News Room - Steel Industry

Posted on 27 Feb 2008

Iron-ore key to steel sector growth

The global steel sector is passing through a phase of extraordinary growth due to all round growth in steel demand led by China and India. International Iron & Steel Institute’s (IISI) provisional report shows that the world crude steel production has increased from 1,250 million tonne in 2006 to 1,343 million tonne in 2007. 

China, with 489 mt of crude steel production, continues to be the largest steel producer in the world, whereas India with 53.1 mt now ranks fifth, up from its eighth rank in 2003. Steel consumption in India is presently growing at nearly 12% and keeping in view the anticipated growth in infrastructure and manufacturing sectors, the demand is further likely to grow by 14-16% during the next few years.

During the current year, between April-December 2007, the domestic steel demand has grown at 12.2% over the same period of previous year. However, production has grown at 6.6% in April – December of current financial year. This demand-supply gap has caused a 67% rise in imports.

For the first time, India had become a net importer of steel in 2006-07. This has caused some concern and the government is making an all-out effort in facilitating supply growth by way of faster commissioning of envisaged steel projects.

A recent study says crude steel production capacity in the country would be over 100 million tonne by the year 2011-12. My ministry is emphasising priority for a better coordination among various central government ministries and the state governments, with a view to resolving issues concerning investment.

The prime minister has approved of the constitution of an inter ministerial group (IMG) in the steel ministry with members from other key ministries and state governments. The group has already discussed key issues concerning infrastructure, raw materials, land acquisition and allocation of mineral resources—relating to major steel projects. Apart from this, I am personally monitoring the expansion projects of Sail and RINL on a periodical basis.

Steel consumption per capita in India remains at a relatively low level of nearly 46 kg against the world average of 150 kg. My ministry is keen on promoting steel usage in the country. With the participation of major steel producers, a national steel promotion campaign has been launched.

The quality of steel used in common safety applications has always been a cause of concern. To make quality steel available in the country, the government has decided to extend mandatory quality certification under the Bureau of Indian Standards Act 1986 in respect of 17 steel products used in housing, construction, boilers, electrical sheets, galvanised sheets for roofing and tinplates used in packaged food industry.

The Quality Control Order, issued by the consumer affairs ministry, will take effect after a period of six months from the date of its publication in the official gazette.

The key to the growth of Indian steel industry lies in leveraging the huge natural resources of iron-ore available in the country. However, the focus of iron-ore mining has always remained inclined towards exports. Out of the many steel producers in the country, only Sail and Tata Steel have the advantage of possessing captive iron-ore mines.

Even some of the major steel producers such as Rashtriya Ispat Nigam Limited, Essar Steel and JSW Steel, producing 3 million tonne or more of steel, do not have their captive iron-ore mines. This reflects a distortion in our mineral policy, which the government is fully committed to rectify.

I have asked the allocation of iron-ore mines to be decided in line with allocation of captive coal-blocks, through a screening committee functioning in the ministry of coal. Unless a national view is taken regarding iron-ore allocation, utilisation and conservation, this country will have this resource exhausted in 20-30 years.

The steel industry is resource intensive. Major steel projects are located in relatively backward regions, involving land acquisition and mining activities. Recent public protests against some of the steel projects have indicated that the industry must project a more humane face. There is also need for involving the displaced and the affected in the growth of the projects by converting them into stakeholders in the company.

Corporate Social Responsibility assumes a much higher significance in this regard. As an initiative, I have asked all the profit making public sector enterprises, under the control of ministry of steel, to spend at least 2% of their distributable surplus in corporate social responsibility (CSR) activities. Our premier mining company, National Mineral Development Corporation, has allocated 5% of their surplus for CSR. The total budget allocated for CSR in respect of the PSUs for 2007-08 is around Rs 230 crore.

The PSUs will strengthen their mechanism and focus on environment, health, education and family welfare and also on building up social infrastructure mostly in rural areas of backward states, covering areas populated by SC, ST and the weaker and underprivileged sections of the society.