DRI Production In FY18 May Increase 5 Percent: SIMA

Yes, there is tremendous scope for growth of the so-called secondary sector, provided all the infrastructure development programmes of the government are implemented. And the government is also taking note of the pivotal role this segment can play in the country’s economic development. But raw material costs, especially iron ore and coal, which constitute 80 percent of the production cost for the DRI players, are a bother, Deependra Kashiva, Executive Director, Sponge Iron Manufacturers Association (SIMA), tells Madhumita Mookerji.

What has been the share of the secondary producers in India’s total steel production for the past three years? Going forward, how are things likely to pan out for this sector in terms of contribution to India’s steel production.

At the outset I would like to say that the term secondary is not a standard one, because this industry began to take shape from the early 1970s and at that time there was restriction on creation of steel capacity through integrated steel plants (BF-BOF route). Therefore, the government realised there was a need to create more steel production and processing capacity and started giving licences for the production of steel through the electric arc furnace route and steel processing units for long products, hot and cold rolled flat steel products, galvanising and colour coated flat products. At that time, the basic raw material used to be supplied by Tata Steel and Steel Authority of India (SAIL). But, since these units were not producing the steel and steel products from iron ore but through the already produced steel, they used to be called secondary producers.

You may have noticed that the National Steel Policy, 2017 has not used the term secondary producers. It has, instead, used the term medium, small and micro enterprises (MSME).

Production from this segment has ranged from 50-57 percent in terms of crude steel production over the last 3 years.

How do you see DRI production in FY18 against the backdrop of a decline in output in FY17?

Around 25-30 million tons (mt) of crude steel used to be produced by the so-called secondary producers and these units were importing on an average 5 mt of scrap, though this had shot up to 9 mt in 2014-15 in addition to indigenous steel melting scrap and DRI.

We expect that DRI production in the country in FY18 should increase by at least 5 percent.