SAIL may replace NMDC in JV with Australian firm for steel making

M Ramesh Chennai | Updated on October 30, 2019

The joint venture, between NMDC, NLC and ECT signed in May 2018, failed to take off as NMDC backed out

Public sector steel major SAIL may replace fellow PSU mining company, NMDC, in a steel-making joint venture with an Australian technology company.

In May 2018, two Indian PSUs – NMDC and NLC India Ltd – signed an agreement with Environmental Clean Technologies of Australia to use the Australian company’s ‘Matmor’ technology to make steel with cheap lignite rather than costly coking coal.

Read more: NLC, NMDC to sign MoU with Australian firm for steel production

It was proposed that the joint venture company, in which ECT would hold a 49 per cent stake with the other 51 per cent shared equally between the Indian partners, would set up a pilot project at Neyveli, Tamil Nadu, to produce steel with lignite, investing approximately ₹150 crore.

The joint venture failed to take off as NMDC backed out. It is now reliably learnt that SAIL could step in. SAIL and NLC India officials are in Melbourne today to see if the JV can be revived.

For ECT it has been a very unhappy experience dealing with India, as is evident from many of its press releases, which spoke of “increasing lack of responsiveness” and “apparent lack of willingness” on the part of NMDC. The Australian company, whose business is to develop technology, offered Matmor first to India, in the belief that with abundance of lignite and a hunger for steel, Indian companies would be very keen.

However, for over a year after signing the agreement, NMDC did not get it ratified by its Board, even as ECT kept waiting and sending reminders. NMDC had, in fact, decided not to proceed with the JV but never communicated this to the partners. Its decision to back out finally came to light only in the form of NMDC’s response to a news story in BusinessLine on the delay in the project. NLC India, however, continued to be interested in the JV.

Also read: Miffed with ‘lack of responsiveness’, Australian firm ends JV with NMDC

Making steel with lignite

Carbon is essential in making steel. Iron ore exists naturally in the form of oxides, and steel is produced by removing oxygen from the ores (this is called ‘reduction’ in chemistry). The marriage between iron and oxygen is broken by introducing carbon, whereupon the oxygen divorces iron and goes with carbon. The traditional source of carbon is the costly coking coal.

ECT’s ‘matmor’ technology uses the wet, low-carbon and cheap lignite in the place of coking coal. Since lignite costs about a third of coking coal, the finished product, steel, is cheaper.

Published on October 30, 2019

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