Steel Technology: India Has New Aspirations

India is looking at new technologies to produce steel. But there are doubts about their efficacy

Published: Aug 11, 2010 06:40:27 AM IST
Updated: Aug 6, 2010 02:48:01 PM IST
Steel Technology: India Has New Aspirations
Image: Sameer Pawar
Steel companies are looking to build mega plants. The benefits of new technologies might erode at capacities exceeding one million tonnes

The 23-feet-high Ashoka Pillar inside Delhi’s historic Qutub Minar complex has, over the years, fascinated tourists and metallurgists. The tourists pose beside it. The technically inclined touch it with awe and respect. For the 1,600 year-old Pillar is testimony to the metallurgical skills of India’s earliest steelmakers.

The Ashoka Pillar is made of wrought iron, or iron alloy, a form of steel that had formed the backbone of the industrial revolution in Europe. Evolution in the process of steelmaking saw wrought iron surviving till the 1960s. Its production was finally stopped as it was expensive compared to the plain ‘carbon’ steel and its properties didn’t allow for welding or forging. Evolution of technologies in the last two centuries have not only helped making cost-effective steel but also invented ways to alter its properties to suit the needs of its consumers. Steel can be welded, forged, flattened and rolled.

mg_32272_briefing_280x210.jpgIn recent years though, steel making companies around the world have looked for solutions to new-age problems. Setting up steel plants takes a lot of time and money. And once the plant is put up, more investments are needed to source raw materials, mainly iron ore and coal. The process of first getting molten iron from the ore and then converting it to steel also generates a lot of carbon dioxide, causing pollution. In India, the new steel projects face an additional problem — delay in getting land. And traditional steel plants need huge tracts of land, as much as 5,000 acres for a 5 million tonnes per year facility.

That’s why state-run Steel Authority of India (SAIL) is looking for new technologies that could replace the traditional blast furnace route to make steel. It is in talks with two steel companies that are known for their technical expertise — Kobe Steel of Japan and Posco of South Korea. Over the last few years, both these companies have developed a new steelmaking technology — Kobe’s ITMK3 and Posco’s Finex — that promises to make steel making both green and less expensive.

In the traditional blast furnace route, iron ore and coal (as fuel) are fed into a furnace from which molten iron comes out. This hot metal is then passed through a converter to produce finished steel. In India, most steel companies follow this route. “But the blast furnace route needs high grade iron ore with an iron content of over 62 percent. As a result, a lot of lower grade iron ore lies unused,” says Jitendra Singh, owner of ISG group of companies. Almost 60 percent of the iron ore mined in India constitutes of these low grade iron ore, or fines, which are either exported to China or are left unused, causing environmental harm.    

Following calls to limit export of iron ore and fines, as a better economic sense, attempts have been made to process these fines into pellets. These pellets can be used in plants that make DRI or sponge iron, another steel raw material. Posco’s earlier technology called Corex also uses pellets instead of iron ore. Its new Finex technology claims to go a step further. Under it, fines can be directly fed into the plants. Kobe’s ITMK3 also promises the same. These technologies help in consuming the unused fines, and also do away with the need to set up a processing plant to upgrade these low grade iron ores.

This also makes the two technologies cheaper. A conventional steel plant using the blast furnace route costs more than Rs. 4,500 crore per tonne to set up, industry experts say plants using the new technologies will be “much cheaper.” The two technologies also use lower grade coal and experts say steel plants can save as much as 20 kg of coal per tonne. One argument in favour of these technologies is the lower emission of green house gasses in the plants using them. Both Posco and Kobe have tested these technologies in pilot projects. Posco operates a 1.5 million tonne a year capacity in South Korea using Finex technology. It also plans to use the technology for its upcoming multi-billion dollar steel plant in Orissa. Kobe has set up two pilot projects, in Japan and USA.

“While these two technologies have promise, they are yet to be tested using raw material found in India. Iron ore and coal differ in grade and properties in each country. So before they are used in India, this check is needed,” says T. Mukherjee, former joint managing director of Tata Steel and a known metallurgist.

That may not be the only shortcoming. Steel companies are looking to build mega plants for economies of scale, and experts say the benefits of the new technologies might erode if the facility’s capacity crosses a million tonnes. “In fact, as you increase the scale of the production unit, the blast furnace route turns out to be more cost effective on the per tonne basis,” says S.K. Gupta, a director at JSW Steel.

He also thinks that Indian steel companies should not become “guinea pigs” by risking the use of a new technology. “As a businessman, only if Posco or Kobe agrees to share the equity needed for the investment, will I come forward to use the technology,” says Gupta. He would know. JSW Steel was one of the first to use Posco’s Corex technology in its Karnataka steel plant and “almost burnt its fingers” before mastering it. Will SAIL take the bait?

(This story appears in the 13 August, 2010 issue of Forbes India. You can buy our tablet version from To visit our Archives, click here.)

Show More
Post Your Comment
Required, will not be published
All comments are moderated
Book: Googled
Fordís Boneham Talks About Launching Small Car in India