Steel Insights, April 2022 by mjunction services ltd

CONTENTS 15 Imported scrap prices rally, trades slow down 16 India pig iron production down y-o-y in February 17 India’s February sponge iron production up 3.4% y-o-y 18 February crude steel production up 7.5% y-o-y 19 Need stakeholders’ cooperation for hydrogen usage: RMI 25 Steel cos lap up coal mines in 4th tranche auction 26 Domestic iron ore offers remain range-bound 28 Seaborne coking coal offers remain volatile in March 29 FY22 ends on positive note for Motown 31 Iron ore handled by major ports down 28% till February 32 Indian Railways’ iron ore handling up 7% till February 33 Global crude steel output down 7.94% in February 36 BHP, Rio Tinto sign pact for iron ore green corridor 38 Stainless steel critical for Ethanol blended motor fuel in India 40 Trajectory in ferro alloy industry 42 NMDC posts 23% production growth in FY22 47 Thermal coal block wins to make JSPL selfsufficient 49 AMNS India to set up advanced Steel Processing Lines in Hazira 51 JSW Utkal get EC nod for 13.2 mtpa Odisha plant 53 Shyam Metalics clears hurdles to buy Ramsarup Ind 55 Corporate Update 57 Government update 59 Import Export data 63 Price trends 64 Ferro Alloy data 65 Production data

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6 | COVER STORY

Steel rides demand revival Production growth in tune with market dynamics.

13 | EVENT

Steel ministry to tweak PLI scheme Policy for secondary players under works.

23 | FEATURE

BCCL to develop Kapuria UG with longwall mining via MDO route Capacity of 2.4 million tons per annum to come on stream.

34 | INTERNATIONAL

ArcelorMittal sets up plant to cut Zenica emissions Gas from coke oven, BF waste to power generator.

44 | CORPORATE

Nithia Capital expands footprint in steel sector, buys Crest Steel Stressed asset co bought Uttam Galva in 2021.

COVER STORY

Steel rides demand revival Sumit Maitra and Tamajit Pain

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COVER STORY

evival in demand across sectors, push to infrastructure spending and frontloading of capex by public sector enterprises along with export opportunities triggered by evolving global geopolitical situations has helped the steel sector produce 16 percent more crude steel in the just concluded fiscal 2022. Domestic steel demand was affected in the third quarter of FY22 due to the rise of Omicron variant of Covid-19. However, it witnessed a sharp bounce back, as a sharp uptick is being noticed in steel consumption since middle of January. Demand for long products has risen faster than flat products, as the country’s construction activities kick-started on the back of infrastructure push by the government and steady demand from the real estate sector. Further, the current geopolitical scenario will provide an opportunity to the Indian steel manufacturers to increase their export share, as the sanctions on Russia would result in supply disruption in global steel markets. Post sanctions on Russia, it is expected that the steel shortage in Europe to emerge, which would result in escalation of prices until alternative sourcing is arranged. This will take time given the quota system on steel imports in Europe. Since the beginning of FY22, domestic steel demand was the highest in January 2022, growing at 11.7 percent on month-onmonth (m-o-m) basis.

“While the demand was driven by a sharp pent-up demand in January 2021, the current demand situation is largely structural in nature, primarily led by infrastructure push by the government,” a steel analyst said. Pickup in infra, construction and PSU capex

Tendering grew by 18 percent year-onyear (y-o-y) in the fourth quarter of FY22 led by highways and water supply segments while order awards grew 30 percent y-o-y in Q4 driven by highways, water supply and urban infrastructure, according to Centrum Institutional Research. Construction demand, which had picked up in December continued in the fourth quarter as well though it had moderated in February due to some seasonal factors. “As per the rail freight data, cement volumes transported witnessed a sequential rise of 24 percent in Q4. Channel checks suggest the demand moderation in February was owing to temporary reasons – unavailability of labour and elections in five major states,” said analysts with JM Financial. Cement demand picked up sharply in December 2021 following a significant slowdown in November and continued in January. However, demand witnessed moderation in February, owing to unavailability of labour and elections in five major states, disrupting the construction activity in these regions,

Cement volumes through railway freight

“As per the rail freight data, cement volumes transported witnessed a sequential rise of 24 percent in Q4. Channel checks suggest the demand moderation in February was owing to temporary reasons – unavailability of labour and elections in five major states.” JM Financial which was reversed quickly with strong uptick in March, analysts with JM Financial said. “Cement volumes transported through railways point to a stable volume trend y-o-y with over 24 percent q-o-q growth in 4Q,” the investment research house said. The government has prioritised spending on infrastructure and capex plans of its various arms including the public sector units, which have been told to fulfill and exceed their capex plans to boost the economy. “At a time when the centre is exhorting CPSUs of the country to frontload their capital expenditure to spur economic growth, Coal India scaled up its capex to `14,834 crore ending FY22, the highest so far,” the state-owned mining major said adding that centralised procurement of Heavy Earth Moving Machineries several subsidiaries amounted to the bulk of `2,605 crores under this head which essentially involved replacing the old fleet with the modernised equipment.

Steel Insights, April 2022

EVENT

Steel ministry to tweak PLI scheme, bring policy for secondary players

♦ Incremental production to be counted from capacity addition or capacity augmentation ♦ Permission to invest in downstream and upstream ♦ Reduction of year-on-year incremental production for calculation of incentives Prominent representatives of this sector from 20 states of the country participated in the conference. The purpose of this conference was to make the Indian steel industry self-reliant and this beginning of dialogue and exchange of ideas with the secondary steel sector will be continued, the ministry said. To take the manufacturing sector forward, the schemes are being tailored to suit the traders and investors. The suggestions of the industry received from the conference will be considered and the Government of India aims to ensure a seamless, transparent and flexible process for the industry, the government said. Need to move towards green steel

Steel Insights Bureau

he Steel Ministry is considering several steps to assist the secondary steel sector to grow including making the Production Linked Incentive (PLI) scheme more attractive, coming out with a policy specifically for the secondary steel sector and also expand the scope of the MSMEs in the steel sector by taking the definition more broad-based. Steel Ministry has assessed the issues being faced by the secondary steel sector following rounds of interactions and outreach programs. Since the conference on the PLI scheme for specialty steel held in October 2021, the ministry has been interacting regularly with the secondary steel sector spread in Punjab, Odisha and Madhya Pradesh accounting for 40 percent of domestic steel production. “Following these interactions, the ministry has documented all such issues

being faced by the sector and we have been directed by the Steel Minister to address them,” Rasika Chaube, Additional Secretary, Steel Ministry, said at the one-day conference organised by the Steel Ministry on “Making India Self-reliant in the Sector of Steel – Role of Secondary Steel Sector”. The government has already extended the last date for application under the PLI scheme for specialty steel from March 31 to April 30 while following steps are being taken to further improve the PLI scheme and make it attractive to the secondary steel players, officials told participants in the meeting. ♦ Expansion of product sub-categories to include steel grades used in the strategic sector ♦ Fixation of PLI slabs at 2 level – for strategic and commercial steel ♦ Omission of ranking system ♦ Consideration of investments in units commissioned after July 29, 2021, date of notification of scheme

Steel Minister Ram Chandra Prasad Singh highlighted the need to move towards green steel, saying the use of hydrogen in the iron ore and steel sector would help reduce coal imports. He also said that Prime Minister Narendra Modi has an ambitious vision on Hydrogen. “Iron and steel industry will be big beneficiary as coal can be replaced by hydrogen and our dependency on import of coal also will reduce,” he said. Speaking during the day-long conference, Singh said the suggestions from the industry will be considered and seamless, transparent and flexible process is the avowed aim of the Centre. He said that industry has made great strides in production by moving from 22 million tons (mt) in 1991 to 120 mt in 202122. He also said that strategy needs to be devised to reach the target of 300 mt by 2030 and 500 mt by 2047. The Minister of State for Steel Faggan Singh Kulaste in his address urged the industry to be vocal about their requirements

Steel Insights, April 2022

FEATURE

BCCL to develop Kapuria UG with longwall mining via MDO route

Of the 57 coal seams/carbonaceous horizons encountered in Kapuria block, 47 seams/sections have attained workable thickness of more than 0.50 m in sizeable area of the block and considered for resource estimation. The sequence of coal seams as intersected in Kapuria block is given in Table-III. The coal is low in moisture and is of coking type. The block is occupied by rocks of barren measure formation which overlie the coal bearing Barakars of Gondwana super group and post Gondwana intrusives, apart from soil and alluvium of recent era. The area is mostly under soil cover and good rock exposures are rare. ♦ 9 normal faults have been deciphered based on surface and sub-surface data. ♦ Out of the 9 faults, 8 are strike faults and one is an oblique fault. ♦ 7 faults dipping southerly and two are dipping towards north. ♦ The throw of the faults varies from 10 m to 290 m. ♦ With borehole density of 8 BH/km2, geological reserve of coal seams up to XV seam is 146.17 mt.

Steel Insights Bureau

harat Coking Coal Ltd has decided to develop the Kapuria Under Ground mine in western Jharia with the help of mass mining technology like longwall mining at a cost of `2244.59 crore for which it has recently floated a tender for selection of a mine developer. Spread over 809.60 hectare, the mine has a normative capacity of 2.4 million tons per annum (mtpa) with peak production of 3.12 mtpa as per the project report earlier prepared by CMPDI. “The authority has decided to undertake the development and operation of Kapuria Underground Mine through a mine operator for extraction of coal, washing of coal as per agreement and delivery thereof,” the tender document says.

The project involves extraction of coal from Kapuria XVIIIA, L6, L5, L5 & L6 combined, XVIC, XVIB, XVIA, XV, L3, XIII seams by mass production technology with support longwall or any other mass production technology and also construction and operation of washery for washing of coal. Duration of the contract is 25 years or life of the mine proposed by the bidder, whichever is shorter. Mine details

Kapuria geological Block with an area of about 6.4 sq km is located in north-central part of Jharia Coalfield and is completely virgin. Coal seams

In the Kapuria block a total of 57 coal seams/ sections have been established.

♦ Additional drilling is going on in the area for improving the exploration status of the block and supplementing its geological data base. The ♦ general strike of the area is WNW-ESE which gradually changes to NW-SE towards the SE part of the block. ♦ The beds dip gently at 5 degree to 12 degree towards SSW which turn SW in the eastern part of the block. As the block has no infrastructure, mine service buildings for mine administration, substation, workshop, stores, coal handling plant are proposed by the bidder near proposed main access of the mine. The access of the seams is proposed through two reverse drifts from surface with cross-section of 6 m 4 m and gradient of 1 in 5. Both the drifts will intersect XVIIIA and XVIB seams. One of the drifts will used for

Steel Insights, April 2022

INTERNATIONAL

ArcelorMittal sets up power plant to cut emissions from Zenica Steel Insights Bureau

rcelorMittal has set up a combined heat and power plant that will cut down sulphur dioxide and dust emissions from ArcelorMittal Zenica by 80 percent. A new, combined heating and power plant has been inaugurated at Zenica, Bosnia & Herzegovina, cutting sulphur dioxide and dust emissions from ArcelorMittal Zenica. The power plant, which has been operating since the end of November 2021, provides district heating to the town of Zenica, using a reliable and more environmentally sustainable supply of energy. The power plant was built by Toplana Zenica, a joint venture between ArcelorMittal Zenica (50 percent), the City of Zenica (20 percent), and KPA Unicon and FinnFund (15 percent each).

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The plant’s new steam generators operate using coke oven gas and blast furnace waste gases from ArcelorMittal Zenica but can also operate using natural gas if necessary. Previously, the waste gases from the steel plant in Zenica were either flared or not fully re-used. The steam generated at the plant is also being used by ArcelorMittal Zenica, while air is supplied for the operation of the blast furnace. With the new plant operational, the use of 150,000 tons of coal a year has been eliminated - not only cutting sulphur dioxide emissions by 80 percent but also cutting 18 percent of ArcelorMittal Zenica’s total CO2 emissions. ArcelorMittal Zenica inherited the old, coal-fired power plant from its predecessor; it continued to run the old boilers in order to provide district heating to Zenica residents, but emissions from the use of coal to fire the

With the new plant operational, the use of 150,000 tons of coal a year has been eliminated - not only cutting sulphur dioxide emissions by 80 percent but also cutting 18 percent of ArcelorMittal Zenica’s total CO2 emissions.

CORPORATE

Nithia Capital expands footprint in steel sector, buys Crest Steel

Steel Insights Bureau

ithia Capital, a global distressed asset manager and investment firm, has completed acquisition of Crest Steel and Power Pvt Ltd in partnership with Amalgam Steel Pvt Ltd for a consideration in excess of `600 crore through the insolvency proceedings route. Located at Durg in Chhattisgarh, Crest is an integrated steel plant with a current sponge iron capacity of 225 kilo tons per annum (ktpa) and steel billet capacity of 80 ktpa. Crest has over 400 acres of land and extensive room for brownfield expansion with a private railway siding, which has been

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identified as part of the planned growth capex projects. These include completion of the 1,500 ktpa iron ore pellet plant and near doubling of the manufacturing capacities for sponge iron and steel billet. This is the second acquisition of Nithia in the steel sector in recent times following the buyout of Uttam Galva Metallics Ltd (Uttam) and Uttam Value Steel Ltd in association with CarVal Investors, through the insolvency route in January 2021. The partners, through their Singaporebased joint venture holding company, Wardha Steel Holdings Pte Ltd acquired the two companies for a total purchase consideration of in excess of `2,000 crores.

Commenting on the acquisition of Crest, Jai Saraf, Founder and CEO of Nithia Capital said, “The acquisition of Crest is an important and strategic step for Nithia and is our second steel investment in India. With our newly forged partnership with Amalgam Steel, we believe Crest will soon achieve a successful turnaround and is well set on its planned growth programme. This transaction is further proof of the success of the Insolvency and Bankruptcy Code (IBC).” Founded in 2010, Nithia Capital is a global advisory and investment firm that specialises in turning around heavy assetbacked underperforming industries in steel, power, resources and allied industrials.

CORPORATE

Shyam Metalics clears hurdles to buy Ramsarup Ind

NCLT, vide its order dated April 6, 2022 dismissed and disposed of the aforementioned applications. According to the operative part of the order, a sum of approximately `322 crore, which represents the entire resolution amount, has been parked in a separate account and can be transferred to the corporate debtor’s account without any further delay. On April 6, NCLT gave the following order: ♦ The full resolution plan amount now parked in a separate account, be transferred to the account of the Corporate Debtor without further ado, and in any case, no later than five days from the date of this order. ♦ The said amount be distributed in accordance with the approved resolution plan immediately upon receipt. ♦ The entire process be completed within a period of one month from the day of the order.

Steel Insights Bureau

he group owning Shyam Metalics and Energy Ltd (SMEL), whose resolution plan for Ramsarup Industries Ltd was approved by the resolution court, National Company Law Tribunal, in 2019, has recently cleared all the legal hurdles put up by various parties. “NCLT vide its order dated April 6, 2022 had settled all the pending issues and approved the resolution plan and given direction to implement the approved resolution plan within a period one month. All the directions of NCLT shall be complied with in due course,” SMEL said in a disclosure to stock exchanges. The resolution plan for the Kolkataheadquartered steel and energy transmission infrastructure maker Ramsarup Industries Ltd, submitted by consortium of SS Natural Resources Pvt Ltd, one of the group companies of SMEL, and subsidiary Shyam Sel and Power Ltd, was approved by the NCLT on September 19, 2019. It was subsequently challenged by various

parties before NCLT / NCLAT/ Supreme Court. NCLT order

There were appeals filed before the National Company Law Appellate Tribunal (NCLAT) against the order approving the resolution plan. All such appeals were disposed of vide a common order dated March 4, 2021. Earlier, appeals preferred before the Supreme Court were disposed on May 4, 2021 and July 2, 2021. Thereafter, during the process of implementation of the Resolution Plan, the following applications were filed before the NCLT: ♦ Application filed by CFM-ARC, a financial creditor of the company seeking liquidation of the company ♦ Application seeking co-operation with the implementation of the resolution plan ♦ Application filed by CFM-ARC seeking payment of interest from for delay in implementation of the resolution plan.

♦ The management of the corporate debtor be transferred to the successful resolution applicant shortly thereafter. “In furtherance to the aforementioned order of the NCLT, the monitoring agency conducted a meeting on April 7, 2022 to discuss the further steps for the implementation of the resolution plan in accordance with the terms of the said order. It was further discussed that the members of the monitoring agency, along with its professional advisors shall be undertaking all necessary steps comply with the said order,” SMEL said. IPO capex plan

During the IPO, the company had laid out expansion plan spread over 4 years with a budgeted capex of approximately `3,000 crore, which was funded through internal accruals. As on December 31, 2021, SMEL incurred `1,363 crore from the budgeted amount and made significant progress in enhancing capacity. It has further spend `145 crore in January

Steel Insights, April 2022

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