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Steel
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Steel is a basic material of construction for creation of infrastructure and many other applications. Earlier, industrial progress and developement of a country was measured in terms of its annual steel production. In the last century, the major steel producing nations were the US, (the-then) USSR, Japan, Germany etc. That has been changing for various reasons, including the pollution creating impact of steel industry, among other reasons. Currently, China has become the driver of steel industry, having crossed 400 million tons per annum (mtpa), whereas their nearest rivals ( Japan, USA & others ) are around 100 mtpa only. India is at around 50 mtpa.
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[edit] The Importance Of Steel
For developing countries, steel continues to be the most common material of construction for creating infrastructure, be it roads, bridges, railways, industries, power plants, transmission lines, ports, buildings ( schools, hospitals etc ), as also for consumer durables viz. automobiles, appliances & other household gadgets.
There has been a tussle between steel and other materials like aluminium, plastics etc but steel continues to be the material of choice by many for its strength & durability, recyclability & being environmentally safer than other materials like plastics.
Steel plants can create pollutants but with the development of technology, there have been safe ways of producing steel, taking care of environment as well. There have been various kinds of pollution control devices like dust catchers, electrostatic precipitators, heat & flame protection devices etc which reduce the hazards associated with steelmaking, within acceptable limits.
[edit] Steel Production
Steel is produced out of iron-ore, as well as by melting scrap. There can be a lot of pollution during production of steel, if proper technologies are not adopted and adequate precautions not taken. In the conventional integrated steel plant, the main production units consist of Coke ovens, Sinter Plant, Blast Furnaces, Steel Shop ( Basic Oxygen Converters ), Continuous Casting & Rolling Mills ( Long and/or Flat ). In an alternative mini steel configuration, electric furnaces melt either scrap or Direct reduced iron ( sponge iron ).
[edit] Environmental Aspect in Steelmaking
- There is a lot of dust and heat generation in the steelmaking processes. There have been various dust catching techniques which remove & recover dust which can be recycled. The pollution control norms in various countries lay down the dust that can be discharged through the chimneys as also the ambient dust content in the production shops. Similarly, there are norms of various gases (Sox, Nox etc) permissible to be discharged through the chimneys. Most of the reputed equipment builders & suppliers are able to meet these IPCC ( Intergovernmental Panel on Climate Change ) norms.
- Apart from these specific pollutants, there is the issue of greenhouse gas emissions. New very large blast furnaces produce less CO2. Waste gases can be recovered and reused in converters. Electric Arc Furnace uses electricity to melt scrap and other steel materials. Electric Arc Furnaces are less carbon-dependent than the conventional integrated steel plant. Continuous casting is a more efficient method of casting.
Nowadays, external waste, such as plastics, can be added to a blast furnace, reducing the CO2 emission from coal.
( Source: IISI Publication-Steel and You The life of steel )
There are plans to increase steel capacity in India substantially to support the economic growth rate. It would be essential to adopt technologies which are efficient as also environment-friendly, so that the growth is sustainable & for the well being of the population at large.
[edit] Story of Indian Steel
India is known to have an ancient history in the art of metallurgy and steelmaking. Over the centuries, this initial advantage seems to have been lost. During the modern industrial revolution era in Europe and the West, India lagged behind in this art and science so much so that when the legendary Jamshedji N Tata was exploring the feasibility of setting up a steel plant in the iron-ore and coal bearing belt of Eastern India in the early 20th century , Sir Frederick Upcott, head of the Great Indian Peninsular Railway is reported to have remarked that ..’I shall eat every pound of steel rail the Tatas succeed in making…’. This remark notwithstanding, Jamshedji went about fulfilling his dream and vision diligently and laid the foundation stone of the modern Indian steel industry at Jamshedpur in Jharkhand in 1907. Tata Steel is currently celebrating the centenary of this pathbreaking vision.
With its modest output of over 5 million tons per annum (mtpa), in a global output of over a billion tons per annum, Tata Steel occupied a pride of place among the global steel industry as one of the lowest cost, good quality steel producer, even before it embarked on its acquisition of Corus last year.
Tata Steel(TISCO) and Indian Iron & Steel Co (IISCO) were the only two integrated steel producers in India at the time of independence of the country in 1947 with a modest output of less than 2 mtpa. With the achievement of independence, the first Prime Minister of the newly independent Nation, Jawaharlal Nehru had a vision of an economically strong India within a democratic political set up. He laid emphasis on the setting up of basic infrastructure and heavy industries within the country to make it self reliant during course of time to provide the necessities of life to its teeming millions. Even before the Industrial Policy Resolution 1956 was formulated, steps were taken to set up three 1-mtpa plants at Rourkela, Bhilai and Durgapur in 1955-56 in the Public Sector. Today, there is a lot of debate and divergence of views whether the Public Sector is the right model for business especially in the manufacturing sector with its demands on efficiency, profitability and competitiveness vis-à-vis the Private Sector. But, fifty years ago, possibly that was the need of the hour.
The initial three plants got set up fairly successfully within a span of 3-4 years from the dates of signing of their agreements. Out of these three, only Bhilai Steel Plant has maintained a steady progress as a successful unit ( in spite of being in the Public Sector) possibly because of its cosmopolitan character and on account of least political interference there. It may be mentioned here that these plants had been set up with technical and economic cooperation with three different countries- Rourkela with the-then West German, Bhilai with the-then Soviet Union and Durgapur with British collaboration.
[edit] The Growth Continues
When the proposal for the fourth Public sector plant in the coking coal belt at Bokaro (close to Jamshedpur) was under consideration, a request was made to the United States for collaboration. Legend has it that the proposal for this collaboration had to be dropped as the Capitalist Super Power found it unacceptable to associate for setting up a plant in the Public Sector. By 1963-64, when this was under finalization, the Industrial Policy Resolution 1956 had already laid down that steel industry was reserved for the Public Sector. Beyond the-then existing plants TISCO & IISCO in the Private Sector, all new capacity had to be created essentially in the Public Sector. Those were the days, when Nehru era was coming to an end. India proclaimed herself to be a Non-aligned nation, but the public perception was that the Nation was pretty much aligned to the Socialist Super Power. Thus, losing no time, the Soviet Union came forward and offered to collaborate again for the fourth Public Sector plant. With the successful experience of Bhilai Steel with Soviet collaboration, the proposal got readily accepted. Bokaro was then called a swadeshi steel plant insofar as indigenous engineering and machine building capacity were to be utilized extensively as opposed to the initial turn-key manner in which the first three plants had been set up. This attempt at indigenization proved very trying for Bokaro as it took enormous time to commission even the first Blast Furnace Complex. But for the dynamic leadership of Mantosh Sondhi ably supported by K C Khanna, which resulted in molten iron and steel flowing out of Bokaro, people had started writing it off as a white elephant. However, as a result of good leadership at Bokaro & SAIL through the years, the plant has managed to keep its head above water at times good and bad.
By the time Bokaro was set up, Public Sector had four integrated plants in operation and a fifth coastal plant was under consideration at Visakhapatnam. Meanwhile, in 1971, IISCO had been nationalized and became a part of the Public Sector steel industry. Tata Steel was the only flag bearer of Private integrated steel producer modernizing its facilities at Jamshedpur and managing it pretty well by international standards in terms of cost and quality.
[edit] Expansion Plans for Steel in India
Expansion programmes of the SAIL (Steel Authority of India Ltd) plants at Bhilai, Bokaro, Rourkela and Durgapur along with the Vizag plant of RINL (Rashtriya Ispat Nigam Ltd) were the only growth story of the steel industry in India in the 70’s and 80’s until the decontrol of the steel industry as a part of economic reforms package started in 90’s. Steel capacity stagnated at around 15 mtpa for a pretty long time till the new private entrepreneurs took the initiative of setting up greenfield plants with backward and forward integration. The new players included Essar Steel, Ispat Group, Jindals and others. Steel capacity presently has touched 50 mtpa as a result of entry of new private players but as mentioned earlier, this is a fraction of the Chinese steelmaking capacity which has crossed 500 mtpa during the same period.
Out of the foreign leaders in steelmaking, POSCO of South Korea signed an MoU with the Govt of Orissa quite sometime ago but the progress has not been very satisfactory so far. There are issues of land acquisition & rehabilitation of displaced persons, apart from long-term lease of iron-ore, among others. Recently, there is an attempt by the Orissa Govt to resolve these issues & put back the proposed project on track again.
Among the Indian players, Tata Steel is moving ahead with its plans in a steady manner. Also, almost all the Indian players- Jindal South West, Jindal Steel & Power, Essar Steel, Bhushan Steel & even some new entrants have signed MoU's with concerned State Govts in the states of Jharkhand, Orissa, Chattisgarh & West Bengal. The global leader Arcelor Mittal has also signed MoU's with the governments of Jharkhand & Orissa. The leasing of iron-ore & coal mines as well as site selection issues are getting resolved.
[edit] The Global Steel Industry
A lot has been written and discussed by way of comparison of growth stories of economies of China and India. Whereas India is still considered as the global OFFICE of the world, China has become the global FACTORY. In spite of the steady but slow implementation of economic reforms in India for almost two decades, the Indian growth rate is still hovering around 8-9% only as against Chinese of over 12%.
As far as the steel industry is concerned, China has been driving the bus, so to say, in the 21st century.
Out of a total annual global steel production of 1250 million metric tonnes, the contribution of major steel producing nations has been as follows:
| Country | Production |
|---|---|
| China | 422.7 |
| Japan | 116.2 |
| US | 98.6 |
| Russia | 70.8 |
| India | 49.8 |
| South Korea | 48.5 |
| Germany | 47.2 |
| Ukraine | 40.9 |
(Source; IISI Steel Statistical Yearbook 2007)
Of late, Indian entrepreneurs like Lakshmi N Mittal and Ratan N Tata, who have almost achieved a celebrity status in India, seem to be taking charge of the global steel industry. Arcelor Mittal headed by Lakshmi N Mittal is still limited to operations outside India (Europe, North & South America, former CIS countries, Africa & Asia). For a couple of years, they have tried to take the initiative of signing MoU’s for setting up greenfield projects in the states of Jharkhand & Orissa in India. Similarly, the quantum jump in the Tata-Corus capacity has come as a result of acquisition of Corus by Tatas.
India has the competitive advantage in steel due to abundant availability of good quality iron ore locally. Coking coal, of course, is not locally available in sufficient quantity and quality. Huge coal imports would thus become a necessity for quantum jump in steel capacity, unless there is a breakthrough in technology of reducing iron ore or making steel directly through alternative routes. Production of Direct Reduced Iron (DRI) offers a distinct possibility of growth depending on economics. India already occupies a pride of place in DRI production in the world. Out of a total of annual production of 60 million metric tonnes, India produces almost one fourth ( 15 mtpa ).
If India has to maintain its rate of economic growth, huge investments in infrastructure including Power Generation are inescapable. All this is possible and would need commensurate growth in steel capacity. While China has already peaked in its steel production, becoming a net exporter recently, India has a long way to go. Even if 400 mtpa would appear to be beyond comprehension at this stage, a modest target of 100 mtpa in the next 10-15 years would need an addition of almost 5 mtpa each year with immediate effect. While investors have been taking the initiative of signing MoU’s with various state governments of West Bengal, Jharkhand, Orissa & Chattisgarh, among others, the progress on ground is not visible. This is a matter of concern.
[edit] The Future
Where does India go from here? The need for massive steel capacity in India does not need much discussion as of now. This can be achieved through a combination of expansion or better utilization of the existing facilities along with fresh creation of new greenfield capacity at suitable new locations. In this context, the possibility of coal bed methane (CBM) located in the states of Jharkhand & West Brngal, which ONGC is trying to commercialise, needs greater thrust. Natural Gas, hitherto, has been limited to coastal areas only in India. The availability of CBM close to the rich iron-ore deposits in Eastern India offers an opportunity of its utilization in steel industry. This needs to be explored, as a matter of urgency.
Investors are queuing up for the establishment of new capacity. Government at Delhi and State capitals must put their act together to resolve any bottlenecks for speedy creation of new facilities. Any delay in this will be a tragedy not only for the steel industry but for the nation, as a whole. Along with existing technology and routes of conventional steel production, there is a need for breakthrough in technology through concerted R & D for development of appropriate technology for India. If India has to reach 100 mtpa & beyond, it should be bold enough to invest in R & D to develop and commercially establish new technology especially those which can do away with or reduce the consumption of coking coal as raw material (fuel). The concern for environment must also reflect in the technology to be adopted for the growth of the Indian steel & mining industries.
Author: K A P Singh
