India’s domestic supply of coking coal should be brought under the control of the country’s steel ministry instead of the coal ministry, the chairman of Steel Authority of India (SAIL) has told a major New Delhi conference.
“There’s not much attention given to the development of coking coal mines in the country, so they should be brought under the steel ministry,” CS Verma said at the Confederation of Indian Industries (CII) Steel Summit in New Delhi on Monday April 30.
Indian steel manufacturers are already sourcing most of their coal requirements through costly imports, which are compounding difficulties in sourcing ore and acquiring land for setting up new units.
These problems are mainly responsible for the lower-than-expected growth rate of 7% reported by the Indian government for a domestic steel industry that produces 72 million tonnes of steel every year, it was acknowledged at the conference.
Average steel consumption
India’s annual per capita consumption of steel has grown from 31kg in 2003 to 56kg in 2011, but it is still less than 30% of the global average for steel consumption per head of population, according to World Steel Assn data.
The country’s steel minister, Beni Prasad Verma, remained confident about the future performance of the industry, however.
“We hope that, by 2020, India’s steel production will reach 200 million tpy,” Verma told conference delegates, while also accepting that Indian steel producers are lacking in operational efficiency.
To achieve this increase in output, Verma said that his ministry has prepared a “research and development roadmap” to incentivise investments in new technologies for steel production, and has emphasised the use of low-grade iron ore and non-coking coal by Indian companies.
Almost all the low-grade iron ore fines mined in India are currently exported, mainly to China.
Naveen Jindal, chairman and md of Jindal Steel & Power, gave an example of technological advancement in privately run companies when he said that his company will implement a coal gasification project at its planned steel plant in Angul in Orissa, in eastern India.
The company has been working on the project for the past five years, he said.
There was a general consensus among all speakers at the conference that profitability has gone from steel manufacturing in India to the mining industry, and backward integration was discussed as a solution.
In this regard, the “excessive export duties” on iron ore from Indonesia, Australia and some African counties were discussed with some concern.
According to a study presented at the conference by Abhishek Poddar, principal at management consultancy firm AT Kearney, 61% of upcoming steel manufacturing projects globally have gone over budget, while 40% are running late.
“The situation in India is even worse, as most companies give relatively less importance to basic project management issues and mainly focus on securing government licences and land for the project,” Poddar said.
This practice, he said, leads to fixing of very ambitious targets. In addition, when actual construction starts, building and organisational problems cause long delays.
A shortage of skilled manpower and transport facilities in India were also highlighted as major problems, while there were suggestions that encouraging mega-steel plants in coastal locations could help expand the sector, given their easy access to water supplies and to maritime transport of raw material and finished products.