Mr. Kamal Aggarwal is engaged in his family run business of steel manufacturing and especially TMT bars since 1975. Besides this he is serving for more than 30 years as an Honorary Secretary General, at All India Induction Furnaces Association. The Association was established in 1987 representing a significant section of the small and medium enterprises steel units who are involved in steel melting and processing through Electric Induction Furnace route.
IM: Can you tell us about the about the development of induction furnace industry in the country including its present turnover and approx. number of units?
KA: Induction furnace steelmaking process use electrical energy for melting charge material and are being used since a long time to produce liquid steel. In 1907, first steel was produced from IF in the United States near Philadelphia.
The first IF for 3-phase application was built in Germany in 1906 by Rochling-Rodenhauser. Most of the IF units in India are in range of average 5-10T capacity, but now bigger size is preferred with refining unit and continuous casting in line. Currently, furnaces with up to a maximum of 30-tonne/charge are being used. In 70s, stainless steel produced by melting stainless scrap and in 80s, Indian entrepreneurs started mild steel melting and slowly units became popular in making alloy & special steel from 90 onwards.
IF units produce steel using scrap, pig iron and sponge iron/ HBI as charge material. Several mini steel plants are dispersed in the country to produce mild steel, alloy steel and stainless steel both for long and flat products. This sector depends entirely on availability of scrap and sponge iron. In many of these units, mini blast furnace hot metal is also used in the charge as partial substitution of scrap. Many producers have installed high frequency induction furnaces and have modernized by using refining equipment as well as continuous casting units.
The secondary steel sector i.e., EAF & IFs together produces 57% of country’s total steel production of about 63 million tons and IFs alone produce 35 million tons against the capacity of 39 million tons (capacity utilization 89.7%). As output, major grade group of production from IF units are Carbon Constructional grade 40-45% (Low & Medium C), Alloy Constructional grade 50% (HSLA, Case Hardening Steel, Medium C –Cr, Mo & Cr, Mo, Ni grade Steels), Stainless steel 5-6% (Mostly Martensitic & Ferritic Grades), Other grades like Tool HW, CW, Die, Die-block Steel, Ball Bearing etc. together about 5%. Turnover in the present situation –2.41 billion USD (considering average price for carbon construction grade 40,000/ PMT & alloy & special steel 60,000/ PMT)
A new generation of industrial induction melting furnaces have been developed during the last 25 years. The development of flexible, constant power-tracking, medium-frequency induction power supplies has resulted in the widespread use of the batch melting methods in modern melt shops where power units incorporate heavy duty silicon-controlled rectifiers that are able to generate both the frequency and the amperage needed for batch melting and are able to achieve electrical efficiency levels exceeding 97%, a substantial improvement over the 85% efficiency of earlier induction power supply system. The new designs allow maximum utilization of furnace power throughout the melting cycle with good control of stirring. Some of the largest commercial units are even capable of melting at nearly 60 tons per hour with needed supporting system and facilities even fast melting of cold charge within 30 minutes.
IM: How is the IF industry geared up to meet the Govt’s dream of creating 300 million tonnes crude steel production by 2030?
KA: A vibrant Steel industry all over the world has historically been the foundation of country’s rapid Industrial Development. On account of rapid industrial development, from a small capacity of 22 Million tone in FY 1991-92 prior to deregulation, India has become 111.2 million ton, the 2nd largest steel producer in the world with output as 111.2 million ton only after China, the giant producer as #1 for last several years with output of 996.3 million tonnes in 2019. India also has a vast and rapidly growing market for steel with strong MSME based sector and a relatively young work force with competitive labor costs. Indian steel industry is characterized by the presence of a large number of small steel producers like IFs who utilize sponge iron, melting scrap, pellets. Presently, there are about 350 sponge iron producers that use iron ore/ pellets and non-coking coal/gas providing feedstock for steel production.
The National Steel Policy 2017 (NSP 2017) is an effort to steer the industry to achieve its full potential, enhance steel production with focus on high-end value-added steel while being globally competitive. To ensure adequate availability of iron ore and other minerals, efforts should be made in conjunction with MSTC, Ministry of Mines / Steel ministry to facilitate auction of mineral blocks in a regular manner Out of total 11 nos. of iron ore mineral block allocated, Karnataka had 7 (63.6%), Odisha – 3 (27.3) & MP -1 (9.1%). Utilization of low-grade fines lying at mine sites of captive iron ore miners has to be promoted and any regulatory change that may be required needs to be be evaluated in conjunction with concerned ministries. Beneficiation and agglomeration industries should be strengthened through suitable support.
During mechanized mining, 60 to 70% output is generated as fines below 10 mm size. Fines are also generated during transportation and handling. To economically utilize these fines, suitable agglomeration process is necessary for converting them into sinters or pellets. Till recent past, domestic steel industry was mainly using higher grades of iron ore and a higher proportion of lumps due to their easy accessibility and availability. However, there is a pressing need to utilize low grade iron ores including slimes and dump fines which are stockpiled at different mine heads. Hence, optimal use of existing low grade iron ore resources with special emphasis on conservation of high-grade ores needs to be encouraged. Pelletization process in India with iron ore fines has capacity of about 86 million tons with a capacity utilization of mere 32.5%. Impetus should be given to Pellet industry as it helps in mineral conservation by acting as direct feedstock in Blast Furnace in place of high-grade iron ore as well as use in IFs.
IM: How is IF industry planning to implement the ambitious “Atmanirbhar Bharat” programme?
KA: The concept of Atma Nirbhar Bharat in steel industry is the project of total replacement of steel or steel product imports augmenting steel production capacity, enhancing steel quality, moving towards production of value-added steel products. In some vulnerable sectors, increasing production by way of higher capacity utilization is an answer to meet entire requirement in domestic market even making fresh investment as well as inviting FDI in steel making, which will, hopefully, provide the much-needed economy of scale and the option to switch taking challenges for product export. The technology of steel making from induction furnace, refining liquid steel and subsequently processing either as finished products in shaped condition or as value added product in India are currently better or equivalent quality standard compared to imported products. Consuming sectors should encourage secondary steel sectors to take challenges in meeting their requirements.
Indian Defense sector as policy decision announced stopping of import of 101 military products/ components which can be developed by domestic producers. Accordingly, Indian manufacturers are being encouraged to strengthen their activities in line ensuring indigenization of such products. Government has also decided that government contract will be strictly examined to encourage import substitution wherever possible. Govt. has also asked each sector to thoroughly examine and identify products which can be indigenized by domestic producers/ manufacturers.
The government is mulling a comprehensive steel policy in a bid to push Atma Nirbhar Bharat in the steel sector including more steel products under the monitoring mechanism from the current 215 steel product lines. Discussions are underway to introduce BIS standards on all steel products to stop substandard imports of goods entering in our country. Govt. has encouraged manufacturers to eliminate constraints in their existing processing system, if there be any, for improvement and invest in R&D activities for all such jobs. Any such proposal will be critically examined to extend all possible support by Govt. The leading Research Institutes in the country may be approached to help and guide in need. Further as part of this scheme, the government may also set up an Empowered committee to expedite land, infra, forest, environmental issues.
IM: To what extent has the IF industry been hit due to sharp rise in iron ore price in the past few months?
Price of iron ore rose by over 75% to a seven-year high with a surprising resurgence in the economy and strong Chinese demand forcing disruption in supply in global and domestic market and also drop in availability for smaller steel producers. Even though demand has picked up and the market is buoyant, smaller steel producers like IF units, Sponge Iron & Pelletization units – most of which are secondary steel producers or directly liked up units have not been able to scale up production. The factors are more than one i.e., not only the shortage of iron ore but input costs have risen sharply over the past few months. Secondary steel producers are repeatedly pointing out the problem of non availability of iron ore and prevailing high prices.
Most of the secondary steel plants were partially or completely closed due to low level of demand in the market arising out of pandemic situation and also high manufacturing cost because of the resultant disruption in supply chain system. After the pandemic, the cost of production between an integrated steel plant and the secondary players has much widened, creating difficulties for secondary steel sectors. The rise in iron ore prices has been triggered by a combination of factors, including reduced output from Brazilian iron ore miner Vale, and China’s accelerating steel production. Australian shipments rose 7% to 713 million tonnes, while Brazilian supplies were up 3.5% at 235.7 million tonnes as per data from China’s General Administration of Customs. The two countries’ production could not fully meet China’s demand and China Mills had to buy from other countries.”
Steel producers’ body has approached to PMO office explaining that the metal price hike was due to surging raw material costs, and demanded a ban on iron ore export for six months. Over the past couple of months, the steel industry has witnessed constant dialogue between iron ore miners and steel producers, aimed at reaching common platform on the availability of key commodities for manufacturing steel. While manufacturers of alloy steels have gone up to the Prime Minister’s Office (PMO) seeking a ban on exports of iron ore citing sky-high prices, miners of iron ore —whose pellets form about 60% of the cost of production of steel have claimed that steel mills have been importing iron ore to suppress prices of the commodity despite huge stockpiles lying idle. Both sides have supplemented their claims with data.
IM: What are the key hurdles being faced by the industry?
KA: In order to promote use of scrap-based steelmaking technologies inter-alia to reduce GHG emission intensity in the country, actions need to be initiated for
1. Increased availability of good quality ferrous scrap. Options have also been evaluated in coordination with other concerned ministries to develop a scrap segregation (quality-wise), collection, processing and recycling policy.
Tata Steel has completed sourcing the first set of ferrous scrap for processing at its new steel recycling plant being set up at Rohtak in Haryana for a capacity of 5 million tons at Rohtak Haryana. The scrap has been procured from various market segments such as end-of-life vehicle scrap, obsolete household scrap, construction and demolition scrap and industrial scrap which would be processed through mechanized equipment and the high-quality processed scrap would be supplied to Electric Arc Furnaces, induction furnaces and foundries for downstream steel making.
It is the first such facility in India, equipped with modern scrap processing equipment such as Shredder, Baler and Material Handler systems. The initiative aims to provide the much-needed raw material fillip to the steel industry by making available Quality Processed Ferrous Scrap, streamlining the currently unorganized scrap supply chain, lowering the dependency on import and enhancing the transparency and efficiency in the entire value chain.
Steel recycling will play a pivotal role in attaining the ambition of NSP. Steel produced through the recycled route entails lower carbon emissions, lower resource consumption and lower energy utilization.
Govt. may like to encourage entrepreneurs to set up such facilities following the Tata model in other areas also where local steel clusters will be benefitted.
2. Electric furnace steel making is energy intensive process where higher power tariff affect cost of production. However, power rate can be adjusted by switching transformers’ taps, which offers additional flexibility in energy consumption and minimizing the cost of electricity. It encourages consumers to change their electricity usage behavior, and thereby help maintaining the supply-demand balance. This is particularly interesting for industrial production plants for which the electricity cost constitutes a significant part of their operating costs. For example, they are able to reduce their electricity cost by shifting their consumption according to time-based energy prices. This on the other hand is beneficial for the power grid as it helps mitigating daily supply and transmission bottlenecks and slowing down the needs for constructing more generation capacity. States enjoy an edge over the former in power tariff.
3. Compared to Chhattisgarh and Bengal, the power tariff in Odisha is 1.40 higher per unit which enhances the cost of production of secondary steel products by Rs. 1400-1500/T. There are about 35 such industries in Odisha at present. Industries in Odisha fear that if the high-power tariff continues in the Goods and Services Tax (GST) regime, flood of cheaper steel from Chhattisgarh and Bengal would hammer the last nail on their coffin. The 35 power-intensive Induction Furnace (IF) plants and rolling mills are staring at imminent closure amid rising power tariff. The IF units consume sponge-iron as raw materials and produce ingots and billets which are used as raw materials by rolling mills to produce finished long products including iron rod, bar, steel angle, channel and beam among other things.
IM: What kind of Govt support are you looking forward to? How is the IF industry working to meet the end users demand for cleaner steel?
KA: In order to ensure availability of sufficient quantity of good quality scrap, establishment of an organized and environment friendly steel scrap processing units within the country should be facilitated by promoting modern steel shredding plants. In order to promote increased use of scrap based steel-making in the country, efforts has to be made in coordination with Ministry of Power to ensure availability of electricity to the sector.
Since steel is an energy intensive industry, Ministry must focus on availability of power to steel making facilities. The power required by the industry is estimated to increase to 27,717 MW by 2030-31. Post de-allocation of coal blocks, various units in steel sector, especially the sponge iron plants, have been procuring power at high cost. Ministry of Steel should deliberate with Ministry of Power to make power available to such units through open access. Waste heat recovery in Steel plants should be explored in consultation with other ministries.
Efforts should also be made to facilitate usage of captive power for MSME sector, removing the cascading effect of anomalies in the tax structure. In view of impending growth scenario in steel sector, Ministry of Steel may facilitate mechanism of Special Purpose Vehicles (SPVs) for Greenfield capacity additions. Steel SPV would acquire the land, get the necessary statutory approvals, water linkage and iron ore linkage and develop the minimum necessary infrastructure for setting up of steel plants to fulfill the objective of NSP. The Steel SPV would thereafter be put to open bidding in a transparent manner for setting up of the steel plant by interested parties. Similarly, the mining SPV may provide long term iron ore linkage to the Steel SPV.
IM: Thank you very much.
