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Spark of genius . How AI helps

Tata Steel save $2 billion in
EBIDTA
Updated - October 01, 2023 at 02:59 PM.

The steel major employs data across its production line, HR, logistics,
decision making, to deliver quality and reduce costs

BY M RAMESH

COMMENTS SHARE READ LATER

Key ingredient: Data and AI have become as important as iron ore and coke for the steel
:
 industry

Guess what the crucial raw materials for

running a profitable steel company are? Iron
ore, coke, a lot of energy and data.

Tata Steel, for one, will never face any

shortage or cost spike of the last. And, with
artificial intelligence (AI), the company is
squeezing data to extract profits.

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Around 2018, the $33 billion steel major set

itself a somewhat direction-giving target of
achieving EBIDTA savings of $2 billion only
from using its data, over an unspecified
number of years. Today, it reckons, it has
milked $1.4 billion and is all set to move the
goal post to a higher level of ambition.

One does not readily connect AI with

something as ‘physical’ as steel making, but
Jayanta Banerjee, Chief Innovation O!cer at
Tata Steel, explains how data and AI have
become as important as iron ore and coke.
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Banerjee is a steel-outsider.
chemicals An IT after
sector
professional, he wrote a paper
weak Q1 on AI back in
the early 1990s before joining Tata
Consultancy Services, where he worked for a
quarter century in TCS’s overseas o!ces.

In 2018, Tata group’s Chairman, Natarajan

Chandrasekaran, hand-picked a few IT
wizards from TCS and put them into various
other companies of the group. Banerjee ended
up in Tata Steel.

“I knew nothing about steel,” says Banerjee.

But he knew data, and Tata Steel is always
drowned in a flood of data.

A date with Data

Steel making is a heavily sensorised business;
Tata Steel uses several lakhs of sensors in its
five (Indian) plants. Most of them are
:
 electronic, but some chemical and acoustic
sensors too. In 2018, the company had about
6 terabytes of data; today it has 5.2 petabytes
(roughly, thousand times more).

Humongous amounts of data implies you

need to keep them somewhere. That is where
‘cloud’ enters the picture. “We invested
heavily in cloud in 2018 and 2019,” says
Banerjee, adding, “today 95 per cent of my
estate is on multiple clouds.” The company
uses the cloud services of Amazon, Google,
Microsoft, Tata Communications and IBM.
Multiple providers are necessary for reasons
of security and building redundancy.

So, Tata Steel had data and cloud, and

Banerjee brought in AI, to make use of the
former. Banerjee calls data, cloud and AI
‘three macros’. An in-house team developed
about 260 algorithms on which the business
runs. Alongside, the company scrapped the
individual control rooms in its various mines
and plants — each blast furnace had its own
control room — and consolidated them
under one IT building, the integrated remote
operations center (iROC), in Jamshedpur.
This brought in an added advantage —
employees didn’t have to be transferred to
di"erent places, as all the operations of the
company are controlled from here.

AI is used a lot in decision making. Take raw

material procurement for example. As
Banerjee explained, questions such as which
raw material to buy; when, where and what is
:
 the best route to ship it into the plant;how to
e!ciently allocate the raw materials to
di"erent plants, are best answered by AI
models.

Furthermore, AI is used in optimising

chemical mix in blast furnaces. This is
important because when raw materials like
coal are transported across long distances,
some impurities (moisture, foreign materials)
will inevitably seep in. The quality of the raw
material will determine what else should go
into the furnace — how much manganese,
zinc, among others. “Impurities in the output
product will be much lesser if I have better
chemistry upstream,” explains Banerjee
adding that fine-tuning the mix is done by AI.

Fault finder
Further along the production line, AI also
helps in identifying the origin of a defect. All
products are fully imaged to find defects
(crack, bubble) before it becomes final . If a
defect shows up in an image, the product is
not supplied to the customer. The image is
then image is compared with an outsourced
library of defect images, to see which one it
resembles the most. This gives them an idea
of what could have gone wrong. Once the
origin of the defect is known, it is created on
the ‘digital twin’ of the plant, where an AI
model learns about the defect and its origin
— it won’t let it happen another time.

All this happens on the production side. Tata

:
 Steel also uses AI in a whole lot of areas like
forecasting and planning, HR and customer
and financial analytics as well.

Banerjee keeps a sharp eye on the costs.

Technology is used only when it positively
impacts at least one of yield, energy,
throughput, quality and productivity. Over
the years, cost-benefit has improved. “When I
started the transformation (around 2018) it
used to be in the range of 1:4.3, today we’re
almost running 1:10. Every dollar I spend, I
get $10 back,” he says.

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 COMMENTS SHARE Published on October 1, 2023

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