As an important input for infrastructure building, steel has always been very vital industry for the growth of the national economy. No industry can exist without the usage of steel and thus it is the main driver for not only the industry but also for the present structure of the society. The professionals like me who have spent multiple decades in this industry will always take pride in this association with the core industry like steel. A lot of sectors like infra, auto, construction, engineering and so many others use steel as a major input and their fortune is in a way linked with that of steel. Thus it is always a good feeling to be associated with such an important industry vertical of the economy.
The reason to narrate all this is that today our industry has added one more feather in its cap. As we all know, in many cases the covid patient suffers from breathlessness and requires additional supply of oxygen. Out of the total oxygen production in the country, around 80 % of the oxygen is produced by the steel plants for their regular use in iron and steel making. Today these steel plants are diverting this oxygen to the medical emergency to save the lives of our countrymen. It is the manifestation of their love for the country and for the people and our industry has made all of us, the whole steel fraternity, feel proud about it. Today, the oxygen is being carried to different locations and the states with the help of special trains organised by the railways. Thousands of patients across the country are being treated with this oxygen and are thanking our industry. It is a really great feeling !
We all also remember that in the first wave of this deadly pandemic, there was an acute shortage of ventilators and related equipment. Many companies from auto sector like Tata Motors, Mahindra & Mahindra rose to the occasion, quickly developed cost effective and multi user model of ventilators indigenously and supplied in huge numbers for this medical emergency. Mind well, they had to forego their regular vehicle production during this period. What a great patriotic gesture ! Like this a lot of help was extended by other industries as well. At individual level too, we see countless examples of such humanely behaviour. The corona pandemic is no doubt disastrous and may have posed a big threat to human existence but at the same time, has taught us a few lessons of humanity as well.
Our country may be fragmented with many religions, castes, languages, cultures etc. but such incidences assure us that from within we are one and especially at the time of crisis, we will forget all our differences and fight the situation in a united manner. Jai Hind !
Rising demand and strong prices ! What else should the Indian iron & steel sector ask for ? Indeed last few months presented more than one surprises for Indian steel industry. The demand started rising somewhere during July-August, the prices started firming around the same period and now in the month of March 2021, the sentiment in the industry seems completely positive. So much so that the government had to lower the import duty on finished steel and also on the scrap and ore in order to put some pressure on prices. These proposals in the recently tabled union budget rightly aimed at giving some relief to the steel using sector such as automobile, infra and construction.
Yes, we have reached the pre-covid production levels and that is really remarkable but is not the peak performance. If one recalls, the Indian economy was not doing well since 2017. The GDP growth rate started falling gradually. Many parameters along with the auto sales figures went southwards and the experts were busy debating whether this can be technically termed as ‘recession’. It was also argued that in today’s connected world, no country can progress in isolation. India also can not progress when most of the countries in the world (of course except China) are undergoing recessionary trends. Quite valid logic ! So my dear friends, hold your crackers and postpone your celebrations. Let us first understand that we have only climbed till the half way mark. A similar situation in Jan 2020 was termed as ‘recession’, so what is the big deal ?
Friends, the most noteworthy fact about today’s situation is that unlike in Jan 2020, its direction is northwards. We have bettered our situation and position in the last two quarters or so. Stabilized the production, strengthened the demand, rebuilt the logistic channels and imparted the required confidence to the user industry. Let me tell you this is a huge contribution not only to the growth of steel industry but also to the national economy which was struggling to come back on the track at that point of time.
So what next ? I feel still a long way to go. If India has to become a 5 trillion economy and if its annual steel making capacity has to reach to 300 mt by 2030-31, our economy has to grow by around 7.5 to 8 % annually. The ‘Indian growth story’ can emerge only out of ‘Indian steel growth story’. Lets keep going, as said in some old poem ‘Miles to go before I sleep’ !
The steel demand in the country seems to be increasing steadily thanks to the user sectors like infra, construction and auto. The first sign of recovery was visible in September when auto sales showed sizable improvement. Many thought it was accumulated demand as there was almost nil sale during the first few months of lockdown. When the positive trend continued in subsequent months, still it was stamped as festive spike. Now that this upward trend is still continuing, experts are believing it to be a sustainable growth. Lets hope this continues and 2021 be a better year for iron & steel sector in the country.
As mentioned in my last month’s column, after the pandemic, there is a greater need for the industry to be competitive in the global marketplace and for that it must adopt smart manufacturing processes and techniques. Many companies in the manufacturing sector have started looking at Industry 4.0 solutions for increasing the productivity, efficiency and competitiveness of the enterprise. The deadly pandemic has also taught us to care more for the mother earth and thus the iron & steel sector needs to develop environment friendly production and processing technologies creating minimum waste and controlling emission of harmful gases. One such process being developed uses hydrogen as reducing agent instead of coking coal. It is supposed to reduce the carbon footprint during steel production. The problem in developing such green processes is that they are costlier than the prevailing process. It is a big challenge to make them commercially viable so that the industry adopts them for regular use.
The covid period has not only changed the working and thinking of corporations but it has also changed the mindset and the priorities of the society. My gut feeling is that this will have a gradual but definite effect on steel demand profile. Let us remain alert and keep watching how the situation unfolds in coming months !
I am quite happy about the way Indian iron & steel industry is recovering from the global pandemic of covid-19. As we all know, ‘steel’ is one of the core sector of the economy and is important input to many important industry sectors like infra, construction, white goods, auto, engineering, etc. Thus the performance of steel sector affects so many industry verticals and finally has a big impact on overall economy of the country.
In the first few months of unlocking, the steel production was superseding the demand. This was natural as the steel producers were running the plants where as the construction activity was almost closed, infra projects were completely halted and hardly any vehicle was being sold. In fact many automakers were themselves involved in the noble work of manufacturing safety equipments for the people. The exports surged during this period. But now gradually the steel demand is moving up and the industry balance is getting restored.
Now that the industry is back on recovery track and cruising ahead decently, there are few other challenges peeping in. Firstly, even if the demand is recovering fast, the supply chain which was disrupted at many places has not been healed properly. Many points including the logistics has to be improved further. Secondly, this pandemic has created lot of stress and pressure within global economy and has tremendously increased the competition. This necessitates the need to produce better quality at competitive prices. Thus the producer has to adopt smart manufacturing techniques, or Industry 4.0 as is commonly referred to in India, to enhance efficiency, productivity and thus improve the bottomline of the company. Mind you, Industry 4.0 is not a just a fashionable word but the smart way of inducting the sustainability in the organisation. Sooner or later, everybody has to adopt it.
Another important outcome of covid-19 is the total change in the mindset of individuals as well as the corporations. Now, going to office everyday looks unnecessary. Instead, working from home throughout the week and going to office may be once a week looks normal. Also, planning a business tour for fewer meetings may not look professional. Video meeting or conversation completely serves the purpose. Although, most of the restrictions imposed during the lockdown are now lifted, the local trains in Mumbai and public transport systems in many metros are not fully on track. This has forced many corporations to outsource many of the professional functions which is going on smoothly. This situation has drastically reduced the need to have big number of permanent employees and also of a big office premises.
Indeed, the post covid world is different, interesting and off course challenging. One has to face it with a smiling face !
The world is slowly coming out of Covid fear. Finally the livelihood proved more important than life and thus professional activities have been re-started and are gearing up all over the world. Mind well, the corona pandemic has not subsided nor we have found the vaccacine but still the industry has gradually started operating. Infact in many places, there has been surge in cases but fortunately the death rate has come down and recovery rate has improved substantially.
Iron & steel industry too has been improving on it’s production figures and by now it has achieved almost 75 % of pre-covid production level. Of course I am talking about the main, integrated and big steel mills. They are comparatively better placed to handle the situation. Many big plants are far away from the main cities and have their own staff and worker’s colony. Thus depending on the market demand, they can enhance their production level in a short time. Of course, there are instances where the pandemic has spread in these colonies too. Smaller rolling mills and processing units will obviously take a longer time to stabilise their production, processing and selling. For these smaller units, the problems are numerous. They have to first look for re-employing the migrated labour. If they have not come back, then getting their replacement is a big issue as it is very difficult to get matching skill set instantly. Secondly, they have to digest the losses of last six months and then raise the new capital. Which bank or financial institution will finance a loss making unit ? Further, the supply chain has been disrupted in many places and restoring it is not an easy task. Also regaining the customer support is very important and will be decided by your past interaction and relations with them. All in all, it is going to be quite an uphill task for smaller units in iron & steel sector. Let’s see how they take on this challenge !
This unforeseen, unprecedented situation has taught all of us a lot of new things. It has really changed the way we think. Naturally, our industry too has lot of takeaways from this situation. Many old business models are collapsing where as a lot of new models are emerging. One has to access the viability of his business model in the light of this new environment. May be there is a need to change, alter or even scrap the old model (as well as the thinking) and come out with an altogether new concept. Innovation was always welcome but in this extraordinary situation it has become the ‘Mantra’ for survival. Face the new world with courage and a smile on the face. Innovate, innovate and ……… innovate ! I promise you will be the winner !
Mining is an important part of every economy. In a world that is already facing shortages of some of the important minerals and metals like petroleum and coal, the demand for such products is only bound to increase with time. Meeting those demands will be a challenge for the mining and minerals industry worldwide. With the increasing efforts in R&D and technological innovations, the mining and minerals industry has developed huge human resource requirements. There is already a shortage of skilled workforce throughout the world. Developments are taking place rapidly and many companies in this sector are expanding their operations and are working on new projects like the refinery being constructed by Reliance Industries Limited in Jamnagar. Also Bharat Petroleum is conducting R&D for value added products and alternate fuels. So to conclude, it can be said that mining and minerals sector has a bright future, be it in terms of employment or technology. The Mining industry in India is one of the core industries of the economy. It provides basic raw materials to many important industries. The Mining industry is characterized by a large number of small operational mines. India is endowed with huge resources of many metallic and non-metallic minerals. With barely 20% of reserves mined, India presents a major opportunity for investors. India has large reserves of Iron ore, Bauxite, Chromium, Manganese ore, Baryte, Rare earth and Mineral salts. India produces as many as 95 minerals, which includes 4 fuel, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals (including building and other materials). In 2015-16, there were more than 2,101 reported mines excluding atomic and minor minerals, natural gas and petroleum (crude) Out of 2,101 reported mines, 274 were located in Madhya Pradesh followed by Tamil Nadu (252), Gujarat (225), Jharkhand (211), Chhattisgarh (162), Odisha (157), Karnataka (146), Andhra Pradesh (135), Maharashtra (134), West Bengal (100). These 10 states together accounted for 85% of the total number of mines in the country in 2015-16. Among them, 558 mines belonged to coal and lignite, 668 to metallic minerals and 975 to non-metallic minerals.
Sunil Duggal is President, FIMI and Vedanta’s Global CEO for Metals and Mining for Group companies including Sterlite Copper, Vedanta Zinc International – Africa and Ireland, Copper Mines of Tasmania – Australia. He is also the CEO and Whole-time Director of Hindustan Zinc Limited since October 2015. He joined the company in the year 2010 as Executive Director, became Chief Operating Officer in the year 2012 and was Dy. CEO from 2014. In his previous stint, he worked with Ambuja Cement for 20 years, wherein, he drove the growth of the company to plus 20 million tons. He was President at the time of leaving. A result oriented professional with over 36 years of experience of leading high-performance teams and 20 plus years in leadership positions. He is known for converting challenges into opportunities, his ability to keep a level head at all times, nurture and grow a business and successfully drive efficiency and productivity whilst reducing costs by embracing new technologies and innovation. His dedicated efforts on sustainability has helped building a robust safety and sustainability culture. Under his able leadership, HZL has been ranked first in Environment Category and 5th in Sustainability globally by Dow Jones Sustainability Index. His thrust on adopting best-in-class mining and smelting techniques, state of art environment friendly technologies and mechanisation, automation and digitalization of operational activities has added great value. He was born and brought up in Amritsar and comes from a humble background. His initial education is from DAV school, Amritsar and has an Electrical Engineering degree from Thapar Institute of Engineering & Technology, Patiala. He is an Alumni of IMD, Lausanne – Switzerland and IIM, Kolkata. He is serving as Vice Chairman – International Zinc Association, President – Federation of Indian Mineral Industries, President – Indian Lead Zinc Development Association. Recently, he has been appointed as the Chair – CII National Committee on Mining. In an interview to Sanjay Singh, Assistant Editor of Steelworld, Duggal says that the mining industry in India is still the highest taxed in the world. Now, the effective tax rate in India works out to be 58% for existing mines and 54% for new mines granted through auction.
for the exclusive interview with Sunil Duggal click here
The Indian economy was doing quite well for the last decade or so and that is the reason many international companies as well as the investing community was eyeing on this newly awakened elephant. This was especially true after the global economic meltdown in 2008 when most of the developed world economies crumbled and India was one of the few growing economies on the planet. This upward journey continued till the end of 2016 but after that the GDP growth rate started slipping. There may be long term benefits of a move like demonitization but on a short term basis, the cash in the market was eroded. Many cash based (legitimate) businesses had received severe jolt and few did not survive this sudden blow.
Big steel corporates were not affected by demonitisation but small mills doing business in cash and evading the tax suffered a lot. I do agree that it is a good transition and has helped the country to strengthen the mainstream economy. Even with respect to GST, the initial teething problems seem to have reduced and the implementation part has started becoming more smooth.
With all the above reasoning, one cannot deny the fact that the country is presently witnessing an economic slowdown. Let the economists debate whether or not it can be technically termed as ‘recession’ but the declining GDP figures for more than two quarters, rising unemployment and especially for steel sector, the disastrous performance by auto sector, all this do not paint, by any standard, a positive picture of the economy. Yes, first of all, let us accept that Indian economy is slowing down, after that will come the solution part.
As far as steel industry is concerned, auto consumes not more that 12 % of steel produced in the country. Thus declining auto sales do not pose a great threat to steel consumption. The bigger problem for steel is slowing down of infra sector, which consumes more that 55 % of steel production and is more or less controlled by central and the state governments. Unless the governments increase their spending for this sector, give a forward push to infra projects, how can steel demand grow?
I do agree that conventionally, auto sector performance was considered as the barometer of the economy of any developing country. Is this assumption still valid? I doubt ! The lifestyle and mindset changes in the last few years have completely changed our approach towards the life. The 21st century, rather than believing in physical infrastructure, believes more in digital one. Steel was the basis of the human progress in 20th century but in this century, human aspirations seem to have taken a new direction. With the progress in solar energy sector, the importance of fossil fuels is certainly going to diminish. With the advent of electric cars, the auto component industry is going to drastically shrink (if not vanish). Can anybody predict what will be the state of steel industry after 10 years?
Yıldız Entegre Holding has more than 100 years’ experience in industry and commerce, and in 2015 it decided to enter the steel business through its subsidiary company, Yıldız Demir Çelik. Danieli was selected as technology partner and supplier of its first steel processing plant : a new, complete cold-mill complex setup representing latest
technologies to produce 1.5M tons per year of high quality cold-rolled, tempered
and coated coils.
The p15:14 30-09-2019roduct range includes white goods applications, commercial, structural and construction grades, IF, HSS, HSLA and DP material, for demanding customers in local and international markets. In 2018 the new installation at Kocaeli started operating in sequence, and already it is producing in excess of the contractual production rate. Danieli acted as the single-source supplier for mechanical, electrical and automation equipment, and the innovative technological solutions and process knowhow applied at Yıldız have been developed by Danieli through continuous in-field experience and R&D improvements.
Steel has historically been the building block of a nation’s rapid industrial development. India is a resource based country and is blessed with large reserves of Iron Ore, Coal, Limestone, i.e the main raw materials required for Iron & Steel making but its sustainability has always been a major challenge. Indian steel industry has seen several up and downs in the past but despite all odds, it has made rapid strides in the last three decades from 22 MT in FY 1991-92 prior to deregulation, to 106 MT in FY 2018-19, thus becoming the second largest steelmaker in the world, after China.
The Indian steel industry operates under three broad based process routes for production viz. BF-BOF, EAF and IF. Recognizing the opportunities available in the country, mainly due to very low per capita consumption of steel and increased focus on infrastructure development, Ministry of Steel, Govt of India prepared a road map in the form of the National Steel Policy -2017 (NSP-17) to create a sustainable Iron & Steel Industry with focus on increasing the production capacity from ~ 130 MT presently to 300 MT by 2030 and to make country self-sufficient in terms of steel and alloyed steel. Thus, the next 10 years will see huge capital investments in the Iron & Steel sector in setting up of Greenfield plants as well as Brown field expansions.
Although, India’s steel production has increased significantly but our dependency on technology and supply of some of the critical raw materials has not improved much, which is leading to huge outflow of foreign exchange. It is high time, the stakeholders of steel sector i.e the design and consultancy organizations, steel producers, R&D organizations, academia and the government work together in developing a sustainable R&D platform capable of indigenous design and manufacture of equipments/ facilities as well as provide innovative solutions to the challenges faced by the steel sector in terms of enhancing process and product capability, cost-effectiveness, competitiveness, quality and environmental issues.
Drivers for Sustainability of Steel Industry
The key drivers for sustainability of the Indian steel sector can be classified under following heads:
• Product development
• Environment and energy
The competitiveness of the steel industry will largely depend on its ability to produce cost-effective steels of desired quality and volume, as per the changing market requirements. India is blessed with huge iron ore reserves of 33.3 billion tons with average iron content of 64%. Due to high Iron content, due importance could not be accorded towards adoption of the advanced beneficiation technologies like adopted in other parts of the world. Now, the grades are deteriorating and some of the deposits are facing major challenges because of high alumina content, which leads to formation of viscous slag and low productivity of the blast furnace. Similarly, Silica also is increasing continuously and impacting the competitiveness. Thus, optimum utilization of low grade iron ore in one of the most cost effective manner without compromising on environmental performance will be the major challenge for providing sustainability in the sector.