The Hindu Business Line : Focus on raw material security, steel industry told

The proposed joint venture would cater to the needs of the Government sector, at least for the time being. Private sector players, he said, were seized of the matter and were firming up long-term contracts with their raw material suppliers.

Kolkata June 25 To ensure sustainability of the domestic steel sector's expansion and investment plans, it would be imperative for the industry to focus on raw materials security in the long term, according to Mr R.S. Pandey, Secretary in the Union Ministry of Steel.

Mr Pandey told Business Line here today that iron ore and coking coal were the two important raw materials for the steel industry. While high-grade iron ore is available locally — albeit at international prices — the industry is greatly dependent upon imports for its coking coal requirements.

"This dependence on coking coal imports is going to go up in the years to come and there is a need for the industry to focus on its raw materials security in the long term," he said.

Mr Pandey said it had been proposed to form a joint venture with public sector units such as Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL), Coal India Ltd, National Thermal Power Corporation and National Mineral Development Corporation (NMDC) as partners for gaining access to raw material assets across other geographies in the world.

"Without this, we cannot sustain our expansion programme. Without assured sources of raw material, we will be putting our investments to risk," he said.

According to him, the proposed joint venture would cater to the needs of the Government sector, at least for the time being. Private sector players, he said, were seized of the matter and were firming up long-term contracts with their raw material suppliers.

Asked if the demand projections justified the huge investments that were being made in the steel sector, Mr Pandey said that, contrary to what was expected when the National Steel Policy was announced in 2005, consumption of steel had outstripped its production.

For example, last fiscal, production grew by 10.9 per cent whereas consumption was up by 11.6 per cent. Net exports had gone down and imports were going up.

The joint capacity of SAIL and RINL would go up to 32 million tonnes per annum (mtpa) by 2010 even as another 3 mtpa steel capacity is proposed to be set up in joint venture by RINL and NMDC.

The private sector, too, is going ahead with greenfield projects and brownfield expansions.

"We believe that domestic steel production will touch 80 mt by 2011-12 and 120 mt by 2015-16, thereby making us the second-largest steel producer in the world at that time," he said.

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