Secondary Steel Sector – Its Contribution & Challenges

Contributers: Presented by :
D. K Ambasta, Jt. GM, SMS
P. Mukherjee, AGM, SMS Sangeeta Sethy, SDE,
MECON Ranchi Steel Making Section
MECON Ranchi MECON LIMITED
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Crude Steel Production & Capacity Trends 2005-2017

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 TECHNOLOGICAL CHALLENGE : SECONDARY SECTOR

Process 2001 2001 2011 2011 2017 2017

route, % BF- DR/BF- BF-BOF DR/BF- BF- DR/BF-
BOF EAF/IF EAF/IF BOF EAF/IF

India 50 43 32 67 43.2 56.8

China 66 17 90 10 91 9
World 59 34 70 30 75.8 24.2

•Individually not suitable for large capacities but it is contributing more

than all integrated steel plants in India for decades with

- Less resource availability & utilisation

- Less production cost
- All the time at the threshold – quick gainer but first to get vanquished

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Secondary Steel Sector

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Vision 300 Mt : The complete picture
Crude steel production, Mt
1948 1981 1991 2001 2011 2016 2017

India 1 11 17 27 73 96 101.4

China - - 71 150 702 808 831.7

World - 707 734 850 1,537 1,628 1688.2

India unit 2016 2017 2021# 2031# 2051#

Production Mt 96 101.4 134 260 600

Capacity Mt 125 134 158 306 700

Finished Steel Mt 83.6 87.2 121 234 540

Per capita kg 65 70* 86 152 275 -

consumption 300

*Estimated – Figure to be published by world steel, #Projected MECON LIMITED

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Opportunities

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Opportunities

• Abundance of Raw Materials-

• Unexplored Rural Market
• Other Sectors-
• Export Market
• Less land requirement,
• Lower capital investment
• Better energy efficiency,
• Proximity to users and less dependence on logistics.

There is a cost advantage of DRI over Scrap & Pig Iron

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Opportunities

DEDICATED FREIGHT CORRIDOR

UNDER CONSTRUCTION
PROPOSED LINE

Out of rail, road and waterways, cost of

transportation of steel and associated
raw materials via road is around three
times that of waterways and twice that
of railways

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 In EAF Area, the Emerging Trends include,

 Oxy-fuel burners
 Flue gas monitoring and control
 Post combustion optimization
 Reduction in tap-to-tap
 Hot DRI / HBI charging time with improved
 Foamy slag practice refining and productivity

This has led to

 Scrap pre-heating

 Bottom stirring / stirring gas injection

 Eccentric bottom tapping
 Ultra high power transformers  Reduced environmental
impact in terms of CO2,
SOx and NOx emissions
 Installation of high efficiency fumes & dust
control equipment

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 Development in EAF
700 7
630
600 6

500 490 5
450 450

400 4

300
300 280 3

200 2

100 1

0 0
1 2 3 4 5 6

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Share of Carbon Dioxide Emission Share of Energy Consumption

BF/BOF Scrap/EAF Gas DRI/EAF Coal DRI/EAF BF/BOF Scrap/EAF Gas DRI/EAF Coal DRI/EAF

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Particulars Indian Actual International Benchmark
EAF furnace size, t 50 – 150 100 – 250
Tap to tap time in EAF, min 75-100 50 – 70
Power consumption in EAF,kWh/t 400 – 600 150 – 350
EAF specific productivity, t/hr/MVA 0.5 – 0.7 0.8-1.5
Slag volume BOF/EAF. Kgs/tcs 150 – 200 50 – 100
Sulfur, ppm 10 – 100 5 – 100
Phosphorus, ppm 50 – 200 10 – 150
Specific energy consumption, G 5.5 – 7 4.5 – 5.5
cal / tcs
Specific dust emission, kg/tcs 0.85 – 1.15 0.5 – 0.75
Solid waste utilization, % 85-90 90-95
Water pollutant discharge, kg/tcs 0.07 – 0.125 0
Oil Consumption, Litres/ t 45 30
Coal Consumption, Kg/t 80 50
Gas Consumption, Nm3/ t 50 30

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Challenges

• LOW LABOUR PRODUCTIVITY:

• HIGH COST OF INPUTS
• SUPPLY OF ENERGY
• POOR QUALITY OF BASIC INFRASTRUCTURE:
• HIGH CAPITAL COST OF THE PROJECTS:
• LACK OF RESEARCH AND DEVELOPMENT

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Challenges for Secondary Steel Sector- A Long Way To GO

• Uncertainty in maintaining stable raw material linkages

• Limitations of economies of scale
• MAM- Manpower, Awareness & Motivation
• Lack of Cohesiveness Raw Material Requirement
• Technology & Technological challenges
• High Cost of capital
Scrap Use
• Global excess steel capacity
• Duty free access to Indian market
• High cost of transportation & logistics DRI Use

– infrastructure Challenge
0 10 20 30 40 50 60
• Environmental sustainability

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Challenges for Secondary Steel Sector- A Long Way To GO

• R & D Efforts
Scrap/DRI
Feeding
Briquetting of Scrap
DRI fines preheating

Focus Green
DP & DS Area technology

Energy
Slag
Conservation
processing
Hot charging
of billets

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Challenges for Secondary Steel Sector- A Long Way To GO

• Quality Issues
Particulars Indian Actual International Benchmark
EAF furnace size, t 50 – 150 100 – 250
Tap to tap time in EAF, min 75-100 50 – 70
Power consumption in EAF,kWh/t 400 – 600 150 – 350
EAF specific productivity, t/hr/MVA 0.5 – 0.7 0.8-1.5
Slag volume BOF/EAF. Kgs/tcs 150 – 200 50 – 100
Sulfur, ppm 10 – 100 5 – 100
Phosphorus, ppm 50 – 200 10 – 150
Specific energy consumption, G cal / tcs 5.5 – 7 4.5 – 5.5

Specific dust emission, kg/tcs 0.85 – 1.15 0.5 – 0.75

Solid waste utilization, % 85-90 90-95
Water pollutant discharge, kg/tcs 0.07 – 0.125 0
Oil Consumption, Litres/ t 45 30
Coal Consumption, Kg/t 80 50
Gas Consumption, Nm3/ t 50 30

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Global impact

• Global overcapacity
• Development in alternate fuel source like shale gas,
CBM, etc. and availability of natural gas
• Tougher regulations for cleaner environment, passenger
safety in all means of transportations, and sustainability
in developed countries will follow suit in India
• Entry of international players will likely to press on quality
issues
• Industry will largely depends on Foreign Investors
• Indication of availability of cheaper scrap from China will
shift gears of Indian steel industry

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Melting Furnace EAF MF. Induction ContiFur
Furnace

Charge 80% DRI+20% Scrap 80% DRI+20% Scrap 100% DRI

Yield 88-89% 87-88% 90%

Efficiency 35-55% 65-70% 85%

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Global steel overcapacity

Global crude steel production, capacity, and overcapacity, 1980-2017(f)

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Regional contribution to steel overcapacity, 2015

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Capital related issues

• 3 lakh crore INR as NPA in steel sector

• Lending mechanism not sensitive to major
fluctuations in interest rates and working capital
issues in case of prolonged situations of recessions
• Cost to capital is very high in India compare other
countries
• Shareholders are looking for early returns with
short-term investments
• Risk capital pooling required from Govt.
• Though 100% FDI route but very high risk sector –
long term based return and market may jeopardize it

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 Govt. Support and Policies

• Govt. Support can not be taken for granted as it destroys global

competitiveness
• MIP will not be extended after expiry
• Status quo policies for land & rehabilitation
• Some policies have slowed demand temporarily for larger cause
• Taxation and custom duties
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 The ray of Hope : Indian Market

• Indian market – a ray of hope for India and as well as world not
only in steel sector but in most of the sectors from cosmetics
to fighter plane.
• 70 % population in rural with meagre 16 kg per capita
consumption is huge potential
• Make in India initiatives and over 1 trillion USD infrastructure
projects will not only create demand for steel but will also
facilitate the sector in growth
• Flexible market players with flexible products – catering to real
Indianised needs

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The ray of Hope : Indian Market
The Empirical values
Sector   Unit Value
Construction      
  Residential kg/sq.ft 5
  commercial kg/sq.ft 7
  industrial kg/sq.ft 14
Machinery & Heavy
Engg. 24 Mt for 2015 CAGR 8%   
Automobiles      
commercial
  vehicle t/unit 3.5
  passanger car   0.81
  jeep vehiucles   1.625
  three wheelers   0.15
  two wheelrs   0.044

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The ray of Hope : Indian Market
The Empirical values
Sector   Unit Value
Infrastructure      
  Roads & bridges % of investment 14.0%
  telecom % of investment 3.0%
  irrigation % of investment 7.5%
  water & sanitation % of investment 10.8%
  Ports % of investment 10.0%
  Airports % of investment 10.0%
  Railways    
  Rail track kg/m 60
  coach kg/unit 37500
  Locomotive kg/unit 96000
  wagon kg/unit 20000
  traction posts kg/unit 1000
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The ray of Hope : Indian Market
The Empirical values
Sector   Unit Value
Power      
  Hydro t/MW 127
  Thermal t/MW 130.6
  Gas t/MW 51
  Nuclear t/MW 130.8
  transmission t/km  
  765 kV   65
  500 kV   38.3
  400 kV   23.5
  220 kV   10.1
  132 kV   9.1

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The ray of Hope : Indian Market
The Empirical values
Sector   Unit Value
Consumer durable 5 Mt for 2015 30 % CAGR   
 
Automobiles      
commercial
  vehicle t/unit 3.5
  passanger car   0.81
  jeep vehiucles   1.625
  three wheelers   0.15
  two wheelrs   0.044

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Technological Challenges

• To address rising cost of production on account of raw

materials
• Squeezed NSR
• Low labor productivity
• Low level of automation
• Lower productivity and yields
• Shortage of skilled manpower
• Upgradation/ adoption of latest state-of-the-art technology
• Reduction in fuel consumption particularly coke
• Lower emissions
• Increasing demand side aspiration for tailor made steel
• Lean iron ore utilisation

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Technological Challenge : Product, process & material

Source : Cambridge University

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Technological challenge : secondary sector
Process 2001 2001 2011 2011 2015 2015
route, % BF- DR/BF- BF- DR/BF- BF- DR/BF-
BOF EAF/IF BOF EAF/IF BOF EAF/IF
India 50 43 32 67 43 57
China 66 17 90 10 94 6
World 59 34 70 30 74 25

Individually not suitable for large capacities but it is

contributing more than all integrated steel plants in India
for decades with
- Less resource availability & utilisation
- Less production cost
- All the time at the threshold – quick gainer but first to get
vanquished
Quality is not the issue – change in perspective support is
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Technological Challenges : sustainability

Source : World Steel Association

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Implementation challenge

• Only 13 years from now !!

• Substantial time is required for conceptualising,
engineering, contracting, ordering, statuary clearances,
funding, etc.
• Biggest hurdle is land acquisition and resettlement
• Even if we employ all engineering resources of the
country – Target appears herculean
• Mobilisation of huge resources at site and construction &
erection activities for never before quantities of civil,
structural & equipment will be a challenge

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Raw material security

Only two major concerns

• Coke
• Iron ore

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Raw material security : Coke
• Practically nil indigenous coking coal

• Totally dependent on imported coal

• Coke market highly volatile – recently

coke prices gone upto US$300 from
Coke Mt/yr US$100 (regular occurance)
Reqt.**
2016 21 • A challenge to the economic viability of
BF Route 43% large integrated steel plant projects
2031 89
BF Route 68% • Non-coking coal route not very suitable for
large capacity
**Based on assumptions

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Raw material security : Iron ore

• Present expansion plan alongwith full

utilisation of existing capacity inadequate
to meet the demand
• Import will have further upwards trend
2013 2014 2015
India (Import) 1.1 7.4 9.5
Iron ore Mt/yr China (Import) 820 933 955
Reqt. ** India (Export) 14.4 9.8 4.2
2016 170 China (Export) 0 0 0

2031 460 • Two issues – quality – production issues

• How to handle dump & fines resting
unused
**Based on assumptions

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Infrastructure

• Huge requirement of Land, water, power, road & rail and

capital for setting up steel plant

• Land & Water can not be created rest upto us

• Raw material linkage for incoming raw material etc.

• Excellent planning to augment & develop rail, road & power

infrastructure but are these matching the pace of demand for
the same to realise the vision

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Suggestive Road map

Steel

Emphasis on
rural area

Make in India for

Manufacturing in
India

Source : Metal & Mining Report - IBEF

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