Steel Insights, March 2023

16 Imported ferrous scrap offers fell marginally

17 India pig iron production down 13% in February

18 Sponge iron production up 5% in January

19 India January crude steel production remained flat

20 Jindal Power bags the biggest mine under Tranche 6

21 India’s steel sector capable of emitting less, producing more: CSE

23 Seaborne coking coal offers remain volatile in February

24 Iron ore offers remain stable at fiscal end

25 Growth momentum continues for auto sector in February

27 Iron ore handled by major ports down 15% till January

28 Railways’ iron ore handling down 6% till January

29 Global crude steel output up 3.27% in January

36 NMDC Steel lists on stock exchange

38 RINL to double down on L&T, eyes 5 lakh tons supply

41 Essar re-enters steel sector, forays into lowcarbon fuels

43 JSW begins work on Kadappa steel plant

45 Tata Motors launches its first vehicle scrapping facility

47 thyssenkrupp to produce superior-grade CRGO steel in India

49 Corporate Update

52 Government update

55 Import Export data

59 Price trends

60 Ferro Alloy data

61 Production data

30

INTERNATIONAL

US steelmakers to benefit from hydrogen credit: study

Tax credit to make green steel cost competitive. 34

CORPORATE

SAIL plans major expansion

Eyes more than 30 million ton capacity.

Coking coal and transition dynamics

Decarbonisation drive squeezing supplies.

33

EVENT

Mining sector should contribute at least 2.5% of GDP by FY27

Minister asks industry to use AI, global practices for more exploration.

40

Publisher’s Statement

CORPORATE

JSPL to set up 3 mt steel plant at Krishnapatnam

To invest in port, slurry pipeline, MSME park.

Statement about ownership and other particulars about Steel Insights required to be published under Rule 8 of the Registration of Newspapers (Central) Rule, 1956. FORM IV (See Rule 8)

1. Place of publication : Kolkata

2. Periodicity of publication : Monthly

3. Printer’s Name : Amit Surana

Whether citizen of India : Yes

4. Publisher’s Name : Amit Surana

Whether citizen of India : Yes

Address : Tata Centre, 43 J L Nehru Road, Kolkata 700071

5. Editor’s Name : Tamajit Pain

Dated: March 2022

Whether citizen of India : Yes

Address : Tata Centre, 43 J L Nehru Road, Kolkata 700071

6. Names and addresses of : mjunction services ltd individuals who own the Tata Centre, 43 J L Nehru Road, Kolkata 700071 newspaper and partners or shareholders holding more than one per cent of the total capital

I, Amit Surana, hereby declare that the particulars given above are true to the best of my knowledge and belief.

Sd/Amit Surana

Publisher

Coking coal and transition dynamics

Sumit Maitra

Global decarbonisation agenda is repurposing investment strategies of the steelmakers and coal miners.

Few coking coal mines are being developed as low-emission alternatives are coming up while evolving geo-political relations are forcing countries to look for newer sourcing bases.

These factors are at play as the Indian steel industry is trying to secure supplies to feed the expanded capacity which will come on stream in coming years.

“Raw material security has become a major issue. We are balancing out two things: growing steel production in line with the National Steel Policy and the focus on decarbonisation and growing sustainably. This dynamics is being managed at a time when the markets has become extremely volatile,” Amita Khurana, Group Chief of Raw Materials Procurement at Tata Steel said at the Chintan Shivir organised by the steel ministry to decide on raw material strategy for the sector.

While commodities have gone through super-cycles, reaching levels unheard of before, the growth aspirations of the country as well as the corporation is not getting matched with the availability of raw materials, Khurana said at the brain-storming session.

While coking coal supplies remain constrained, miners divesting their coking coal assets would create uncertainty in supply, believes Teck Resources Ltd (Teck), the second largest producer of high-quality steelmaking coal in the world.

Teck itself is divesting its prized coking coal assets to 2 top steelmakers in the world – POSCO of Korea and Nippon Steel of Japan.

As these assets turn captive mines from merchant mines, this would mean trouble for Indian steelmakers who are expected to import more coking coal in coming days.

“Future demand growth (for met coal to come) mainly from India and South East Asia. Demand is expected to increase 37 million tons by 2030, driven by India and SE Asia,” Teck Resources told investors while announcing the deal.

Energy transition-focused strategies, along with evolving demand for critical minerals, is changing the investment climate of the steel sector, says top management of Teck.

Future supply growth coming mainly from existing mines, but could be delayed by labour shortages, logistic issues and approvals, the company says predicting market shortage by 2025, unless additional production comes on.

Coking coal price volatility turning steelmakers nervous Coking coal, one of the key input raw materials that changes the dynamics of the steel industry, plunged in the last week of February with easing supply concerns.

Prices cooled off with debottlenecking of logistic constraints and improving climatic conditions in Australia.

Chinese steel manufacturers are cutting down on their production due to environmental concerns and Chinese steel maker Baowu Group is also reselling its Glencore low volume coal for $370/ton.

“The fact that the largest steel manufacturer in the world is reselling its coking coal in open market, coking coal is expected to run in surplus and prices are

Teck Resources

expected to correct further in coming weeks,” analysts with Motilal Oswal had said on February 27.

However, strong demand in Asia and Europe has led to a sharp rise in coking coal prices since then.

Persistent volatility in coking coal prices hampers Indian steel makers, which rely heavily on imported coking coal.

Usually steel manufacturers in India carry inventory of around two months, and hence any price hike would dent margins of steel manufacturers in Q1 of FY24.

“The increase in coking coal prices again is threatening to increase our cost of production in the current quarter. However, the simultaneous improvement in the steel prices is expected to cover up the same,” SAIL Finance Director Anil Tulsiani recently told analysts.

“Volatility in coal prices has probably been the most important factor in recent past which can make or mar the fortunes of the steel industry. It has been a cause for concern for all of us. While Tata Steel has a requirement of higher share of indigenous coal insulating the company to some extent while SAIL is having 40-45 percent of its costs coming from imported coal alone. So, volatility would remain a concern,” V Suresh, Executive Director, Coal Import Group, SAIL, said at the Chintan Shivir.

“Future demand growth (for met coal to come) mainly from India and South East Asia. Demand is expected to increase 37 million tons by 2030, driven by India and SE Asia.”

Global seaborne coking coal outlook

US steelmakers to benefit from hydrogen credit: study

Steel Insights Bureau

To produce shipping fuel, fertilizer, and steel, tax credits under the Inflation Reduction Act (IRA) can make hydrogen-based production competitive with – and even cheaper than –fossil-based production methods, says a study by sustainability think tank RMI.

Under IRA, which promotes transition to a green economy and domestic manufacturing, a $3 production tax credit for each kilogram of green hydrogen produced will be provided.

This means the cost of US-made green hydrogen can be cut to $1 per kilogram or below, when other incentives and credits are used.

The tax credit can help bring critical technology to scale and create a vibrant economy of hydrogen production, purchase, and use, all while addressing one of our most challenging climate goals: slashing emissions from heavy industry.

“Clean hydrogen is necessary if we are going to decarbonize some of the most carbon-intensive sectors like steelmaking, shipping, aviation, trucking, fertilizer production and chemical manufacturing. Just as we’ve seen with wind and solar, a tax incentive for low-carbon hydrogen can spur development of a low-cost, clean energy source,” RMI says in a new report.

Importance of tax credit

The credit could immediately cut the cost of

producing low-carbon hydrogen and make it competitive with carbon-intensive hydrogen production, like with unabated natural gas.

The tax credit can pay out as much as $3 per kilogram of clean hydrogen produced over ten years, awarding projects developed as late as January 1, 2033.

In addition, the direct pay nature of this tax credit enables industries to apply without “tax equity” — a provision that should help alleviate constraints in the tax equity market and remove a barrier for many producers.

Tax credit to make green steel cost competitive

Clean hydrogen production is already happening across the world. Industries are moving quickly to scale and use this technology. Thanks to a significant down payment on clean technologies of the future in the Inflation Reduction Act, US production of clean hydrogen will now receive a substantial tax credit that could unleash a torrent of production by making clean production competitive with current fossil production.

SAIL plans major capacity expansion

Steel Authority of India Ltd (SAIL) is embarking on significant capacity enhancement.

The steel major is planning the next leg of expansion post FY24-25, which will take capacity to over 30 million tons (mt) including an incremental capacity of about 13 mt by 2031.

“We have already firmed up some sort of plan for expansion…we will be going in for our expansion plans and most probably we will be initially starting with the modernization, it’s a new expansion at our IISCO Steel Plant, which will be the first one, where we are planning to increase the capacity by 4.5 mt and then staggering the other expansions also, which will take place subsequently to probably go in for a 12 mtto-13-mt expansion by 2030-2031,” Anil Tulsiani, Director, Finance, SAIL, has told analysts.

“Capex should start from the year 2024, 2025, because we’ll have to, firstly, finalize the Draft Project Report and then go in for the tendering process, so the entire process

should take almost one and a half to two years,” he added.

Production is also being enhanced through debottlenecking and full capacity utilisation, Tulsiani said.

“There are two things we are doing. One, whatever assets we have now, we are trying to sweat them out. We are doing some debottlenecking schemes and all that. With that, we will try to probably increase the capacity by another 3 mt in the coming 3 to 4 years,” he told analysts following the announcement of third quarter financial results of the company.

“The company is currently functioning at full capacity of 19 mt crude steel production. With de-bottlenecking, SAIL can achieve better crude steel production volumes in 4QFY23. January has been the best month for crude steel production in the company’s history and a similar run rate will continue for Februry/March as well. The company is expected to clock sales volumes of 4.5-4.8 mt in 4QFY23, taking the total sales to 16 mt for FY23,” analysts with Motilal Oswal said in a report issued after the conference call.

Capex strategy

♦ Total capex earmarked for FY23 stands at `5,500 crore of which `3,500 crore is already spent and `6,000 -`7,000 crore for FY24.

♦ SAIL will undertake the debottlenecking exercise and increase the capacity by 3mt in the next 3-4 years.

♦ After the debottlenecking is completed, SAIL is expected to undertake a mega expansion at its IISCO facility and increase its capacity by another 4.5 mt.

♦ SAIL plans to add 12-12.5 mt incremental capacity by 2030-31.

♦ All the capex will start from FY25.

Eyes higher pricing for Railways

While pricing for Railways products has been received for FY21, SAIL has already submitted the request for FY22 at higher rates for about 1.1 mt of products. The benefit of

Steel Insights Bureau

Soma Mondal, Chairman, SAIL inaugurating Maya, the Extended Reality Lab providing Augmented Reality, Virtual Reality and Mixed Reality-based experience created by SAILMTI in collaboration with IIT Madras. The lab provides immersive experiences in various scenarios such as simulated training, interactive processes and virtual 360 degree views.

JSPL to set up 3 mt steel plant at Krishnapatnam

10,000 crore in 3 mt plant in Andhra Pradesh. The group will also set up a port, a slurry pipeline and invest in a MSME park.

During the Global Investors Summit, Andhra Pradesh received investment proposals worth `13 lakh crore and a total of 340 MoUs were signed.

“This will create employment for 6 lakh people in our state, helping us to build a stronger, more prosperous Andhra Pradesh,” the state government said.

Union Minister for Road Transport and Highways, Nitin Gadkari and Andhra Pradesh Chief Minister YS Jagan Mohan Reddy inaugurated an exhibition at the meet.

Jindal Power to commission

Steel Insights Bureau

Jindal Steel & Power Ltd will be investing `10,000 crore in setting up a 3 million ton (mt) steel plant in Andhra Pradesh, its chairman Naveen Jindal has said.

For the project, JSPL has signed a Memorandum of Understanding with the Andhra Pradesh government to set up the 3 mtpa steel plant near Krishnapatnam Port.

“This plant will provide employment to 10,000 people and will strengthen our association with Andhra Pradesh and its people,” Jindal said while speaking at the Andhra Pradesh Global Investors Summit 2023.

Jindal further said the group will be signing a MoU with the AP Government for investing in renewable energy across solar, wind and hydro as well expanding the capacity of its existing cement plant.

The group will also be investing in a port

and building slurry pipeline and a MSME park in the state.

“We are pleased to share our positive experience of working in Andhra Pradesh for the past many years. We see it as a potential industrial hub in the future. AP is renowned for its excellent infrastructure, large manufacturing base, talented youth, and a very business-friendly environment. We extend our gratitude to the state govt for its visionary leadership and progressive policies,” Jindal added.

The earlier plan was to set up a 2.5 mt plant for which land was earmarked for Jindal Steel Andhra Ltd (JSAL) at Thamminapatnam and Momidi villages in Chillakur mandal of Nellore district.

JSAL, a joint venture of JSPL and its sister concern Nalwa Steel and Power Ltd was established for the integrated steel plant with a proposed investment of `7,500 crore, excluding the cost of land.

Simhapuri Energy by April

“Recently we took over Simhapuri Energy, a 600MW power plant and we have already started one unit of 150MW, another unit will start this week and by April, the entire capacity of 600MW will be commissioned and will serve country’s need for energy,” Jindal said.

Earlier in June 202, Jindal Power announced that it has acquire Simhapuri Energy’s 600 MW power plant in Nellore district. JPL acquired the stressed power plant for `300 crore. As per reports, JPL will operate the plant by importing coal from Indonesia and Africa.

The costal power plant, in close proximity of Krishna Patnam Port, was promoted by Madhucon Projects.

Phase I comprising of 2 units each of 150 MW started commercial operation in 2012 and had Power Purchase Agreement (PPA) with PTC and Andhra Pradesh discom.

JSPL will invest

`

Essar re-enters steel sector, forays into low-carbon fuels

Steel Insights Bureau

Essar group, whose steel business in India was earlier acquired by ArcelorMittal Nippon Steel India, is coming back to the sector in a limited way.

Additionally, the Ruia family-owned group is foraying into low-carbon fuels in India including green hydrogen and green ammonia, green steel facility in Saudi Arabia and also tapping into decarbonisation opportunities in UK with the launch of the Essar Energy Transition (EET) vertical.

“Other sustainability investments planned by the Essar Group beyond EET include the creation of an LNG value chain in India, including LNG truck manufacturing and LNG fuel stations, setting up a pellet plant in Odisha and a 4-million tons per annum (mtpa) green steel complex at Ras-Al-Khair, Saudi Arabia,” Essar said in a release recently.

Forays in Energy transition biz

Essar Group on February 27 announced the formation of EET which will invest about $1.2 billion in India, a part of $3.6 billion in developing a range of low-carbon energy transition projects over the next five years and the balance $2.4 billion will be invested across its site at Stanlow, between Liverpool and Manchester.

The EET will include:

♦ Essar Oil UK, the company’s refining and marketing business in North West England

♦ Vertex Hydrogen, which is developing 1 gigawatt (GW) of blue hydrogen for the UK market, with follow-on capacity set to reach 3.8GW

♦ EET Future Energy, which is developing 1 GW of green ammonia in India, targeted at UK and international markets

♦ Stanlow Terminals Ltd, which is

developing enabling storage and pipeline infrastructure

♦ EET Biofuels, which is investing in developing 1 mt of low carbon biofuels.

“EET’s investment programme will play a major role in accelerating the UK’s low carbon transformation, supporting the government’s decarbonisation policy and creating highly skilled employment opportunities at the heart of the Northern Powerhouse economy,” the company said in a release.

The investments, across a range of hydrogen production technologies,

decarbonisation, biofuels (road and aviation), and infrastructure projects, will contribute to North West England quickly becoming one of the leading post-carbon industrial clusters in Europe.

Essar believes that these investments will support the reduction of around 3.5 million tons of carbon dioxide, around 20 percent of the total industrial emissions in North West England.

“The launch of EET heralds Essar’s repositioning for growth and resurgence. Essar is now investing in new forwardlooking assets with modern, efficient, and ESG-compliant technologies to last for several decades,” the company said.

Decarbonisation strategy

EET’s strategy is founded on the fact that hydrogen and biofuels are fast becoming globally significant fuels of the future and that the UK is positioned strongly to

JSW begins work on Kadapa steel plant

Steel Insights Bureau

Andhra Pradesh Chief Minister YS

Jagan Mohan Reddy and JSW

Steel Chairman cum MD Sajjan Jindal recently laid the foundation stone and performed the Bhoomi Puja for the JSW Steel Plant project at Sunnapurallapalle village, Jammalamadugu mandal in YSR Kadapa district.

On December 13, the state Cabinet had given approval for the construction of the steel plant to be spread over 3,295 acres which has been acquired in Jammalamadugu.

In the first phase, JSW will invest `3,300 crore in the plant and 1 million tons per annum (mtpa) will be produced in the first year.

The plant will then be expanded to 2 mtpa in the second phase and will eventually reach 3 mt capacity.

The total investment for all the three phases would be `8,800 crore, according to Reddy.

“It’s an honour to mark the groundbreaking ceremony of our new steel plant at Kadapa in Andhra Pradesh. This steel plant has been a long cherished dream of the state, of the people of Kadappa, and finally, because of the hard work, persuasion and dedication of the Chief Minister Jagan Mohan Reddy that the project is going to see the light of the day,” Sajjan Jindal, Chairman and Managing Director, JSW Steel, said at the groundbreaking ceremony.

“The plant embodies a spirit of responsibility and progress. By utilising the latest clean energy and waste management systems, we aim to exceed industry standards in terms of environmental impact,” Jindal said.

Once the steel plant is built, an ecosystem

a capacity of 3 mt. Total investment would be `8,800 crore.

will be developed with several ancillary units. Once the ecosystem is created, then the entire area would be transformed into a Steel City, Jagan said after laying the foundation stone.

The CM said all necessary infrastructure such as road, power and water supply will be provided at an outlay of `700 crore, to the plant.

Jagan expressed hope that the steel plant would be commissioned in 24 to 30 months.

Sajjan Jindal said the laying of the foundation is just the beginning and it will convert into a big steel plant in the years to come.

“The steel plant which he set up in Bellary in 1995 with an initial production capacity of 1.2 mtpa has now reached 13 mtpa and is poised to become the world’s largest steel plant with 25 mtpa in the next few years. I can promise you that over the years this place will blossom. This will be known on the map as the steel district of India,” Jindal said.

He expressed his desire to create a model steel plant in Kadapa district, which will be

Andhra Pradesh Chief Minister Jagan Mohan Reddy and JSW Steel Chairman cum MD Sajjan Jindal performing the groundbreaking ceremony for the Kadapa steel plant

In first phase, JSW will invest `3,300 crore in the Kadapa plant and 1 million tons per annum will be produced in the first year of operations. The plant will then be expanded to 2 mtpa in the second phase and will eventually reach