India's CII-Steel Summit Vows to Up Production to 200 Million Tons by 2020

According to recent reports from Industrial Info Resources (Sugar Land, TX), A Sai Pratap, Indian minister of state for steel, has urged steel producers in the country to play a vital role in reducing energy consumption in the steel-making process and use advanced technology to improve production efficiency. The minister was addressing industry representatives at the recently concluded steel summit, which was titled "Advantage India ? An Enabling Framework for Growth." The daylong conference was conducted by the Confederation of Indian Industry (New Delhi).

Pratap stressed the need for steel mills to reduce energy consumption to the global average of 4.2 million kilocalories per ton or less, from the current level of 6.2 million kilocalories per ton. He indicated that it was vital for steel producers to target reduction in water usage by 50 percent per ton and work toward improving productivity at least five-fold in the next two decades. Presently, India's per capita steel consumption is about 40 kilograms with a near-term target of 50 kilograms per person. Steelmakers were asked to focus on using technologies suitable to locally available, low-grade iron ore and non-coking coal, to reduce greenhouse gas emissions.

A technology fund also has been proposed, with participation from the Indian government and the steel industry, which will assist in developing and implementing state-of-the-art technology in this sector. The minister also emphasized the importance of human resources development in the steel industry, indicating that it was critical to train and develop skilled personnel and technology experts. Continuous research and development, and upgrading skills and technology, are paramount to India's success in doubling steel production capabilities in the next five years.

Presently, India's steel production is about 55 million tons per year. In the last five years, India has witnessed an average growth of 10 percent per year in steel demand. The minister indicated that it was imperative for the Indian steel industry to increase its annual production capability to 200 million tons by 2020. India's per capita consumption of steel is about 47 kilograms, while the global average is about 190 kilograms. The minister was optimistic that if rural demand was identified and fulfilled, India can bridge the gap in per capita consumption.

In a related development, the Indian government has announced the launch of a survey to identify the per capita consumption of steel in rural markets. The survey, titled "Rural Steel Consumption and Demand," will be conducted by the Joint Plant Committee established by the steel ministry. The study will cover 1,500 villages in 300 districts across the country. The survey will assist in assessing rural steel supply and demand. A similar study conducted five to six years ago indicated that India's rural per capita consumption of steel was about 2 kilograms. Ministry officials are confident that the per capita consumption would increase with ongoing and proposed rural housing and infrastructure projects.

Steel secretary Atul Chaturvedi identified land acquisition as the biggest challenge in the development of new steel production facilities. Chaturvedi assured industry representatives that the steel ministry was working out sustainable rehabilitation and resettlement schemes, which will help in sorting out land issues. ArcelorMittal (Luxembourg) recently indicated that it was scouting for alternative sites in India, after facing land issues in Orissa and Jharkhand. ArcelorMittal proposed to set up 12 million-ton-per-year integrated steel plants in these states, with investments of $10 billion on each project. The projects have been delayed by four years due to land acquisition problems. Orissa and Jharkhand were the first choice for these plants, since these states together account for 55 percent of the iron ore deposits and 70 percent of the coal reserves in India.

S K Roongta, chairman of India's largest public sector steel producer, Steel Authority of India Limited (SAIL; New Delhi), also stressed the need for a technology upgrade, energy-efficient production processes, and sustainable R&R policies. He also identified the need for tapping the steel demand potential in rural areas in the country. Roongta was confident that proposed infrastructure spending of $500 billion, during the ongoing 11th five-year plan period, 2007-12, would be the biggest growth driver for the steel industry.

During the first six months of this fiscal year, India's steel consumption increased by 5.7 percent to 26.49 million tons, compared to the same period last year. India is the fifth-largest steel producer, accounting for about 7 percent of the total global steel production. Reports indicate that during January to March 2009, India was the only country to record an overall positive growth of 1.01 percent in crude steel production.

A recent study conducted by Credit Suisse Group AG (Zurich, Switzerland) states that until 2012, India's steel consumption is expected to grow at the rate of 16 percent per year. The study further elaborates that large-scale construction projects, worth about $1 trillion, will spur domestic steel consumption. The World Steel Association (Brussels, Belgium) forecasts that in 2009, steel consumption in India will increase by 2 percent to 53 million tons.

The recently released Confederation of Indian Industry report on the Indian economy indicates that the country is slowly but steadily emerging from the economic slowdown. During the first quarter of 2009-10, India witnessed a gross domestic product growth of 6.1 percent, which was higher than the 5.8 percent growth recorded in the last quarter of 2008.