Steel Insights, July 2022

CONTENTS 15 Imported scrap trade gain momentum 16 India pig iron production down y-o-y in May 17 India’s May sponge iron production up 6% y-o-y 18 India May crude steel production up 17.3% y-o-y 19 Coal Min eyes 25.33 mt washed met coal supply by FY30 21 Infra spending to support steel demand 23 Duty hike hurts steel exports 24 Gasifying coal: time to step on the pedal 29 JSW, Jindal Power, Vedanta bid for Ghogharpalli block 30 Rating agencies see steel prices staying depressed 32 World needs faster decarbonisation: BP report 34 Seaborne coking coal offers fall in June 35 Iron ore offers remain volatile 37 June sales bring in more promise, supply side eases 39 Iron ore handled by major ports down 23% till May 40 Indian Railways’ iron ore handling down 9% till May 41 Global crude steel output up 4.18% in May 42 ArcelorMittal shares low-carbon steel standard concept 51 Tata Steel plans country-wide EAF hubs 55 AM/NS wins order to supply slag for 37-km expressway 57 Corporate Update 61 Government update 59 Import Export data 63 Price trends 64 Ferro Alloy data 65 Production data 67 Consumption data 68 Import data 69 Export data

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6 | COVER STORY

Decarbonising Indian steel: the journey begins Emerging framework from the government towards Net Zero steel.

13 | COVER

“We can provide CO2 captured at Angul for free if it is utilised by user plants” Exclusive interview of Dr V R Sharma, Managing Director, JSPL.

44 | INTERNATIONAL

Low emission tech to keep metal prices high: Aussie report EVs, new energy tech to impact demand.

49 | EVENT

Hefty export tax on pellet hurting iron ore sector India Minerals and Metals Forum discusses sectoral issues.

56 | CORPORATE

JSW Steel eyes 37-mt capacity by FY25 Bhushan expansion to 3.5 mtpa likely by Q2.

COVER STORY

Decarbonising Indian steel: the journey begins Sumit Maitra

6 Steel Insights, July 2022

COVER STORY

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ndian government has taken the crucial first step towards providing a framework for how the Indian steel sector would approach decarbonisation and lowering of emission.

The cost-conscious and inflation-wary Indian steel industry has so far been taking baby steps towards this goal.

The recent cost-push and demand-driven inflation in steel prices had also discouraged any major step towards making green steel, partly because decarbonisation is expected to drive up costs of production.

For this, the initial impetus in the form of assistance towards developing the right mix of technologies and processes, was expected to come from the government, which is also expected to provide the necessary handholding in the initial phases through financial support and other assistances.

While the government has already taken steps to provide enabling policy environment through its measures like the National Hydrogen Mission and impetus to coal gasification, it has now spelt out the areas where Research & Development would be encouraged through financial support to achieve objectives like reducing specific energy consumption, lowering of Green House Gas emission, mitigation of pollution and waste utilisation.

While these steps would require investments that might drive up steel prices in future, reduction in cost of production is another key objective that these R&D efforts would try to achieve.

Steel Ministry had earlier awarded several R&D projects for utilisation of different types of slags generated during manufacturing of steel.

The use of steel slag in road construction shall address the shortage of natural aggregates in the country as the production of steel slag in the country from different process routes is likely to increase from present by 2030.

The Steel Ministry recently urged the steel sector stakeholders to develop a “timebound action plan and make concerted efforts for lowering the emissions from the steel industry” in line with the commitments made by the Government in COP26.

Discussions were also held over promoting the transition towards green steel, various strategies and technologies that can be adopted by the steel industry to produce green steel, and technology readiness levels, among others.

The use of green hydrogen in producing iron and the use of carbon capture utilisation and storage (CCUS) technologies for lowering emissions were also discussed at the meeting.

R&D for decarbonisation

Ministry of Steel has just introduced the scheme for ‘Promotion of R&D in Iron & Steel Sector’ for providing financial assistance for R&D projects identified for funding by the ministry.

R&D project proposals have been invited from academic institutions, research laboratories and Indian steel companies for pursuing R&D projects in the following areas: ♦ Development of innovative technologies for utilisation of iron ore fines and noncoking coal ♦ Beneficiation of raw materials like iron ore, coal and agglomeration ♦ Improvement in quality of steel produced through the various routes of steel making including the Induction Furnace route. ♦ Development of commercially viable technology for utilisation of steel plant and mine wastes including LD/EAF/IF slag. ♦ R&D for achieving global benchmarks in productivity, quality, raw material consumption, energy consumption, water consumption, refractory consumption etc ♦ Development of low-carbon technologies for reduction in GHG emission. ♦ Development of innovative technology for effective recovery of waste heat in different iron & steel making processes including downstream processes ♦ To pursue R&D on steel-intensive design of building/ bridges/ structures with an aim to increase usage/ consumption of steel

“If right steps are taken, the country can emerge as the world’s largest producer of green steel at 15-20 mt by 2030 - a pioneering effort to make green steel mainstream for the world.”

NITI Aayog & RMI ♦ Development of innovative solutions for addressing the challenges faced by the iron & steel industry Scope of support to R&D projects

R&D work in lab scale/bench scale and scale-up to pilot scale/demonstration plants will be supported.

In case of industrial and commercial organisations pursuing R&D projects, financial assistance of up to 50 percent of the total cost will be permissible.

In case of academic institutions and research laboratories, financial assistance of upto 70 percent is permissible.

Preference will be given to R&D project having tie-up with user industry.

For pilot/demonstration scale R&D projects, financial assistance will be limited to upto 40 percent and the balance to be met by the industrial partner.

Joint proposals with other laboratories/ institutions/industry are desirable for providing support under the scheme, the notification for the scheme says.

India can be world’s largest greensteel maker: NITI Aayog

In recent times, hydrogen, as a source of energy, has been a dominant contender.

Steel Insights, July 2022

7

COVER STORY

“We can provide CO2 captured at Angul for free if it is utilised by user plants”

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indal Steel and Power Ltd, which has been operating world’s first syngas-based plant to reduce iron in its steelmaking operations, has been a cheerleader for adoption of coal gasification in the country. JSPL’s facility including the DRI plant at Angul in Odisha is being showcased by the Indian government as part of its push to aggressively promote coal gasification as one of the processes to make coal a sustainable and environment-friendly fuel.

As part of this initiative, JSPL hosted Steel Insights to visit the facility up close as part of a delegation organised by the Coal Ministry.

During the event, Sumit Maitra caught up with Dr V R Sharma, Managing Director, JSPL who shared plans for promotion of a gasification ecosystem including setting up of a carbon park.

- for our Angul as well as Raigarh capacities. So, we expect that once the mines start operating, it would be good for us. But, as of today, we are facing a shortage of coal. For this, we seek the support of the government of India to facilitate faster opening up of the mines.

The government has come up with some incentives to promote coal gasification in the country. Do you see benefits in such measures?

The government has provided incentive in the form of a concession of 50 percent in revenue share for coal gasification. We appreciate the incentive, which, we believe, will encourage more players into the coal gasification sector.

There was a time when the coal gasification plant had to shut down for want of coal. What is the current situation? Are you comfortable with the availability of coal to run your Angul facility continuously?

JSPL has been promoting the concept of integrated gasification combined cycle (IGCC) power plants. What are the benefits of going for such projects?

That phase is over. An important development is that we have won some coal mines - one in Chattisgarh and three in Odisha

We waste lots of money and energy transporting coal away from the pithead. IGCC power plant at the pithead can save a lot of cost

Steel Insights, June 2022

13

FEATURE

JSW, Jindal Power, Vedanta bid for Ghogharpalli block Steel Insights Bureau

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ntities like JSW Steel Ltd, Jindal Power Ltd and Vedanta Ltd have participated in the recently held 15th tranche of coal block auction.

All the 3 major corporate entities have bid for the Ghogharpalli block.

JSW Steel has also bid for the block Rampia and Dip side of Rampia – under the 2nd attempt for tranche 14.

A total of 38 offline bids were received under three tranches of commercial coal mine auctions. - the 5th tranche, 2nd attempt of 4th tranche and 2nd attempt of 3rd tranche of commercial coal mine auction launched by the Ministry of Coal.

The last date for submission of technical bids for all the coal mines was June 27.

Under 5th tranche of auctions, a total of 28 offline bids were received against 15 coal mines, where 2 or more bids have been received for 8 coal mines.

Under 2nd attempt of third tranche, a total of 9 coal mines were put up for auctions and 6 bids have been received against 6 coal mines.

Under 2nd attempt of 4th tranche, a total of 4 coal mines were put up for auctions and 4 bids have been received against 3 coal mines.

The bids received as part of the auction process were opened on June 28 in New Delhi in the presence of interested prospective bidders.

The 5th tranche of auction, combined with second attempt of 4th and 3rd tranche of auctions for commercial mining of coal have garnered good interest from the Industry.

Only one technical bid has been received for Choritand Tiliaya, Datima, Dongeri Tal – II, Kosar Dongergaon, Mandla-South, Sitanala and Sondhia.

Timelines for Riri, Bigga Abhaysinghpura, Bapeu, East of Sethiathope, Michaelpatti, Vadaseri, Nagurda, Nagurda East and Nagurda West lignite blocks have been revised and the bid due date for these blocks is July 20.

Several mines received no bids.

List of bidders in 15th tranche of coal block auction

Bandha North ♦ JMS Mining Pvt Ltd ♦ Jaiprakash Power Ventures Ltd Basantpur ♦ Gangaramchak Mining Pvt Ltd ♦ Esskay Concast & Minerals Pvt Ltd Dahegaon/Makardhokra-IV ♦ Avassa Ferro Alloys Pvt Ltd ♦ KJS Cement (I) Ltd Ghogharpalli & its Dip Extension ♦ NLC India Ltd ♦ Cavill Mining Pvt Ltd ♦ Throns Infrastructure Pvt Ltd ♦ Jhar Mineral Resources Pvt Ltd ♦ JSW Steel Ltd ♦ Jindal Power Ltd ♦ Vedanta Ltd Jitpur ♦ Cavill Mining Pvt Ltd ♦ Terri Mining Pvt Ltd ♦ Shyam Sel & Power Ltd MarkiMangli-IV ♦ YJSL Minerals and Logistics Pvt Ltd ♦ Sobhagya Mercantile Ltd ♦ Nagpur Business Forms Pvt Ltd Sursa ♦ Madhya Bharat Minerals Pvt Ltd ♦ Godavari Power & Ispat Ltd 2nd attempt for Tranche 13

Altogether 6 bids were received for 6 bids

“A portion of the exports will likely be diverted to the domestic market in FY23, owing to export taxes.” “A portion of the exports will likely be diverted to the domestic market in FY23, owing to export taxes.” offered under the second attempt for tranche 13 auction.

No bids have been received for Thesgora-B/ Rudrapuri, Jaganathpur A coal mines.

Accordingly, under clause 3.3.2 (b) (II) (iii) and 9.6 of the Tender Document dated April 11, 2022, the tender process for the mine has been annulled.

However, timelines for Parbatpur Central coal mine have been revised and the bid due date for this block is July 20.

List of bidders Barra

Bharat Aluminium Co Ltd

Ashok Karkatta Central

Moonpie Metaliks Pvt Ltd

Kasta (East)

Jitusol Developers Pvt Ltd

Maiki North

Maiki South Mining Pvt Ltd

Marki Barka

Birla Corp

Koyagudem Block – III

Auro Coal Pvt Ltd

2nd attempt for Tranche 14

Under Tranche 14th’s second attempt, 3 bids were received from NLC India, Jhar Minerals and JSW Steel for the block Rampia and Dip side of Rampia while Rungta Sons Pvt Ltd put in a bid for the Alakananda mine.

No bids have been received for Binja coal mine and the tender process for the mine was annulled.

Steel Insights, July 2022

29

INTERNATIONAL

Low emission tech to keep metal prices high: Aussie report

Steel Insights Bureau

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lobal efforts to build energy and transport systems based on low emission technologies are likely to keep base metal and critical mineral prices high, the Australian industry ministry said in its quarterly Resources and Energy Quarterly.

“This will partly offset the impact of energy exports coming off their highs, as the

44 Steel Insights, July 2022

sanctions on Russia sees world trade in fossil fuels re-organise,” the report said.

However, there is likelihood of energy prices remaining higher than expected, as the exclusion of a significant amount of Russian oil, gas and coal exports from the global market leaves noticeable shortages.

The production of Electric Vehicles and new energy technologies will see growing demand for metals such as copper, aluminium, lithium and nickel. The volume

of energy exports is forecast to show similar growth during the outlook period. Supply constraints should ease, and high prices will encourage expansion, the report predicts.

The report sees markets already pricing in the loss of some Russian resource and energy commodity output from world supply.

New outbreaks of vaccine-resistant Covid-19 strains also pose risks to the outlook. Especially so if they occur in China, where small outbreaks are currently being

EVENT

Hefty export tax on pellet hurting iron ore sector

Steel Insights Bureau

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mposition of export duty of 45 percent on iron ore pellets, up from nil has affected operations of standalone pellet plants, said several participants in the 11th India Minerals and Metals Forum organised by the Indian Chamber of Commerce and Industry in New Delhi recently.

Pankaj Satija Co-Chairperson, ICC National Expert Committee on Minerals & Metals and Managing Director, Tata Steel Mining Ltd said the 45 percent export duty is a challenge that the iron ore mining sector is being made to face.

“Pellet plants are suffering because of export duty,” he said.

“There is need to revisit policy on export duty on pellets and low grade iron ore fines in the larger interest of common good,” said Manish Kharbanda Group Head, Legal, Corporate Affairs, Environment & CSR, Jindal Steel and Power Ltd (JSPL) during his presentation.

The imposition of tax has come at a time when there is overcapacity in the sector and pellet plants are operating at a low 60 percent capacity.

“In FY22, out of 110 million tons per annum (mtpa) capacity, production of pellets was 77 mt with 70 percent plant utilisation.

The sector exported 11 mt contributing 10 percent of capacity. But with export becoming unviable, plant utilisation level has fallen below 60 percent,” Kharbanda said while addressing the event.

Satija, however, added that there is optimism among steel and mining companies as they are actively participating in auctions and planning to expand capacities.

Pellets have mostly been kept free from the duty and growth of pellet industry is important when 70 percent of ore production is in fines, they argued.

Setting up of pellet plants is capital intensive and requires import of technology.

Recent policy announcement has made

standalone pellets becoming uneconomical, the JSPL official said.

With duties also hiked on exports of steel, the current year will see export potential likely to cut down by at least 20-30 percent, if not more, Gajendra Pratap Singh, Sr. VP & Group Head, Corporate and Regulatory Affairs, JSW Group, said.

Export potential of Indian steel is close to 8-9 mt to its neighboring countries but actual exports are only 2-3 mt, he said.

Kharbanda expressed hope that the export duty is a temporary measure to contain the rising inflation and will be reversed soon.

Availability of lumps and pellets is more than requirement of domestic sponge industry with the present capacity of pellets higher than sponge iron requirement of ore at a ratio of 1.6: 1.

“The 45 percent export duty levied by the government on iron ore pellets last month has made export of the material unviable and the prices are already corrected up to 30 percent after imposition of duty made pellet manufacturing non-viable,” Sanjay Mitra, Vice President Raw Material & Logistics, Amalgam Steel said.

The increase in export taxes on lowgrade iron ore will stop export anymore and accumulate large surpluses at home, and mainly hit low-grade ore, which does not have prudent domestic market and mostly exported to overseas markets.

“Already substantial stocks piles are getting accumulated in mines that may lead to mine operational difficulties,” Mitra said.

Need for beneficiation

To make iron ore mining and steelmaking sustainable, low grade of iron ore must be beneficiated, several industry stalwarts said.

“Iron ore of less than 58 percent Fe

“There is need to revisit policy on export duty on pellets and low grade iron ore fines in the larger interest of common good.”

Manish Kharbanda, Group Head, Legal, Corporate Affairs, Environment & CSR, JSPL

Steel Insights, July 2022

49

CORPORATE Several downstream capacity expansion projects are also underway, which will bolster the company’s value-added portfolio by adding to its colour coating and tin-plate capacities significantly. Of these, the modernisation and capacity enhancement projects at Vasind and Tarapur have been commissioned.

JSW Steel eyes 37-mt capacity by FY25 Steel Insights Bureau

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SW Steel is aiming to increase its domestic steel capacity to 37 million tons per annum (mtpa) by FY25 from 27 mtpa at present, the company has said.

“We are expanding our India capacity in a phased manner to 37 mtpa from 27 mtpa at present to tap the opportunities in the domestic as well as global markets,” Sajjan Jindal, Chairman and Managing Director, JSW Steel, told shareholders in the annual report of the company.

JSW Steel is expanding its manufacturing capacity, in line with the nation’s aspirations, and setting up world-class steelmaking processes that are environment-friendly as well, the company said in the recently published annual report. JSW is one of India’s largest steel producers with an installed steelmaking capacity of 25.5 mtpa.

Its international operations comprise 1.2 million net tons per annum (mntpa) plate mills and 0.5 mntpa pipe mills in Texas; a 3 mntpa hot rolling mill and a 1.5 mntpa electric arc furnace in Ohio; and a 1.3 mtpa long steel rolling facility in Piombino, Italy.

In FY22, JSW began integrated operations at its 5 mtpa capacity expansion at Dolvi.

Raw material processing capacity was also ramped up to support higher production. In Vijayanagar, debottlenecking initiatives are underway to increase the capacity by 1 mtpa.

Further, the company has made good progress with its brownfield expansion of 5 mtpa, for an estimated capex of `20,000 crore.

And another 1.5 mtpa will be added after completing the ongoing modification and expansion of the blast furnace.

The completion of these expansion plans will take Vijayanagar’s installed capacity to 19.5 mtpa by FY25 from 12 mtpa currently.

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The expansion at BPSL to 3.5 mtpa is progressing well and is expected to be completed by Q2 of FY23 and the phaseII expansion from 3.5 mtpa to 5 mtpa is expected to be completed by FY24, the company has disclosed in its annual report.

Diversification of product portfolio

The company has moved quickly to create a portfolio of relevant value-added product capacities in anticipation of rising consumer aspirations and the inevitable growth in infrastructure spending.

“The company intends to increase the proportion of high-margin value-added products in the product mix so as to improve resilience to withstand steel price volatility, and offer a broad-based suite of products to meet the growing requirements of customers and facilitate import substitution,” JSW said in its annual report.

The share of value-added and special product (VASP) sale was 60 percent of consolidated sales volume as on March 31, 2022, which contributed to the increase in margins.

Moving up the steel value chain

JSW Steel is building stronger competencies in its Cold Rolled (CR) products. Vijayanagar Works’ CRM-2 is the only mill in India with the capability to produce some of the Advanced High Strength Automotive Steel (AHSS) grades for use in automobiles.

JSW Steel has also launched a firstof-its-kind Automotive Steel R&D lab at Vijayanagar to develop next-generation AHSS. The company received approvals for 25 different grades of AHSS from auto OEMs in FY22, including high-strength structural steel for passenger and commercial vehicle applications and special alloy steel grade with better specific steel purity qualities.

Earmarks `10,000 crore to cut carbon emission

JSW has earmarked `10,000 crore for investments to reduce its carbon emissions through various initiatives, such as increasing the use of renewable energy to replace thermal power, reduce our fuel rate through improved

“We are expanding our India capacity in a phased manner to 37 mtpa from 27 mtpa at present to tap the opportunities in the domestic as well as global markets,” Sajjan Jindal, Chairman and Managing Director, JSW Steel

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