The Future of the Indian steel industry lies in the accumulation of idle capacities, low end products and adverse terms of trade.

1. Susmita Dasgupta
ECONOMIC RESEARCH UNIT,
JOINT PLANT COMMITTEE
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2. If the steel industry continues to grow at 8%
annually on an average.
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3. According to the Annual Report 2011-12 of Ministry
of Steel, Government of India
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4. The main reason for this is the stagnating
population and zero growth rates of economies.
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5. 1. Trade in raw materials adjunct to steel business
like coal, iron ore, chromium, zinc and nickel.
2. Repeated relocations of steel facilities. Eg POSCO
and plants of Arcelor Mittal.
3. Development of cities and real estates in land
earmarked for steel plants as in
JSE, Karnataka, BSL in Jharkhand. Essar and Tata
Steel have real estates and investments in SEZs.
4. Businesses such as ocean liners and port
development. Eg Tata NYK and Dhamra port. Essar
Shipping, JITF Vector of the Jindals.
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6.  Lack of mineral resources like iron and coal.
 Limited supply of natural resources like water
and land.
 Pollution impacts on air and water.
 Poor skills.
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7. Managing
Shortage of
Iron Ore
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8.  India has reserves of 13000 million tonnes, a
stock of about 25 years beyond 2030.
 Mining of poorer quality of iron ore with
gangue.
 Fines are likely to be mined and hence lower
Fe content.
 Increased pollution due to use of fines, more
fines due to lower Fe and higher gangue.
 Steel plants are likely to get uncertain mix of
iron ore.
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9. Observes that pollution in the
sponge iron industry is more due to
the poor quality of raw materials
than due to poor management of
pollution control technology.
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10.  Pelletization to use iron ore fines.
 Export of pelletization instead of iron ore, leaving
the steel industry exactly in the same place.
 Increased concentration in mine ownership and
in mining for pellets. Hectic mine buying.
 Elimination of DRI industry or integrating it to
Blast Furnaces or EAFs.
 Migration of DRI to Gulf where natural gas prices
are low and DRI is the only way to make margins.
 New designs of Blast Furnace to be able to use
100% pellets.
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12.  India has at present 284370 million tonnes of
coal including coking and non coking as
proved, indicated and inferred
reserves, according to the Ministry of
Coal, 2012.
 Assuming that the steel industry uses 12% of
the coal produced, the industry can claim
only 12% of the coal reserves which is 34124
million tonnes.
 At the rate of 423 million tonnes annually, we
are left with only 80 years.
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13.  Monopoly of the government over coal
mining and allocation of blocks.
 The strange clauses in Fuel Supply Agreement
of Coal India Limited, the PSU which has a
monopoly over coal.
 Much of coal has very high ash content
emitting high pollution and adversely
affecting fuel economy.
 The need to import coal and the compulsion
to export thermal grades in return.
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14. 1. Mixing of grades and emerging with a
poorer quality of coal.
2. Integration of steel facilities for maximum
use of waste gas in order to ease out burden
on coal.
3. Rush for coal blocks due to anxieties related
to land acquisition issues.
4. Squatting over blocks to hoard and raise
domestic prices.
5. Diversion of profits from steel to purchase
coal blocks abroad.
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15. 1. Community attacks on DRI plants because of increased
pollution. Community attacks on Coke Oven emissions.
2. Japanese companies coming with non recovery coke
ovens with cleaner technology and better heat recovery
systems. Such technology supplies bring along with them
raw material assurances.
3. Thermal coal must be exported from coal blocks held by
steel companies to pay for royalties and coking coal.
4. Crisis in the power sector due to export of thermal coal.
5. Insistence on nuclear energy to overcome the export of
thermal coal.
6. Huge crisis of coal for stand alone DRI, merchant pig
manufacturers, stand alone sinter and pellet plants.
Threat of elimination.
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16. Pursuit of raw materials will favour larger plants
over the smaller, where smaller plants are likely
to be eliminated.
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18.  Larger plants with automation with specific
deskilling policies.
 Contract labour.
 Standard grades.
 Purchased technology especially tied with raw
material trade. Loss of indigenous
technology.
 Apathy of Indians to research.
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20.  Indian population is expected to be 1.5 billions.
 At the present rate of annual growth of 1.5% and
the growth of steel at 8%, it is expected that the
per capita consumption of steel will grow by
5.3%.
 If the present per capita steel consumption in
India is 50 Kgs, then at 5.3% growth, by
2030, per capita consumption will be no more
than 120 kgs, maximum 150 kgs.
 Annual demand for steel will be 225 million
tonnes of steel leaving 100 million tonnes each
year as surplus.
 With declining growth of steel demand across the
world, this surplus steel will prove burdensome.
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21. And other products will have to be imported in
return causing a series of cheap imports in the
rest of the economy.
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22. Industrial Structure Technology Profile
 Larger and integrated plants
and elimination of smaller
stand alone plants.
 Production of standard
grades and import of
specialized grades albeit
from Indian plants located
abroad.
 De skilled workforce.
 Repeated relocation of steel
business to generate profits.
 Creating maximum distance
between raw material and
steel plants to generate
freight business.
 Integration of stages eg
DRI, pellets, iron ore
beneficiation and steel
production.
 Creating facilities that can
use a variety of raw
materials.
 Technologies to manage off
gas and hence integration
of processes.
 Large scale mergers and
acquisitions in dedicated
technology providers like
Danieli, Corus, Tenova; or
Hatch and Beddows.
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23.  We will observe quite a bit of capital migration as
value added processes and raw material
production will migrate abroad. DRI facilities in
the Gulf countries, ferro alloys in Nepal and
Bhutan and so on.
 Technology will be chosen to ensure raw material
supply. Like Japanese technology supplies of non
recovery Coke ovens will come with coke.
 Large scale automated plants for sinter and pellet
leading to large scale and automated steel plants.
 Standard grades will be produced and the
diversity and broad base of the industry likely to
be compromised.
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24. Thank You.
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