This is based on assumption that 60 to 65 per cent of steel production will be through blast furnace-basic oxygen furnace route and 35 to 40 per cent through electric arc furnace (EAF) and induction furnace (IF) route. In order to restrict the industry’s greenhouse gas emission, the government wants a good volume of the metal made through EAFs. To facilitate that, the policy recommends establishment of steel shredding plants in different parts of the country.
Much of the planned new steel capacity through greenfield and brownfield routes is for Odisha, Jharkhand and Chhattisgarh where the country’s iron ore resource is largely concentrated. There is no denying of the inadequacy of rail and road infrastructure available to the mining groups supplying iron ore and coal to steel mills, which also often find it challenging to swiftly despatch finished products to consumption centres. The steel policy says that to be infrastructure ready for 2030-31, “the government will need to invest heavily in development of evacuation infrastructure to minimise turn-around-time as well as to build the necessary linkages to reduce the length of haulage.”
The two leading iron ore producing states that are suffering the most because of railway infrastructure bottlenecks are Odisha and Jharkhand. Odisha, which alone had around 50 per cent share of the country’s iron ore production of 210 mt in 2017-18, is seeing stocks at mine heads rising to a high of around 100 mt as the railways has progressively reduced the daily allocation of rakes to “28 to 30 from 58 to 60,” complains an official of a leading merchant
Growing mountains of mine head stocks in Odisha, resulting from falling evacuation in the face of high production, are a big concern for miners as well as environmentalists. As Indian steel mills have a distinct preference for lump ore, it’s mostly the fines below 10mm size, constituting 60 to 70 per cent of iron ore production that keep on piling up around the mines. The monsoon is about two months away. When the rains come, some portions of accumulated fines will get washed into streams and rivers polluting water.
The railways are under compulsion to ensure that thermal power plants have sufficient stocks of coal at all times. But with wagons in short supply, the railways are left with no option but to cut allocation of rakes to sectors such as mines to maintain coal supply to power units. Coincidentally, Piyus Goyal is in charge of both ministries of coal and railways. As iron ore mining groups in Odisha and Jharkhand are not able to move the mineral matching production to consumption points, the user units ranging from steel mills without captive mines, pellet and sponge iron manufacturers are facing shortages of the raw material from time to time. Many of these are medium and small units.
The miners and iron ore users do not expect the mineral evacuation problem to go away anytime soon. According to an industry official, “procurement of wagons by the railways last year was less than 8,000 against the target of 12,000. The railways are supposed to spend Rs 90 billion to procure 38,000 wagons by 2020. We can only hope the procurement target will be achieved and some relief will come our way.”
As attempts are made to remove transport bottlenecks, the steel policy makes a strong recommendation for “alternative modes of transportation of raw materials” such as slurry pipelines and conveyors that will bring relief to miners and mineral processors. Besides decongesting transportation infrastructure in mining belts, slurry pipelines will go a long way in curbing pollution involved in moving iron ore by rail or road. There is promise in the policy that all the benefits available to infrastructure industries will be extended to slurry pipelines also.
RK Sharma, director general of Federation of Indian Mineral Industries, says the challenge is also to liquidate iron ore fines with fe content of up to 62 per cent for which the local demand remains negligible. Citing the fact that over 85 per cent of the country’s iron ore pithead stocks is in Odisha and Jharkhand, Sharma says “liquidation of much of that will be possible if export duty on the fines with fe content of up to 62 per cent is abolished.” The duty makes Indian ore uncompetitive in the global market.