Editorial October 2017

Ministry of Steel (Govt of India) has set an ambitious target of steel industry to enhance the capacity to 300 MTPY by 2030 from the present capacity of around 130 MTPY. There is a countrywide debate on this and many experts feel that this is unrealistic figure. On the other hand, there are many who support such optimism and feel that if the national economy continues to grow with substantial speed, this target is well within reach. Instead of taking any side, I would like to put forward few observations.

 

First of all, I would rather use the word ‘Projection’ or ‘Estimation’ instead of ‘Target’. We all know that steel is an input for a lot of industries. The basic objective of steel industry is to provide sufficient steel to other industry sectors in a sustainable manner at a reasonable price. Thus the steel demand does not lie within steel industry but depends on the requirement from other industries like infra, auto, engineering etc. Thus, rather than having its own target, steel industry should estimate the steel requirement from customer industries and and try to fulfill it.

 

Of all the industries, steel is one of the highest employer industries. It requires both unskilled as well as skilled, technically qualified manpower and even metallurgy experts. I do agree that the manpower requirement can substantially reduce due to automation and modern manufacturing processes but still there is no substitute for metallurgists. Today our country produces only few thousand metallurgists per year. Many engineering colleges prefer dropping the metallurgy stream or merge it with Material Science stream. Further, very few metallurgical engineers get excited by the idea of working in dirty environment of a steel plant and many of them change their career path. Many also prefer overseas research option over a job in a steel plant. Thus today it is very difficult to find a qualified metallurgist to run the plant. If we expect India to reach to a level of 300 MTPY by 2030, we have to see that those many metallurgists are produced in the country to run this industry.

 

Building of a steel plant is a huge and complicated project. It requires expertise from all engineering streams and there are specialized organizations that design and commission such projects. India today has only handful of such companies. Building an additional steel making capacity of around 170 MT in 13 years would require many more such project execution companies.

 

To produce one ton of steel, three tons of raw materials are required to move. Thus to produce 300 MT, we have to move 900 MT plus 300 MT of finished steel. One can imagine the kind of infrastructure (roads, rail and even sea route) required for this exercise.

 

The final and the most critical point is finance. Today many of the Indian steel companies are so much burdened with debt that financial institutions are scared to lend them further finance. Thus even if there is an opportunity, the present management of private steel companies is not in a position to expand for lack of support from financial institutions.

 

Thus its going to be a uphill task to reach to 300 MTPY level but this process would certainly help the industry to be more productive, competitive and sustainable on a long term basis.

 

 

 

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