Government to chalk out action plan for post-Covid steel sector Strategy to target input imports, logistics costs

Sumit Maitra

Government has decided to chalk out a roadmap to mitigate the adverse impact of the pandemic, rejuvenate the steel sector following the challenges being posed by the pandemic and to help the industry emerge stronger and competitive in a post Covid world.

For this, the government, along with the Joint Plant Committee, has responses from reputed consultants for “for development and implementation of an action plan for the Indian steel sector in the wake of ongoing Covid crisis across the world”.

“The action plan is to be developed and implemented within a timeframe of 12 months from the date of signing the contract,” the EoI document issued by the ministry said.

Strategy objectives

Till February 2020, the Indian steel sector was all set to achieve cumulative capacity expansion projections of 180-190 million tons a year by 2024-25 and also become self-sufficient in manufacturing auto grades, electrical steel, API grades. “However, due to the global slowdown induced by the Covid lockdown in India as well as the important steel producing and consuming countries round the world, the projections of the Indian steel industry are required to be recalibrated and the strategy for development of the domestic steel industry needs to be revised,” the EoI document says.

While Indian steel sector sources almost its entire requirement of iron ore and pellets, ferro-manganese, ferro-chrome domestically, the country imports more than 90 percent of coking coal, about 25 percent of scrap and almost entire steel grade limestone is imported.

Dolomite is both imported as well as procured domestically while more than 60 percent thermal coal for DRI units is imported.

“There is thus a need for the domestic steel industry, both primary and secondary, to increase sourcing of coking and thermal coal as well as limestone and dolomite from within the country,” the document said.

Another major cost component for the Indian steel sector is logistics, which is about 16-17 percent of the total cost.

Inbound logistics cost is 2.5 times higher than the outbound logistics cost, mainly on account of higher cost of moving goods by rail and road, and low availability of costeffective modes such as inland waterways, and slurry pipelines for moving minerals.

In order to reduce the logistics cost for the steel sector, it is important to focus on promoting multi-modality for both raw materials as well as finished steel, reducing the cost of rail and road freight, increasing speed of movement and loading/unloading as well simplifying processes and procedures.

The strategy would targets following key areas

♦ Identification of the current challenges arising out of the global Covid pandemic and its impact of the steel sector

♦ Ways to increase sourcing of coking and thermal coal as well as limestone & dolomite from within the country

♦ Reduce logistics cost for the steel sector by ways to promote multi-modality for both raw materials as well as finished steel, reducing the cost of rail and road freight, increasing speed of movement and loading/unloading as well simplifying processes and procedures