03

Iron ore prices and its supply hindrances, competitive selling prices, volatility of the prices, rising input cost, dumping of cheaper steel products, etc. are all matters of concern for the steel industry in India. But the rising concern of the industry has been the issue of environment pollution. The main challenge before the industry has been how to produce steel with less carbon emission. So, the steel industry has a crucial role to play in India’s pledge to net zero emission by 2070.

Sajjan Jindal on the challenges before the steel industry

Addressing the Minerals and Mining and Metals e-conclave organised by the Bengal Chamber and Commerce and Industries (BCC&I), Sajjan Jindal, JSW, Group Chairman and Managing Director, said that the steel industry accounted for 0.7% of the world economic output. At the same time, the industry contributes 7% towards global emissions. According to Jindal, “This needs to change fast.” JSW Steel has set a target of reducing its specific CO2 emissions by 42% by FY 2030 compared to that of FY 2005.

How to reduce emissions while the industry is in a huge expansion mode?

The steel industry has been in a huge expansion plan. It is not only the JSW Steel which has targeted an unprecedented rate of expansion, according to Jindal. Many other steel barons have been on the expansion mode in India. JSW has planned to expand production capacity over the next four years which is equivalent to the capacities it achieved in the past two decades. The government owned steel sector is also going for a big amount of capital expenditure for its production units like SAIL, NMDC, RINIKIOCL MOIL and MECON. On December 8, 2021 Union Steel Minister Ram Chandra Prasad Singh reviewed the progress of the capital expenditure target of `13,300 crore for the year 2021-22 announced by state owned steel and iron ore companies.  In October 2021, ArcelorMittal and Nippon Steel Corporation’s joint venture steel firm in India, announced a plan to expand its operations in the country by investing rupees one trillion ($ 13.34 billion) over 10 years. Actually, the list of expansion proposals is very long. 

POSCO and Adani Group signed a pact on January 12, 2022 to set up a steel plant in Gujarat. The Adani group reportedly said that it has agreed to explore business cooperation opportunities including the establishment of a green, environment friendly integrated steel plant mill at Mundra.

Expansion of TMT bar is also not lagging

On January 28, 2022, the Kolkata headquartered SM Group, a steel manufacturer and a leading exporter and importer of minerals launched TMT Bar, GOVVINDA. The rising demand for TMT Bar has been the main reason behind this. Manish Khemka, CMD of the Group told BE that the group’s captive power plant carbon emission is very less. He also said that the production system of the TMT bar is very different from the general steel plant where carbon emission is very high. According to Khemka, the share of TMT Bar in the whole steel industry is about 35%. So, with the higher growth of the economy, demand for TMT bars will be rising. So, expansion of the product portfolio is necessary, according to Khamka.   

Current status of the steel industry in India

India’s current steel producing capacity is about 140 MT per annum. The future production capacity target is to raise it to 300 MT per annum by 2030-31. India Brand Equity Foundation (IBEF) data shows that India’s finished steel consumption is anticipated to increase to 230 MT BY 2030-31 from 93.43 MT in 2020-21. As of October 2021, India was the world’s second largest producer of crude steel with an output of 9.8 MT.

The government support policy for the steel industry is not insignificant. In October, the government announced guidelines for the approved specialty steel production linked incentive (PLI) scheme. In the Union Budget 2021-22, the government allotted `39.25 crore to the Ministry of Steel. India is said to have comparative advantage in steel production because of easy availability of low-cost manpower and presence of abundant iron ore reserves. India is home to the fifth-highest reserves of iron ore in the world.       

Industry thinks government initiative is necessary to lower emission

The main challenge before the industry is how to expand the production capacity with low emissions. This needs a very advanced technology which in turn involves high costs. If producers have to do this on their own, the cost of production would be very high. In that case, India will lose its competitiveness. Jindal raised this point in the above-mentioned event. A recent report of a consulting firm, McKinsey, pointed out that India may need to spend 11% of GDP to meet Net Zero Goals by 2050 - compared with the global average of about 7.5% of GDP (Money Control report, January 27).  It is reported (January 27) that India’s top steel makers sought federal funds to cut carbon emissions. Steel makers wanted government subsidies and tax incentives to source new technologies, the ISA said in a statement ahead of the Annual Budget for FY 2022-23.