The Hindu Business Line : Decline in scrap availability — Additional sponge iron capacity to be set up

IT is boom time for the domestic sponge iron industry, thanks largely to the depleting availability of scrap. In the next three years, an additional 16.28-million tonnes per annum (m.t.p.a.) sponge iron capacity is slated to be set up in the country, according to Mr Ashok Pandit, Managing Director of Tata Sponge Iron Ltd.

Speaking to presspersons after delivering the keynote address at a national seminar on `Sponge iron industry — Growth & opportunities' organised here on Friday by Indian Institute of Metals (Kolkata chapter) and Steel & Metallurgy Journal, Mr Pandit said that, of the additional 16.28-m.t.p.a. sponge iron capacity that is being set up, 15.28 m.t.p.a. would be coal-based while the balance would be gas-based.

At present, the cumulative installed capacity in the domestic sponge iron sector stands at 10.6 m.t.p.a. Of this, 7.3 m.t.p.a. is coal-based while the balance gas-based. India has three players in the gas-based sponge iron business and over 60 players in coal-based sponge iron manufacturing.

According to Mr Pandit, the adoption of emerging technologies by steel plants has resulted in a decline in the availability of scrap. Sponge iron is increasingly being used as an important raw material for steel making via the electric arc furnace and induction furnace routes, substituting the use of scrap, which has become scarce now. The prices of sponge iron have gone up from Rs 5,000 per tonne two years ago to Rs 10,000 to Rs 12,000 at present.

Mr Pandit presented a case for augmenting iron ore mining with a view to making more quantities of the raw material available to sponge iron manufacturers.

On its part, Tata Sponge Iron Ltd has firmed up plans to augment capacity from 2,40,000 m.t.p.a. at present to 3,90,000 m.t.p.a. within the next two years. The proposed capacity expansion is estimated to entail an investment of Rs 70 crore which would be met through internal accruals, according to Mr Pandit.