Sponge iron makers plan
capacity hikes

NEW DELHI: The upsurge in the steel industry, riding on rising prices of both flat and long products, is giving fresh momentum to allied sectors.

India’s sponge iron industry, which became the world’s largest last year with record production of 6.9 million tonnes, has lined up plans to add another over 4 MT coal-based capacity to meet the surging demand from steel makers. The new capacities would take the total installed capacity of the industry from present 8.8 MT to 12.8 MT in the next three years.

The companies that are either planning or constructing sponge iron kilns include Jindal Steel and Power, Monnet Ispat, SunFlag, Bhushan Steel, Usha Martin and BT Steel. In addition, Tata Steel is also expected to commission a new kiln by mid 2004. Jindal Steel and Power is planning two sponge iron kilns, of which one with 3 lakh tonnes capacity would be operational by November this year.

All these new capacities would be coal-based and would be located in coal-belts in states like Orissa, Chattisgarh, Jharkhand and West Bengal. The investments for the proposed new capacities are estimated to be to the tune of Rs 600-700 crore.

The first quarter of 2003-04 has been extremely good for the sponge iron industry. The demand from the steel industry is driving volumes and the capacity utilisation has increased, said Mr S S Bhatnagar, director, Sponge Iron Manufacturers’ Association.  

As for gas-based sponge iron plants, there has, however, been the constant threat of gas price increase as also limited availability of gas. With the decision of the Group of Ministers to hike gas prices by Rs 350 per 1,000 standard cubic metre of gas, the cost of gas would increase by 12%. Essar Steel, Ispat Industries and VikramIspat of A V Birla Group are three units that make sponge iron from the gas route. These units account for about 50% of the domestic sponge iron out. Availability of iron ore, the principal raw material, is also facing an unprecedented constraint because of additional export commitments this year, said Mr Bhatnagar.

The demand for sponge iron by the year 2007 is projected to be 9.5 MT. With the proposed capacities, the domestic demand would be fully met by local sponge iron. The competition from scrap is likely to be less intense in the years to come, as steel makers are increasingly resorting to the sponge iron route for steel making, said sources.

K G NARENDRANATH
TIMES NEWS NETWORK[ THURSDAY, AUGUST 07, 2003 01:36:50 AM ]