A growing challenge

Steel sector is only going to grow. So will resource stress and pollution

Billets production at Godawari Ispat plant in Raipur, Chhattisgarh. Working conditions at the plant are poor

The Iron and steel sector has seen phenomenal growth since economic liberalisation in 1991. A spurt in infrastructure development, housing construction and industrial projects that followed liberalisation has resulted in a growth rate of 8 per cent in the sector. India’s annual steel production has more than doubled to 75 million tonnes in the past decade and is growing at the fastest pace after China.

Unlike world steel production, Indian steel industry has not been significantly influenced by the fluctuations in global economy. In fact, it plans significant expansion. As many as 301 MoUs have been signed between companies and state governments to set up steel plants of an estimated capacity of 488.7 million tonnes per annum. Steel consumption in the country is expected to increase owing to rapid urbanisation, industrialisation and motorisation. If the sector continues to grow at 8 per cent, steel production in India will increase fivefold and reach 325 million tonnes a year by 2030.

This projection throws up tough challenges. As the Green Rating Project shows environmental management of the steel industry is poor. Unless it switches to clean technology and efficient resource management the future growth will have serious repercussions. Following are the major concerns:

Source: Green Rating of Indian Iron and Steel Industry, 2012, CSE, New Delhi

• Emissions from dirty route: At present, the industry uses two main routes of steel production: the traditional, relatively energy-efficient BF-BOF route; and the relatively energy-inefficient DRI-EAF route based on coal. The energy-efficient BF-BOF route currently accounts for 49 per cent of the steel production. Production through this route has grown at 5.5 per cent since 1991-92 and this rate is likely to continue till 2030. The DRI-EAF route is projected to grow faster at over 11 per cent a year till 2030-31. This is because of two reasons: one, it is cheaper to set up; two, it mostly uses low-grade, non-coking coal, which is abundantly available in India.

India is the leading producer of coal-based sponge iron. The total production of sponge iron in the country in 2010-11 was reported to be 26.71 million tonnes, of which 78 per cent was through the coal-based route. Growth of the much cleaner gas-based sponge iron production has remained nearly stagnant since gas is expensive and not easily available. This means in the next 20 years, the route for producing steel will change in India. The BF-BOF route is expected to contribute only 30 per cent to production in 2030-31, with coal DRI-EAF contributing the lion’s share of 58 per cent. This is bad for the environment as the coal-based DRI route is highly polluting.

Given that average energy requirement for producing a tonne of primary crude steel (tcs) is 7 giga calories, by 2030-31 the total energy demand of the sector will increase by more than four times, assuming that 20 per cent of crude steel will be coming through steel scrap. Producing this much energy will require 280 million tonnes of coking coal equivalent. With the increase in energy consumption, carbon emissions from the sector are likely to grow fivefold. At present, the sector produces 2.4 tonnes of CO2 for every tonne of crude steel produced.

• Severe water stress: Water consumption for the sector is 11 m³/tcs. But considering the huge size of the industry, the total annual requirement is 700 million m3. This is estimated to rise to 3,400 million m3 by 2030-31, which is 2.5 times the current annual water supply to Delhi. Given that almost all the integrated steel plants are dependent on surface water—even coastal plants are not using sea water and rainwater harvesting is in the nascent stage—this will create immense water stress.

• More land for more production: At present, the steel industry holds a total of about 75,000 hectares (ha) to produce 69.6 million tonnes of steel annually. New plants being set up are more efficient but still use 270 ha per million tonne of steel capacity. At this rate, meeting the projected crude steel production in India by 2020-21 will require about 97,000 ha, and by 2030-31 nearly 0.14 million ha. It means nearly double the land industry holds at present will be required by the steel sector in 2030-31.

• Iron ore crunch: The industry’s iron ore requirement will increase to more than four times (468 million tonnes) by 2030-31, from 111 million tonnes in 2010-11. Indian steel plants are already not getting enough iron ore because nearly half the ore produced in India is exported. In 2010-11, India produced 213 million tonnes of iron ore. Of this, 100 million tonnes was exported.

A mountain of flyash at Monnet ispat Raigarh

Whether it is land, water, energy or iron ore, the stress on natural resources is extremely high. How is the industry going to meet its future demand? Pollution will be an additional problem since Indian practices are far behind global standards. Wastewater release will multiply if the sector does not switch to zero-water discharge, and so will air emission. Solid waste, particularly slag and char from steel melting shops, is already a major problem. The industry will face serious problems unless it adopts global best practices.

Green Rating Team: Umashankar S, Sanjeev Kumar Kanchan and Kanchan Kumar Agarwal. Contributions by Ishikaa Sharma and Sunanda Mehta. GRP is funded by MoEF-UNDP