MUMBAI, India India is
expected to become the second-largest crude steel producer in
the world by 2015 as the countrys construction,
infrastructure, manufacturing and automotive sectors
Global research and consultant
firm Frost & Sullivan Ltd. said it expects Indias
crude steel production capacity to hit 112.5 million tonnes in
the 2015-16 fiscal year.
Capacity expansions planned by
major steel producers, the availability of a large consumer
base due to Indias demographics and adequate iron ore
reserves to meet domestic demand are among the key factors
driving growth, according to a Frost & Sullivan report.
"Around 300 memorandum of
understandings have been signed with various states for planned
capacity of around 488.56 million tonnes per year by 2020 and
major investments are planned for the states of Orissa,
Jharkhand, Karnataka, Chhattisgarh and West Bengal," Frost
& Sullivans director of metals and minerals,
Venkatesan Subramanian, said.
Total installed capacity in
India currently stands at about 78 million tonnesmaking
it the worlds fourth-largest crude steel
producerwhile capacity utilization was around 84 percent
Indias finished steel
production of 70.32 million tonnes in 2011-12 is forecast to
rise to 92.29 million tonnes in 2015-16.
However, the report highlighted
several threats that could prevent the sector from reaching its
potential, including a possible delay in obtaining approval
from local authorities for large-scale projects due to
environmental and land concerns, inadequate infrastructure and
inefficient transportation systems, fluctuating raw material
prices, and insufficient power and coking coal. In addition,
competition from international steelmakers, mainly in China and
eastern Europe, also poses a challenge.
Frost & Sullivan does not
expect the Indian Supreme Court ban on mining activities in
some parts of the country to affect the steel industry in the
long run. The ban came about following concerns of
environmental damage and illegal mining in Karnataka state and
was later extended to other regions. "As the ban on mining
activities is temporary, it will have a short-term impact on
the Indian steel industry," Subramanian told AMM
sister publication Steel First.
The consultancy firm also does
not expect a recent coal scandalwhich came to light after
the countrys comptroller and auditor-general pointed out
that the arbitrary allocation of coal blocks to private
companies for captive use had caused massive losses to the
nation while private companies made windfall gainsto have
a lasting effect on the steel industry. The coal allocation is
said to have cost the Indian treasury an estimated loss of more
than $181 billion.
The scandal "is likely to have a
short-term repercussion on steel production in India. The
shortfall in coal demand will be met by steel companies through
imports," Subramanian said.
A version of this article was first published by AMM sister
publication Steel First.