
proximity of raw material & power. Ferro Manganese plants came up at Joda
in Orissa, Dandeli in Karnataka, Tumsar in Maharashtra and near Vizag, A.P.
Today the Ferro Manganese plant at Joda is the one of oldest continuously
operating Ferro Alloy plants.
The first phase of expansion of the industry took place between the late sixties
and seventies and 14 furnaces with capacity addition of 178 MVA undertook
bulk production of Ferro Silicon and Ferro Chrome.
The second phase of expansion was during the eighties on product
diversification, assimilation and advance technology and setting up of Export
Oriented Units to earn substantial foreign exchange for the country. This
resulted in addition of 12 more furnaces and the capacity addition during the
eighties was about 308 MVA.
The Ferro Alloy Industry was thrown open and liberalized during 1991-92. As
a result, a number of Small and Medium Units having transformer rating of 2.5
MVA to 10-12 MVA emerged in production of Bulk Ferro Alloys, particularly in
the State of Madhya Pradesh, West Bengal, Kerala, Pondicherry, Goa,
Jharkhand, Chhattisgarh, Jammu and Meghalaya.
4. The Indian Ferro Alloy Industry Today
Since liberalization, the Indian Ferro Alloy industry has truly become global.
The ferro alloy industry in India has grown far in excess of the growth in the
steel industry and the estimated production capacity of ferro alloys in India is
more than double the domestic demand, with a significant proportion (upto
50% in some years) of the ferroalloys being exported. Despite this, the ferro
alloy industry operates at an average 65% capacity utilization.
The estimated production capacity has crossed 2200 MVA and fresh capacity
of around 500 MVA is coming up, mostly in Manganese ferro alloys to feed the
proposed steel expansion.
Table 1 : The Indian Ferro Alloy Industry
Capacity,
Current Capacity Units Furnaces MVA
mill MT
Manganese Alloys 76 161 1182 2.1
Ferro Silicon 29 38 266 0.2
Chrome Alloys 28 53 803 1.3
Noble Ferro Alloys 37 - - 0.04
TOTAL 170 25 2 2251 3.64
5. Contribution of the Indian Ferro Alloy Industry to the Indian Economy
Like the software industry that propelled India to global fame and made India
the hub for software development, properly nurtured, the Indian Ferro Alloy
industry has the potential to make India the hub for ferroalloys to the world.
Already, the Indian Ferro Alloy industry is :
a. A Valuable Foreign Exchange Earner
India is a major ferro alloy exporter and Ferro alloy exports are a major
Foreign Export earner.
Foreign Exchange Earned from Ferro Alloy Exports in Million USD
1800
1547 548*
1600
1400
1200 1118 *in 3 Qtrs ,
Apr-Dec’09
1000
800
600
364
400 266 266
200
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Of this over 60%-70% is earned by export of HC Ferro Chrome.
b) Earnings from Export of Ferro Alloys ploughed back to society :
The earnings from the total sales of Ferro Chrome the Industry has re-
invested in the Industry by setting up Captive Power Plants, acquiring
Coal Mines, Ore Mines and spending a huge amount on Society by
setting up Residential complexes, Schools, Colleges and Hospitals, etc.,
which has created additional jobs for the people. Ferro Alloy industries
are located in remote areas creating islands of prosperity in states of
Orissa, Karnataka, West Bengal, Chattisgarh, Kerela & Andhra Pradesh.
6. c) Electricity generation
Electricity generation by the Ferro Chrome Industry through Captive
Power Plants is also supplied to the grid, thus increasing availability of
power in India.
Also, although generation costs for power is not high, the industry pays
a high tariff due to cross subsidization to Agriculture, Low Plant Load
factor and high T & D losses. The Units have to maintain a minimum
demand of 85 % of Power in their operation. This clearly shows that the
Industry has paid much more than the normal power tariff applicable
for this Industry, which has earned substantial revenue to the State and
Central Governments
d) Industrialization of the eastern region –
particularly Orissa, West Bengal and Andhra Pradesh
e) Employment to people :
It is estimated that a 50k/MT Ferro Alloy plant supports around 750
families around the plant(ie a total of about 60,000 families by the ferro
alloy industry in India), and these plants are located in remote areas
where there is no other source of employment.
The steep increase in power tariff in South Africa and China coupled with
increases in freight, labour, and regulatory costs in China has made the Indian
Industry highly competitive. Decreased Chinese competitiveness has resulted
in a sharp reduction in ferroalloy exports from China, which has turned into a
net ferroalloy importer since 2009.
This presents an opportunity for the Indian Ferro Alloy industry to
consolidate its position as a leading Ferro Alloy exporter to the world.
As stated earlier, due to the low capacity utilization of existing capacities and
with new facilities coming up, India has the unique ability to immediately
scale up production of ferro alloys.
India enjoys a freight advantage in markets such as China, Korea & Japan,
which are large consumption centres. China, in particular has shown a nearly
25% growth in steel production and is still growing.
Other advantages include comparable power, labour & inland freight costs to
major ferroalloy production regions like China and domestic availability of
ore.
7. However, there are some bottlenecks that need to be resolved if India is to
claim its position, namely:
1. Infrastructural Bottlenecks
Inadequate roads, railway network capacity & ports for handling large
scale ore imports & ferroalloy exports. The Government action on
encouraging investments for rapid infrastructure development; creation of
special economic zones and special freight corridors is a step in the right
direction and action needs to be speeded up.
2. Transport Bottlenecks & Problem of Transport Union
Transportation has been the bane of the ferroalloy industry, due to high
cost of transportation, low reliability and frequent disruptions. In many
major ferroalloy manufacturing regions, the transport sector is in the
clutches of powerful transport unions who do not allow outside trucks in
the sector. Consequently transport rates in some sectors are amongst the
highest in the world. It is necessary for the industry and the local
authorities to jointly tackle.
3. Power Availability & Cost
Indian average power tariffs are at similar level to China, after steep
increase in power tariffs in China recently, which has made the Indian
Industry competitive. Also, power sector reforms - allowing for Captive
Power Plants & Power Wheeling has made the industry somewhat inured
to grid power. However, as small captive power plants are not energy
efficient, there is an urgent need to increase grid power generation to
support ferroalloy industry growth. Recent power shortages in summer in
Eastern India (the hub of Ferro Alloy production) and South India, is also a
matter of concern.
4. Regulatory Framework
The industry needs a regulatory framework that encourages ferroalloy
exports for India to consolidate its position as major ferroalloy exporter.
Incentives to ferroalloy export hubs by way of priority power allocation,
rake availability, and tax structure will help boost ferro alloy exports
further.
In conclusion, the ferroalloy industry in India is all set to further consolidate
its position as the major source of ferroalloys to the world, if the above
bottlenecks are resolved.
10. Sized Ferro Alloy ready for Packing
Automation of Submerged Electric Arc furnace for Ferro Alloy making
11. Quality Control during Ferro Alloy Making
Casting of tapped liquid ferro alloys into cast pans before sizing
12. The strategic advantage of the ferro alloy industry in India stems from India’s
resource base in terms of manganese & chrome ores
A fully mechanized Manganese ore mine
13. A mechanised Chrome Ore Mine in Orissa
A mechanized Manganese ore mine in Orissa