Union Steel Minister Virbhadra Singh spells out his vision for the Indian steel sector in an exclusive conversation with Pramod Kumar
Virbhadra Singh, Union minister for steel, is keen on taking initiatives to make the Indian steel sector self-sustaining and globally competitive. In this exclusive interaction with TSI, he discusses the major issues facing the sector and also how they can be addressed. Excerpts from the interview...
How has the steel industry grown in this last year since slowdown hit India in October 2008?
The steel sector in India has successfully surmounted the global economic recession and has stood out with a positive growth of 2.5 per cent in steel production and 6.8 per cent in steel consumption during April-November of the financial year 2009-2010. This has been possible on account of the various economic and financial stimuli that were launched in October 2008. The trends also indicate that steel demand in India may pick up now on the back of strong domestic demand from the automobiles, housing and construction sectors.
Steel consumption has faced shortage of iron ore and you had also recently said raw iron ore exports should be restricted. What can be done on this front?
I am of the view that iron ore reserves in the country need to be conserved for fulfilling the requirements of the domestic steel industry, which is a key to infrastructure sector in the country. The ministry has been consistently taking up the matter for imposition of appropriate export duty on iron ore to discourage unabated exports of iron ore and also improve the domestic availability. The government has recently increased the export duty on iron ore lumps from five per cent to ten per cent and the iron ore fines from nil to five per cent.
Recognising that iron ore is a non-renewable resource and considering the long-term requirements of steel industry, the government has already taken a stand that conservation of iron ore resources is of paramount importance. We are, therefore, examining all options to improve the domestic availability of iron ore at reasonable prices, through fiscal measures.
We have seen the steel industry in China prosper because of the Olympics? How will the Commonwealth Games impact India?
VS: The usage of steel for the Commonwealth Games and linked infrastructure could be as high as one million tonnes. However, that is not an isolated area where we are looking for growth. While Commonwealth Games may give a fillip to steel demand, the sustainable boost to steel demand in India over the medium and long term will be strongly linked to infrastructure development, urbanisation and lifestyle changes on account of growing income levels. India has already entered the steel intensive phase of growth, which observed steel consumption growth clocking double digits a few years back. We may again witness double digit growth in steel consumption very soon, possibly by next financial year.
You have been trying to expedite the expansion programme of SAIL to the tune of Rs 60,000 crore. Can you elaborate on this?
In order to maintain its pivotal position in the Indian steel sector and to improve its competitive edge, Steel Authority of India Limited (SAIL) has drawn up a modernisation and expansion programme for its five integrated steel plants and the special steel plants, including the raw material division. Apart from increasing the production capacity, the plan also addresses elimination of technology obsolescence, improving energy efficiency, environment friendly technology and improvement in value addition through a flexible product-mix and customer centric approach. Special emphasis has been laid on state-of-the-art-Information Technology application through Enterprise Resource Planning (ERP) and Manufacturing Execution System (MES). The estimated project cost of the steel plan is Rs 60,000 crore. Besides, a provision of Rs 10,264 crore has also been made towards investment in existing mines under Raw Materials Division. During the year 2009-2010, SAIL has earmarked nearly Rs.10,000 crore towards budgeted capital expenditure, out of which Rs.6100 crore was spent by November 2009. The plan is likely to be completed by 2012-2013.
What is your long-term vision for SAIL as an organisation?
At this time we are the fifth largest producer of steel (globally) and we hope that we will be second largest after implementation of the present programme.
What impediments do you see in meeting the annual steel production target, especially when all the major steel projects, including those of Tata Steel, Arcelor Mittal, Jindal South West and Jindal Steel and Power Limited, are pending for over four years?
It is a fact that brownfield capacities of all major steel investors are going on as per schedule. During the last financial year, Tata Steel added 1.8 million tonne blast furnace at Janshedpur and JSW Steel commissioned a 3 million tonne blast furnace in Karnataka. Almost all estimated 33 million tonnes of brownfield steel capacities are likely to materalise within the next 3 years. This includes additional 12 million tonne expansion capacity of SAIL and 3.4 million tonne capacity expansion project of RINL. In the private sector, all major players like Tata Steel, JSW Steel, Essar, Jindal Steel & Power and others are also moving fast with their brownfield capacity addition plans. Amongst the Greenfield investors, a few have achieved substantial progress in land acquisition. These projects include Tata Steel’s 3 million tonne plant in Orissa, Essar’s Steel’s 6 million tonne unit in Orissa and Jindal Steel and Power’s (JSPL) 2.5 million tonnes each in Orissa and Jharkhand. Posco is one of the foreign investment projects which is facing difficulty in land acquisition, but has made considerable inroads by keeping other things in place. This way they can move ahead immediately after acquiring the land. The land identified by Arcelor Mittal, both in Orissa and Jharkhand, falls under the scheduled area, which involves additional procedural formalities. The process has already started and one may see some progress soon. Moreover, there are also a number of small and medium steel projects in the capacity range of 0.5 to 1.0 million tonnes, which were initially not considered, but are observed to be coming up fast.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
Virbhadra Singh, Union minister for steel, is keen on taking initiatives to make the Indian steel sector self-sustaining and globally competitive. In this exclusive interaction with TSI, he discusses the major issues facing the sector and also how they can be addressed. Excerpts from the interview...
How has the steel industry grown in this last year since slowdown hit India in October 2008?
The steel sector in India has successfully surmounted the global economic recession and has stood out with a positive growth of 2.5 per cent in steel production and 6.8 per cent in steel consumption during April-November of the financial year 2009-2010. This has been possible on account of the various economic and financial stimuli that were launched in October 2008. The trends also indicate that steel demand in India may pick up now on the back of strong domestic demand from the automobiles, housing and construction sectors.
Steel consumption has faced shortage of iron ore and you had also recently said raw iron ore exports should be restricted. What can be done on this front?
I am of the view that iron ore reserves in the country need to be conserved for fulfilling the requirements of the domestic steel industry, which is a key to infrastructure sector in the country. The ministry has been consistently taking up the matter for imposition of appropriate export duty on iron ore to discourage unabated exports of iron ore and also improve the domestic availability. The government has recently increased the export duty on iron ore lumps from five per cent to ten per cent and the iron ore fines from nil to five per cent.
Recognising that iron ore is a non-renewable resource and considering the long-term requirements of steel industry, the government has already taken a stand that conservation of iron ore resources is of paramount importance. We are, therefore, examining all options to improve the domestic availability of iron ore at reasonable prices, through fiscal measures.
We have seen the steel industry in China prosper because of the Olympics? How will the Commonwealth Games impact India?
VS: The usage of steel for the Commonwealth Games and linked infrastructure could be as high as one million tonnes. However, that is not an isolated area where we are looking for growth. While Commonwealth Games may give a fillip to steel demand, the sustainable boost to steel demand in India over the medium and long term will be strongly linked to infrastructure development, urbanisation and lifestyle changes on account of growing income levels. India has already entered the steel intensive phase of growth, which observed steel consumption growth clocking double digits a few years back. We may again witness double digit growth in steel consumption very soon, possibly by next financial year.
You have been trying to expedite the expansion programme of SAIL to the tune of Rs 60,000 crore. Can you elaborate on this?
In order to maintain its pivotal position in the Indian steel sector and to improve its competitive edge, Steel Authority of India Limited (SAIL) has drawn up a modernisation and expansion programme for its five integrated steel plants and the special steel plants, including the raw material division. Apart from increasing the production capacity, the plan also addresses elimination of technology obsolescence, improving energy efficiency, environment friendly technology and improvement in value addition through a flexible product-mix and customer centric approach. Special emphasis has been laid on state-of-the-art-Information Technology application through Enterprise Resource Planning (ERP) and Manufacturing Execution System (MES). The estimated project cost of the steel plan is Rs 60,000 crore. Besides, a provision of Rs 10,264 crore has also been made towards investment in existing mines under Raw Materials Division. During the year 2009-2010, SAIL has earmarked nearly Rs.10,000 crore towards budgeted capital expenditure, out of which Rs.6100 crore was spent by November 2009. The plan is likely to be completed by 2012-2013.
What is your long-term vision for SAIL as an organisation?
At this time we are the fifth largest producer of steel (globally) and we hope that we will be second largest after implementation of the present programme.
What impediments do you see in meeting the annual steel production target, especially when all the major steel projects, including those of Tata Steel, Arcelor Mittal, Jindal South West and Jindal Steel and Power Limited, are pending for over four years?
It is a fact that brownfield capacities of all major steel investors are going on as per schedule. During the last financial year, Tata Steel added 1.8 million tonne blast furnace at Janshedpur and JSW Steel commissioned a 3 million tonne blast furnace in Karnataka. Almost all estimated 33 million tonnes of brownfield steel capacities are likely to materalise within the next 3 years. This includes additional 12 million tonne expansion capacity of SAIL and 3.4 million tonne capacity expansion project of RINL. In the private sector, all major players like Tata Steel, JSW Steel, Essar, Jindal Steel & Power and others are also moving fast with their brownfield capacity addition plans. Amongst the Greenfield investors, a few have achieved substantial progress in land acquisition. These projects include Tata Steel’s 3 million tonne plant in Orissa, Essar’s Steel’s 6 million tonne unit in Orissa and Jindal Steel and Power’s (JSPL) 2.5 million tonnes each in Orissa and Jharkhand. Posco is one of the foreign investment projects which is facing difficulty in land acquisition, but has made considerable inroads by keeping other things in place. This way they can move ahead immediately after acquiring the land. The land identified by Arcelor Mittal, both in Orissa and Jharkhand, falls under the scheduled area, which involves additional procedural formalities. The process has already started and one may see some progress soon. Moreover, there are also a number of small and medium steel projects in the capacity range of 0.5 to 1.0 million tonnes, which were initially not considered, but are observed to be coming up fast.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
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