New national steel policy in the offing

Policy to propose 14 rail projects, seven road projects and four ports for transportation of minerals

By Umashankar S
Published: Tuesday 15 May 2012

Fearing poor steel sector growth due to sky-rocketing prices of minerals and poor infrastructure for its transportation, the government is planning a new national steel policy, said Beni Prasad Verma, the Union minister of steel. He was speaking at a function organised by the Confederation of Indian Industry in New Delhi on April 30. The policy will be finalised in the next two months. 

Verma said the slow demand of steel in the rural sector was a particular matter of concern for the government. Infrastructure in the new rural areas need to be improved and steel is an essential ingredient for development, he said. The earlier national steel policy was launched in 2005 where domestic crude steel production was targeted at 110 million tonnes by 2020; the production was 72 million tonnes in 2011.

Citing high prices of coking coal and reliance on its imports, Verma said his vision was to develop a national research and development (R&D) centre to explore alternative iron-making technologies such as Finex and Hismelt.

To encourage use of iron ore fines lying near existing mine areas, he informed that the government has announced import duty cut on iron ore beneficiation and pellet machinery from 7.5 per cent to 2.5 per cent in the Union Budget 2012-13.  On the other hand, to protect domestic players from foreign competition, the government has also increased import duty on flat steel products used in electric machinery from five to 7.5 per cent, he said.

Slow growth concern

The new steel secretary, D R S Chaudhary, said that for India’s GDP to grow at seven per cent per annum, steel sector should grow at eight to 10 per cent per year. However, in the past three years, growth in the sector was just five per cent. Hence, the government is reviewing the situation and is finalising a new national steel policy in the coming two months.

He said that 14 new railway projects, seven road projects and four ports were being proposed in the new policy to improve the transportation infrastructure for mineral movement. Thrust would be given to R&D activities in the new policy, with particular focus on environment and clean technologies, he informed. He added that Indian steel producers use 1.5 times the resources that advanced countries use to produce steel. He also cited the corporate social responsibility activities of National Mineral Development Corporation (NMDC) in Bacheli in Bastar district as the role model for others to follow.

C S Verma, chairperson of state-owned Steel Authority of India Limited (SAIL), said land acquisition is a big concern and industries have to adopt larger blast furnaces for compact production facilities. He cited poor coking coal mines development by ministry of coal through its company Coal India Limited (CIL), and requested the Union ministry of steel to take control of coking coal mines in the country.  He said there are plenty of soft coking coal reserves in the country, but they are not being properly developed by CIL. 

The SAIL chairperson said Indian steel companies only allocated 0.15 percent of turnover for R&D activities against two per cent internationally. The Indian companies not only need to invest in innovation but also need significant financial support from the government, he claimed.

A P Choudhary, chairperson of Rashtriya Ispat Nigam Limited said two major concerns for steel industry are water supply and infrastructure for raw material movement.  He said coast-based plants can address this concern, as desalination has become viable for meeting water demand, whereas materials can be easily transported over sea.

N K Nanda, chairperson of NMDC, said the company has recently developed technology to reuse iron ore waste with 35 per cent ferrous content. He said the waste can be purified to a level of up to 64 per cent ferrous content for making it suitable for industries. He added that the company is establishing a new three million tonne per annum (MTPA) steel plant at Nagarnar in Jagdalpur district, Chhattisgarh.

Dillip Oommen, chief executive of Essar Steel said that around 200 million tonnes of unused iron ore is dumped around the mines in Odisha and needs to be used after suitable purification and pelletisation. The company has set up a new six MTPA pellet plant at Paradip in Odisha for use of the iron ore fines, he claimed.

Rajiv Rai of RKKR group, highlighted the problems of the small- and medium-scale steel players stating that e-auction of iron ores from Karnataka is leading to high purchase prices of Rs. 9,000 per tonne for lump ore.

Industry blames slow clearances

All industry officials attending the summit, however, cited slow clearances of mining leases and environmental permits as the major reason affecting new capacity addition. However, Centre for Science and Environment, a Delhi-based NGO, has recently shown clearances already granted for steel sector in the 11th Five Year Plan accounted for a total of 89 MTPA capacity. The clearances granted in the five-year period would double the country’s steel capacity to 160 MTPA.

Secretary with ministry of coal, Zohra Chatterjee, informed that unscientific mining, fire hazards and heavy population in the Jharia-Bokaro belt made the area difficult for scaling up production. She said the area has around 5,00,000 residents and that she would have to look into the rehabilitation master plan for any new development of coking coal blocks in that area.


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