Friday, December 30, 2011

Achievements and Initiatives of the Ministry of Steel in the Year 2011

Year End Review

Trends and Developments in Steel Sector
Steel sector trends

· India became the 4th largest producer of crude steel in the world in 2010 as against the 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world by 2015.

· India also maintained its lead position as the world’s largest producer of direct reduced iron (DRI) or sponge iron.

· Ministry’s National Steel Policy (NSP) 2005 projection of 110 million tonnes of finished steel production per annum by 2019-20 is likely to be exceeded by 2012. The country is likely to achieve a crude steel production capacity of 112 million tonnes by the year 2011-12.

· Going by estimate of Rs.4,000 crore investment per million tonne of additional capacity, intended steel capacity build up in the country is likely to result in an investment of Rs.8,70,640 crore by 2020.

· 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes by 2019-20.

· Major investment plans are in the states of Orissa, Jharkhand, Karnataka, Chhattisgarh and West Bengal.

· The steel sector contributes to nearly 2% of the GDP and employs over 5 lakh people.

· The per capita steel consumption during the last six years has risen from 38 kg in 2005-06 to 55 kg in 2010-11.

Production, consumption and demand of Steel

· In the next five years, demand of steel is likely to grow at a higher annual average growth of over 11-12% as compared to the average annual growth of 8% achieved between 1991-92 and 2010-11.

· Capacity for crude steel production expanded from 51.17 million tonnes per annum (mtpa) in 2005-06 to 78 mtpa in 2010-11.

· Crude steel production grew at 8% annually (CAGR) from 46.46 million tonnes in 2005-06 to 69.57 million tonnes in 2010-11.

· Production for sale of finished steel stood at 66.01 million tonnes during 2010-11 as against 46.57 million tonnes in 2005-06, an average annual (CAGR) growth of 7%.

· Consumption of finished steel has grown at a CAGR of 9.6 % during the last six years.

· Export of finished steel during 2010-11 stood at 3.36 million tonnes while imports during 2010-11 stood at 6.54 million tonnes.

Major initiatives and achievements

(i) Steel Authority of India Ltd. (SAIL) became a Maharatna company and Rashtriya Ispat Nigam Ltd. (RINL) became a Navratna company during 2010.

(ii) Mega Expansion Plans of SAIL, RINL & NMDC Ltd.

The Steel PSUs are in the midst of ambitious expansion plans. The major thrust of the modernization and expansion plans is to adopt the best modern technology, which in addition to being cost effective should also be energy efficient and environment friendly.

· The expansion plans would increase the capacity of SAIL from 12.84 million tonnes (in 2006-07) per annum crude steel production to 21.40 million tonnes in the first phase to be completed by 2012-13, at an estimated cost of around Rs. 70,000 crore, which includes Rs. 10,000 crore for mine development.

· Rashtriya Ispat Nigam Limited (RINL) is at an advanced stage of commissioning it crude steel capacity expansion project from 2.9 million tonnes to 6.3 million tonnes per annum. The project is likely to be completed by 2010-11 at an estimated cost of Rs. 15,525 crore.

· NMDC plans to increase the production of iron ore from the present level of around 24 million tonnes to 40 million tonnes by 2014-15.

· NMDC is setting up a 3 million tonne per annum (mtpa) capacity Integrated Steel Plant at Nagarnar, Chhattisgarh with an estimated cost of Rs. 15,525 crore.

· NMDC is also setting up a 1.2 million tonne per annum (mtpa) capacity pellet plant at Donimalai, Karanataka.

(iii) Merger/acquisitions/revival/restructuring/Joint ventures of the Steel PSUs

· Maharashtra Elektrosmelt Ltd (MEL), the 99.12% subsidiary of Steel Authority of India Limited (SAIL), has been merged with SAIL with effect from 01.04.2010.

· ‘SAIL Refractory Company Limited’ – a subsidiary company of SAIL for transfer of the Refractory unit of BSCL incorporated in August, 2011

· SAIL- SCL Limited - Joint ventures (JV) with Govt. of Kerala to revive existing facilities at Steel Complex, Calicut has been effective from 30.12.2010. SAIL has formally taken over the management of the JV Company. Govt. of Kerala has been requested to expedite approval of rolling mill by JV Board.

· JV with Kobe Steel for ITmk3 Technology envisages installation of a 0.5 MTPA Iron Nugget plant at ASP, Durgapur. This unit will produce premium grade Iron Nuggets from iron ore fines and non-coking coal. Proposal for formation of a JV Company with M/s Kobe Steel (50:50 equity participation) has been put up for consideration of SAIL Board on 29.11. 2011.

· Hajigak Iron Ore Deposits, Afghanistan

SAIL led Consortium which submitted bid in September’2011 has been alloted mining blocks B, C & D of the Hajigak Iron ore deposits (reserve of 1770 MT). The total investment estimated at US $ 10. 8 Billion in phases (includes development of mine, installation of 6.12 MTPA Steel plant in two phases, 800 MW Power plant, Rail & Road infrastructure and CSR activities).

(iv) Special Purpose Vehicle

· A Joint Venture Company(JVC) called “ International Coal Ventures Ltd” comprising of SAIL, RINL, CIL, NTPC and NMDC has been set up for acquisition of coal mines in overseas territories, with an equity base of Rs.3000 crore to be leveraged with around Rs. 7000 crore of debt. The ICVL will function like a Navratna company with powers to clear proposals involving investment of upto Rs.1500 crore. The company has already initiated efforts to acquire coal properties abroad with specific countries like Australia, Mozambique, Canada, Indonesia and USA.

(v) Enhancing steel distribution network

· Public sector steel units are expanding their dealer and distributor networks to reach district centers and remote areas of the country. Presently SAIL has a total marketing network of 2700 dealers in 626 districts, 66 warehouses, 37 branch sales offices and 27 customer contact offices in the country. RINL has over 150 dealers. Private sector steel companies have also been asked to expand their distribution network to cover almost all the major districts of the country.

· Ministry of Steel has evolved a scheme for routing the allocation of iron and steel materials from main producers like SAIL, RINL and Tata Steel to SSI units and other Government Departments through the Small Scale Industries Corporations (SSICs) and the National Small Scale Corporation (NSIC) and provides handling charges of approximately Rs.500-550 per tonne to the Corporations so that the Corporations supply the steel materials at the doorsteps of the SSI units.

(vi) Corporate Social Responsibility (CSR)

· CSR has been identified as an important parameter in the MoUs drawn up by all the PSUs with the Ministry. CSR activities focusing on environmental care, education, health care, cultural efflorescence and peripheral development, family welfare, social initiatives and other measures are underway in the PSUs.

· All profitable Steel PSUs have earmarked certain amount based on the net profit of last year in terms of DPE Guidelines.

(vii) Promoting R&D in Steel Sector

In order to encourage R&D activities in iron and steel sector, Ministry of Steel is providing financial assistance under the following two schemes:

(A) Financial assistance from Steel Development Fund (SDF) under the mechanism of Empowered Committee (EC)

· 68 R&D projects have been approved costing Rs. 544.34 crore with SDF assistance of Rs. 263.48 crore. So far Ministry of Steel has released Rs. 145.63 crore from Steel Development Fund (SDF). Out of 68 R&D projects, 35 projects have been completed yielding benefits to the industries, 9 projects have been stopped after midterm review and 24 projects are in progress.

(B) Financial assistance from Government Budgetary Support (GBS) under the mechanism of Project Approval and Monitoring Committee (PAMC)

· Under this scheme R&D project proposals in three broad areas namely (i) development of innovative /path breaking technologies (ii) improvement of quality of steel and (iii) beneficiation of raw materials in the Iron and Steel Sector are being proposed. So far 8 R&D projects have been approved costing Rs. 143.87 crore with Government Budgetary Support of Rs. 111.11 crore. So far Rs. 31.18 crore has been released up to 2010-11. The projects are at their initial stage.

(viii) Assessment of steel demand

· The Ministry has initiated a study to assess the steel demand in the rural areas of the country and to examine the potential of increasing the level of steel consumption. The study would cover 300 districts, 1500 villages, 4500 manufactures and 8000 retailers spread over all the 35 states and union territories of the country.

(ix) Disinvestment of Steel PSUs

· Disinvestment of 10% Government of India’s shareholdings in MOIL has been completed. The Government earned Rs. 618.76 crore by disinvestment of MOIL.

· In accordance with the Cabinet Decision, 51% shareholding (i.e. 7, 36,638 shares) of Government of India in Eastern Investments Company Limited (EIL) under Bird Group of Companies was transferred to Rashtriya Ispat Nigam Limited (RINL). Thus RINL has become the holding company of Eastern Investments Company Limited (EIL) and its subsidiaries Orissa Minerals Development Corporation (OMDC) and Bisra Stone Lime Company Ltd. (BSLC) are now subsidiaries of RINL w.e.f. 05.01.2011.

No comments: