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Driven by strong domestic demand, Tata Steel is scaling up its steel-making capacity in the country. The phased commissioning of the 5 million ton per annum (mtpa) capacity expansion at Kalinganagar is underway, while the second phase will go on stream next fiscal.
- Also read: Tata Steel turns corner, reports net profit of ₹522 crore in Q3 on the back of lower costs
The company also announced the closure of two blast furnaces at its UK plant (in Port Tablot) since operations there have reached a stage “where continuing...is no longer an option”.
According to TV Narendran, CEO and Managing Director, Tata Steel, the company has charged power into the new blast furnace and expects to make it physically ready “by next quarter”. Production is expected to start thereafter. There has been a delay “of a few months” since some of the parts that were coming in for assembly of the blast furnace were damaged and had to be replaced.
“So, in India, we are scaling up our steelmaking capacity to capitalise on the growth opportunity .... we target to produce about 0.7 million tonnes of crude steel in FY25, and ramp up further in FY26,” he said during an earnings call.
As for Kalinganagar, the company is looking at “carbon avoidance in the blast furnaces”, and alternatives such as injecting biochar, hydrogen or steel scrap. “[We] are working with technology partners on process improvements,” he added.
According to him, plans are being worked on to get the Phase-III capacity expansion of Kalinganagar plant in-place. “We have an option, Kalinganagar also, we want to develop a plan so that as we complete the Phase-II, we can start looking at Phase-III, because that means you need not decommission the vendors and things like that...There are some advantages of that. So we’ll explore it,” he said.
From 3 million tonnes, the current scale up will be to 8 mtpa. And at full capacity it will be 13 mtpa.
Options are being explored to take up the annual capacity at Neelachal Ispat from 1 million tonnes to about 5 million tonnes.
“And we are also parallelly looking at the Angul plant, the Meramandali plant, the Bhushan plant to go from 5 million tons to 6.5 million tons, as step one, because to go to 10 million tons, you need to acquire some land, etc,” Narendran said adding that “all options are available (and) over the next six months we will come closer to finalising them”.
Capital projects are being carried out in a front-end loading (FEL) approach, which means the company is now “far more precise understanding of cost” before projects are taken tp the Board for approval.
“So, we are doing that FEL-3 work for Neelachal. We will be starting that soon for the Kalinganagar Phase-III. And work is also going on the Meramandali plant. So, I think in the next six months we’ll be able to give you a bit more clarity...” said Narendran, adding that “in the next two years, you will see the ramp up of Kalinganagar”.
Statutory Consultations on UK
In the UK, Tata Steel will commence statutory consultations “with the relevant stakeholders on the proposed restructuring”. The transition is towards electric arc furnace (EAF) based steel-making.
“But I think we have reached a stage where continuing as we did is no longer an option and we would be closing the first blast furnace by the middle of 2024 and the second blast furnace in the second half of 2024,” Narendran said.
The company had detailed discussion with the UK multi-trade union representative body, where a proposal for maintaining a single blast furnace till the EAF transition was discussed. It was found “neither feasible nor affordable” to continue the blast furnace production.
“Further, the company undertook engineering studies that found that the execution of the Electric Arc Furnace in an already operating steel melt shop would be fraught with risk and would result in a suboptimal plant layout, delaying implementation of the EAF plan and in a way jeopardizing the proposed business transformation program,” Koushik Chatterjee, ED and CFO said during the call.
The target is to commission the Electric Arc Furnace in four years. “It has already begun engineering design work and planning discussions with National Grid (for electricity connection),” Chatterjee said.
In the bridge period, Tata Steel would look at importing semi-finished steel to serve customers in the region.
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