Ministry of Steel

Strategic Plan for next five years (2011-16)

Indian Steel Industry - Background

Iron and steel has for ages provided the key input for building a nation’s physical infrastructure and industrial base. If we trace the origin and growth of Indian steel industry itself, it has been one of the primary movers for the country’s shift from a basically agrarian to an industrialised economy. The sector’s growth has not only been parallel to our political transition from a foreign colony to an independent sovereign state but also to the transition from a regulated/planned regime to an open and globalised one. At the time of independence, India was producing around one million tonnes of steel per annum with matching consumption levels. The economic strategy of rapid industrialisation with self-sufficiency (import substitution) also meant that a special thrust was given to promotion of steel industry and for two obvious reasons - firstly, to give a fillip to domestic industrialisation and secondly to exploit the nation’s large reserves of iron ore and coal – the two critical raw materials required for steel making.

The regime of planning and control continued for more than four decades i.e. till early 90’s leading to reservation of large scale integrated capacities in the public sector, introduction of price and distribution controls, protectionist trade barriers as well as restrictions on import of foreign technology and equity participation. Initially these initiatives did encourage the sector’s growth but mainly on account of the new capacities created. By the mid 70’s however the growth had became sluggish and the government found it increasingly difficult to mobilise enough resources to invest in either creation of new capacities or expanding of the existing ones. As a result, the only capacity additions that could take place were in the scrap-based small and medium scale Electric Arc Furnace (EAF)/ Induction Furnace (IF) units operating in the secondary sector. There was also a decline in over all steel consumption levels with slowing down of industrial growth, capital formation and investment flows.

1 The above scenario changed with adoption of the general economic policy of liberalisation and reforms in 1991 following which the steel industry was also deregulated in 1992 marking a watershed in the industry’s development. With opening up of the sector the erstwhile regime of controls were wholly dismantled i.e. capacity controls and reservation for the PSUs were withdrawn, prices and distribution (with the exception of a few areas such as SSIs) were freed, trade barriers rationalised with reduction in tariff rates, de-licensing/de-canalisation (introduction of OGL) of imports and removal of export ceilings, the policy of freight equalisation replaced by freight ceilings as a first step towards total replacement and the sector opened up for foreign direct investment (FDI) and technology imports.

The far-reaching policy changes resulted in decadal additions to capacity as well as consumption of steel within first five years after the deregulation and it also saw the rise of private sector in the industry. With the changed viability conditions there was also a movement towards adoption of state-of-the-art technologies in both the new and old capacities, improvement in operative efficiency levels and improved quality parameters of the products including product-mix (Trends in steel production, consumption and capacity utilisation since 2001-02 are given at Annexure I, II and III).

After deregulation, the rapid pace of growth and the existing market trends called for certain guidelines and frame work. This led to the formulation of a National Steel Policy (NSP) which was announced in November, 2005. As a basic blue print for the growth of a self reliant and globally competitive Indian steel sector, it proposed facilitating the removal of procedural and policy bottlenecks that affect the availability of production inputs, increased investment in research and development, and creation of supportive road, railways and port infrastructure for the industry. The policy though focused on the domestic sector also envisaged a steel industry growing faster than domestic consumption which will enable export opportunities to be realised.

Today India has emerged as the fifth largest producer of steel and also the single largest sponge iron producing country in the world (The global crude steel production during 2009 had touched 1220 million tonnes. Of this the largest share was contributed by China (567.8 millon tonnes) followed by Japan (87.5 millon tonnes), Russia (59.9 millon

2 tonnes), US (58.1 millon tonnes) and India (56.6 millon tonnes) respectively.

Steel manufacturing is a core sector with strong forward and backward linkages with many other sectors of the economy. It contributes to nearly 2% of our Gross Domestic Product (GDP) and provides employment to over five lakh people. The sector has been able to withstand the sluggish growth on account of the global downturn and adverse market conditions and this was mainly on account of the resurgence in automotive appliances, capital goods and construction sectors. As a result, both domestic and foreign investors have continued to show a great deal of interest in setting up of fresh steel capacities in the country. As of today, a total of 222 MOUs have been signed for setting up of 275.7 million tonnes of steel investments in the country including three FDI projects (12 mtpa POSCO Projects in Orissa, 12 mtpa ArcelorMittal projects in Orissa and Jharkhand). The sector also remains one of the major contributors to the national exchequer and in 2009-10 the net profit earned by all profit making PSUs taken together itself was to the tune of over Rs. 10,000 crore.

The Ministry’s vision for such a vibrant sector as already outlined in the National Steel Policy (NSP), is that of building an industry of global standards with capacity to cater to different as well as diversified demand for all types of steel and steel based items/ products. Therefore, the proposed strategic plan for the next five years i.e. 2011-16 will also focus on implementation of initiatives for achieving global competitiveness not only in terms of cost, quality and product-mix but also of matching the global benchmarks of efficiency and productivity.

The details of such a strategic plan as outlined below has also been formulated after taking into consideration the various interests and aspirations of all the stakeholders involved.

3 1. Vision, Objectives and Functions

Vision

The ministry’s vision for the industry is to transform India into a global leader in the steel sector, both as a steel producer as well as a steel consuming nation and to enhance the industry’s international competitiveness.

Mission

1) Promoting policies, initiatives and incentives for attaining a national steel production capacity exceeding 100 million tonnes per annum by the year 2015-16.

2) Streamlining the regulatory environment for enabling optimal steel production; particularly regarding mineral policy and the mine allocation regime, tariff and taxation measures, land allocation and environmental and forest clearances.

3) Promoting the development of infrastructure required for enhancing national steel production through coordinated efforts, particularly in sectors like Railways, Roads, Ports, Power and Water supply.

4) Enhancing domestic demand for steel through promotional efforts and by enlarging the retail network of steel companies.

5) Improving the techno-economic efficiency of operations of steel ministry’s PSUs.

Objectives

1) 1(a) To facilitate the early realisation of steel investment proposals both in the public and private sector through coordination and consensus building with state governments and agencies of the union government particularly through the forum of the Inter Ministerial Group (I.M.G.); for attaining the national objective of total finished steel production exceeding 100 million tonnes by 2015-16.

4 1(b) To facilitate creation of appurtenant infrastructure required for steel capacity addition and to pursue clearance required by the public and private sectors in areas like mineral allocation, land allocation and environmental & forest clearances.

2) To oversee the completion of the capex and modernisation programmes of the PSUs particularly SAIL, RINL and NMDC.

3) Ensuring adequate availability of raw materials for steel industry from domestic and overseas sources, particularly iron ore and coal by PSUs under the steel ministry.

4) To facilitate and monitor mergers, acquisitions and Joint Ventures by the steel ministry PSUs.

5) To pursue with the Ministry of Finance and the Ministry of Commerce for the adoption of fiscal and tariff measures for ensuring the sustainability and future prospects of the Indian steel industry.

6) Promotion of Steel usage through cost effective steel products, dissemination of knowledge and ensuring higher steel availability in rural areas

7) Promotion of Research and Development in steel sector.

8) To improve the commercial and technical efficiency of operations of all PSUs.

9) To encourage implementation of Quality control standards in manufacture of steel and steel based products.

Functions

1) Matters relating to production, distribution, imports and exports of iron and steel and ferro alloys.

2) Matters relating to the PSUs including their subsidiaries under the ministry’s administrative control i.e. (i) Steel Authority of India Ltd (SAIL); (ii) NMDC Limited ; (iii) Rashtriya Ispat Nigam Ltd (RINL); (iv) Manganese (Ore) India Ltd (MOIL); (v) MSTC Ltd; (vi) Ferro Scrap Nigam Ltd (FSNL); (vii) Hindustan Steelworks Construction

5 Ltd (HSCL); (viii) MECON Ltd; (ix) KIOCL Ltd; and (x) Bird Group Ltd and also the company/undertaking set up for foreign acquisition of coal assets i.e. the International Coal Ventures Limited (ICVL)

3) Planning, development and facilitation for setting up of iron and steel production facilities including Electric Arc Furnace (EAF) units, Induction Furnace (IF) units, processing facilities like re-rollers, flat products (hot/cold rolling units), coating units, wire drawing units and steel scrap processing including ship breaking.

4) Development of iron ore mines in the public sector and other ore mines (manganese ore, chrome ore, limestone, sillimanite, kayanite and other minerals used in the iron and steel industry but excluding mining lease or matters related thereto).

2. Assessment of Situation

(a) Current performance

Indian steel demand is today driven mostly by domestic requirements and since 2006-07 India has been a net importer of steel. The various economic and fiscal measures initiated by the government combined with a robust economic and financial market trends has resulted in sustained demand from major consumers like construction, real estate, housing sectors and industries requiring specialised steel applications like auto and electrical components sectors.

During 2009-10, the total net production of finished steel was 59.69 millon tonnes as against 57.16 millon tonnes in 2008-09 i.e. a growth of 4.4 per cent. The total net consumption of finished steel during the year was 56.47 millon tonnes as against 52.32 millon tonnes in 2008-09 i.e. the rise of 7.7 per cent. As for external trade during the year, imports of finished steel increased by 24.8 percent to touch 7.29 million tonnes from 5.84 millon tonnes in 2008-09 but exports showed a decline of 28.8 percent i.e. 3.23 millon tonnes from 4.44 million tonnes in 2008-09.

6 (b) External factors affecting the sector

(i) Political

Steel usage ranges from the ordinary i.e. household items /tools etc. to the massive and complex ones i.e. bridges, communication towers, machinery, railways and defence equipments etc. It is an industry charachterised by large scale investments in land, equipment and technology, long gestation periods but at the same time also relatively huge margins /profits on account of the value, durability and varied usage of the final product cutting across sectors. Being a deregulated sector commercial decisions made by the manufacturers are largely influenced by the prevailing domestic as well as international market trends . Despite this they are also heavily dependent on political intervention and consensus building to access the basic raw material and infrastructure support linkages necessary for day to day operations. Other policies decided at a political level like that of resettlement and rehabilitation of population in and around the plants / mines set up as well as on environmental sustainability etc. are also of crucial relevance to the industry.

(ii) Economic

Despite many inherent advantages like availability of quality iron ore, low wages and availability of highly skilled personnel etc. Indian steel industry continues to be restricted by its low labour productivity, high energy consumption levels, heavy dependence on imported technology including for maintenance operations etc. Steel manufacturing across the world has become a very competitive business and in such an environment the only way to move ahead of one’s rivals would be by achieving operational efficiency through adoption of cost cutting options, diversification, right product mix, increased investment in innovation- centric research and development efforts and personnel training .

(iii) Technological

Steel making is a highly capital and technology intensive sector. Therefore sustained and consistent improvements in parameters of technical efficiency has become vital specially in areas where the industry

7 is lagging behind. Such problems are mainly related to obsolescence of technology adopted and lack of timely modernisation / renovation, quality of raw material and other inputs, inefficient shop floor practices, lack of automation and R&D intervention. Concerted efforts with well thought out programme of action are therefore, necessary to bring the Indian Steel Industry at par with their counterparts abroad. The specific areas requiring immediate attention include areas of process improvement, automation, use of inferior raw material, beneficiation, energy conservation and use of waste material. While for some of these problems, the industry is in search of innovative and cost effective solutions, there exists proven technologies in certain other areas. These technologies/practices have been already operating successfully abroad and need to be adopted and assimilated by the Indian industry at an accelerated pace. While adoption of proven technologies may result in immediate gains, there is a need to encourage those technologies which though are not yet commercially proven but are consistent with the resource endowment of the country.

(iv) Environmental

Environment protection in iron ore & steel plants is essentially linked to the technology adopted for iron & steel making starting from raw material to finished steel stage and finally to the efficient disposal/re-use of generated bye-products and waste. Therefore, effective management of environment calls for an integrated approach covering the production process as also the environment surrounding the plant. In other words, “sustainable development” is to be practiced right from technology development and design stages and also ensured that technologies which are not sustainable are not adopted for either expansion of existing plants or creation of new capacities. Towards these objectives, initiatives both at the level of the entrepreneurs and government by way of suitable intervention are necessary.

(v) Legal

A number existing legal / statutory regulations and government policy guidelines are of crucial relevance to the industry. Some of the crucial ones amongst these include those linked to allocation of mining leases, environmental and forest clearances, quality control and the Policy on resettlement and rehabilitation etc.

8 (c) Major Stakeholders

The stakeholders linked to the industry are as many as they are varied and cover the following:

I. Ministry of Steel II. Steel producers including miners of key raw materials for the sector III. Steel consumers IV. State governments concerned V. Other central ministries concerned (Railways, Surface Transport, Ports and Shipping, Mines, Environment and Forests, Petroleum and Natural Gas, Power, Heavy industry, Micro, Small and Medium Industries, Coal, Planning Commission, Commerce & Industry, Finance etc.) VI. Alliance partners / foreign investors VII. Research Institutes / organisations VIII. Environmental groups IX. Local population in and around steel plants & mines.

(d) SWOT Analysis

Indian steel industry has been blessed with a number of inherent advantages but at the same time it also faces some crucial constraints.

9 The sector’s main strengths, weaknesses, opportunities as well as threats/challenges are as summarised below:

Strengths Weaknesses  Availability of quality iron ore and  High cost of energy/power processed inputs like sponge iron  Poor infrastructure linkages for  Low wage level movement of both raw material and  Skilled manpower and managerial finished products capabilities  Inferior quality of indigenously  A regionally dispersed secondary steel available coking coal sector to cater to local demand  Relatively high cost of capital specially for smaller producers  Low labour productivity as well as rigid labour laws  Dependence on imported technology and equipment including for maintenance operations  Multiple statutory clearances required for mining and steel making investments  Issues linked to land acquisition and rehabilitation

Opportunities Threats/Challenges

 Potentially huge domestic demand from  Slow growth of infrastructure steel intensive investments like development infrastructure building, real estate,  Potential competition from countries automobile/ auto components, like China communications, ship building,  Unstable/Adverse global market defence, and medical equipment, trends consumer durables etc.  Dwindling raw material reserves  A largely untapped rural market specially iron ore through exports  Huge potential for productive foreign collaboration particularly in specialized steel making products and equipment

10 (e) Learning Agenda

Today Indian steel industry’s prospects are primarily determined by market forces but given the structural constraints faced by the sector (need for raw material access , infrastructure support etc.) Ministry of Steel will continue to play an important role as a facilitator. With global relocation and world-wide restructuring the focus of the industry has now shifted to countries like India which have the key raw materials, low cost labour, the requisite technical manpower, a high potential for technology absorption and last but not least a rapidly growing domestic market.

India therefore has the potential to emerge as a global steel player if the inherent advantages available are leveraged properly and special attention given to areas where achievements are likely to fall short of expectations. This is the basic premise on which the strategy options for the sector will have to be explored and finalised before implementation.

3. Outline of the Strategy

(i) Summary

The key strategic initiatives proposed for the next five years (i.e. 2011-16) is based on a critical assessment of the industry’s strengths, weaknesses, opportunities and challenges and also crucial inputs received during the interaction with representatives from the Industry and other ministries as well as state governments concerned. It also incorporates relevant potential challenges already identified for the 12th Plan (2012-17) like emphasis on infrastructure development, adoption of environmentally sustainable business practices and the need for ‘inclusive growth’ i.e. wider dissemination of benefits of growth to rural areas and socially/economically disadvantaged groups.

The multipronged strategy thus outlined for the growth of domestic steel sector would cover on the demand side initiatives for promotion of steel usage, strengthening of the delivery chain/retail outlets linking the steel producers to the users - especially in the rural areas, creating awareness about steel as a cost-effective and technically efficient end-use material through educational institutes / other professional bodies etc.

11 On the supply side the strategy intends to focus on facilitating creation of additional production capacities including production of special steel and alloys, providing an enabling framework for requisite raw material and infrastructure linkages for the industry, higher investment in research and development activities, initiatives for improvement in business operations including sustainable production techniques, an effective consumer redressal mechanism and adoption of a world class data base and monitoring system etc. Besides, demand and supply aspects of steel making operations, the strategy will also give a thrust to the sector’s relevance for ‘inclusive growth’ though the Corporate Social Responsibility (CSR) framework focusing on the population in and around the steel plants/mines.

Before deciding on the long term strategy initiatives for a sector a feedback from the industry was necessary and specially on the likely trends in steel demand, supply and capacity creation required. So based on the sectoral performace over the last five years (i.e. from 2005-06 to 2009-10) the following indicative estimates for likely demand, supply, additional capacity as well as matching input requirements for the next five years i.e. by 2015-16 were derived:-

(1) During the last five years (i.e. 2005-06 to 2009-10), the total finished steel consumption (alloy+ non alloy) in the country had registered a compounded average growth rate (CAGR) of 9.2 percent. So assuming the same growth rate for the next five years also (with no change in the existing GDP growth rate) the total finished steel consumption or steel demand by 2015-16 would be around 95 million tonnes;

(2) If the conversion rate from crude steel to finished steel (i.e. after adjustments for losses and diversion for other usage) is taken as 88 percent, then the crude steel supply required to produce 95 million tonnes of finished steel would be around 108 million tonnes;

(3) Assuming a capacity utilisation of 80 percent, the total capacity required to produce 108 million tonnes of crude steel by 2015-16 would be around 135 million tonnes;

(4) Finally based on available consumption ratios or usage per tonne of crude steel the matching inputs/raw material requirement to

12 achieve the target of 108 million tonnes of crude steel by 2015-16 were estimated as 185 million tonnes of Iron ore, 55 million tonnes of Coking coal, 42 million tonnes of non-coking coal and 5.8 million tonnes of manganese ore respectively.

(ii) Stakeholder Discussions /Interactions

a) With Steel producers and Associations on 10.01.2011

The tentative projections for the sector by 2015-16 (given at 3 (i) above) were discussed with the industry representatives (including various Associations) during the discussions held with them on 10.1’11.

During the interaction most of the steel producers (specially the major ones like SAIL and TATA steel ltd) felt that the estimates were rather conservative and that capacity creation requirement is likely to touch 150 million tonnes by 2015-16 as against the projected 135 million tonnes. On the projected input requirements also many felt that a manganese ore requirement of 5.8 million tonnes was rather inflated as its usage has actually been declining over the years on account of technology changes.

The important issues raised during the interaction with the industry were as follows :

 While making capacity projections for a sector like steel making, a very important aspect that needs to be taken up for consideration is the infrastructural requirements in terms of requisite roads/rail linkages. This is important considering that most of the Indian steel manufacturing plants are concentrated in the relatively backward eastern region while the final markets are either in the south or western region.

 On issue of raw material availability – in the case of iron ore the problem is not one of less availability but that of non utilisation of the huge volume of iron ore fines being generated domestically, also with improved technology requirement of raw material like manganese ore in steel making has actually declined and therefore the actual requirement will be much lower than what has been projected by the ministry . On coal availability – an important

13 suggestion received was the need to move a proposal for reserving weakly grade coking coal blocs exclusively for steel industry’s requirement. There should also be transparency in pricing policy specially for fuel and natural gas – vital inputs used in sponge iron making and finally increased investment is required for improving the quality of domestically available metal scrap to reduce our dependence on imports.

 While some producers (like RINL) chose to focus on their pending proposal awaiting government clearance (specially on transport linkages/mining leases etc.) there were specific policy suggestions mooted for the benefit of the entire sector. These included setting up of a separate sovereign fund for foreign acquisition of coking coal reserves/assets , a separate Steel Finance Corporation (SFC) to fund investments , introduction of a “single window clearance process’ at the state level to speed up green field project approvals, appointment of a separate Director level officer to coordinate issues linked to traffic / movement of raw materials and finished products across the country and central support for law and order issues linked to business operations in politically sensitive regions like Chhatisgarh and Jharkhand etc.

b) With other ministries /departments and state governments on 17.01.2011

The issues / constraints raised by the industry (at 3(ii)( a) above) were discussed with the ministries/departments and state governments concerned on 17.01.’11 and the specific feedback received included the following:

 Exports of iron ore (an important component of Long Term Agreement(LTA) with countries like Japan) has not affected its domestic availability as India has mainly been exporting iron ore fines only. During 2009-10, out of the total 117.37 million tonnes of iron ore exported, lump ore constituted only 13.41 million tonnes while fines accounted for 103.96 million tonnes i.e. 88.6 percent apprx. From the point of likely environmental degradation and hazards also, there is a compulsion to export these excess ore (mainly fines). There is however need for increased domestic usage of iron ore fines through agglomeration and beneficiation etc. as it

14 may also lead to more value added exports like iron ore pellets. (Ministry of Commerce & Industry)

 Aggressive capacity additions has been proposed for the Power sector in the coming years @ 20,000 mw per annum which is going to result in huge input requirements specially of steel for setting up of various power plants. As per assessment made by CEA, Ministry of Power - the total requirement of structural steel and of stainless steel by 12th plan is going to be around 4.540 million tonnes and 10.006 million tonnes respectively. The requirement of special steel and alloys or ‘reinforcement steel’ by 12th plan is projected at 1.872 million tonnes which currently are not being produced domestically. Setting up of such production capacities in the country may therefore need to be included in the strategic plan. (Central Electrical Authority, Ministry of Power).

 Investment in infrastructure development will continue to be a major thrust area during 12th Plan also. Unlike earlier plans the sectoral targets for 12th plan are going to be based on a ‘cross-sector’ appraisal exercise instead of sector specific Working Group appraisal/reports and this would be relevant for making a realistic assessment of the potential demand and supply trends of a sector like steel. As focus of our planning exercises is now more on ‘inclusive growth’ a lot of potential plan investments are going to be targeted towards rural economy like in health, education, housing facilities etc. This will push up rural income and expenditure levels, and therefore strategic plan may also consider raising the per capita rural steel consumption levels to at least 60 to 80 kg. (Planning Commission).

 There is an urgent need for survey and reassessment of the existing mining reserves by all the lease holders. A recent review conducted on the progress in reporting of the mineral resources had shown that even in many areas reserved for PSUs resources and reserves are yet to be assessed in terms of UNFC guidelines. Secondly, for grant of mining leases to companies like RINL, there is need for clarity in the existing Policy on iron ore linkages required for existing steel making capacities and in consultation with state governments concerned. Thirdly, conservation of minerals like iron ore may be encouraged through improvement in mining methods,

15 beneficiation and utilisation of low grade ore and also promotion of R&D activities through selected institutes/organisations(Ministry of Mines)

 Coking coal constitutes only ten percent of our total identified reserves and given the limited availability even the targeted production for 11th plan has now been revised to 447 million tonnes from earlier 520 million tonnes. With compulsion for priority allocation also to sectors like power, cement etc. it has been decided to provide no more coking coal linkages to the sponge iron sector. Given the supply constraints, there is also concern regarding non or limited utilisation of the coal blocks already allocated( including steel industry). As regards reserving of weakly grade coking coal for steel sector, it may require examination but that policy initiatives have been introduced for upgradtion through setting up of washeries and the department intends to encourage investments from the user industries themselves for such ventures. (Ministry of Coal).

 For allowing mining operations in the West Singhbhum region of the state government the approval of the Ministry of Environment & Forest is still awaited. (State Government of Jharkhand).

 While proposing agglomeration and beneficiation for ore fines there needs to be clarity that it is applicable more to low grade ore fines as in the case for fines of higher grade the viable option would be to go in for sintering of fines. (Economic Research Unit, Joint Plant Committee).

c) Revised Projections for 2015-16

All the above inputs received during the two rounds of stakeholder discussions held have been included in the proposed strategic plan for the sector. Based on the feedback received the sectoral projections have also been reexamined and revised. The reassessment has taken into account the fact that the huge proposed investments in infrastructure development projects in the coming years will have a multiplier effect on steel usage. Therefore we may assume that there may be a minimum growth rate of 10 percent in steel consumption ( as against 9.2 percent assumed earlier ) and the revised indicative estimates for demand,

16 supply, capacity creation and input requirements by 2015-16 would be as follows:

Projections for next five years i.e. by 2015-16 (in million tonnes) :

Steel consumption /demand 100.06 Crude steel production 113.70 Production capacity required 142.13

Raw material requirement

Iron ore 194.0 Coking coal 58.0 Non-coking coal 44.0 Manganese ore 3.97

Given the nature of the industry’s operations including its sensitivity to market trends, the above targets can be subject to modifications . However seen against the sheer size of the proposed or planned steel intensive investments in the coming years including the 12th plan (2007-12) the above projections for next five years seem fairly feasible.

(iii) Prioritisation of proposed Strategic Initiatives

(1) Creation of additional capacity by 2015-16

According to the revised projections ( at 3(ii) c) above) to achieve a total crude steel production of 113.7 million tonnes by 2015-16 a total capacity creation of 142.0 million tonnes is required. This is higher than the earlier estimate of 135 million tonnes but lower than the 150 million tonnes projected by steel majors like SAIL or TATA steel ltd.

Normally there are bound to be differences of opinion on projections for capacity additions specially for a manufacturing sector like steel as the estimates are often subject to variation depending on the changes in market conditions for steel and steel based products both at domestic as well as global level. In fact the National Steel Policy -2005

17 itself had projected a capacity creation of 110 million tonnes by 2019-20 but in the light of the resurgent demand conditions as well as growth potential for steel usage it was revised to 124 millon tonnes by 2011-12. As per this revised target, the projected additional capacity of around 60 million tonnes was to be effected through both brownfield and greenfield projects not only in the private sector (Tata Steel, Essar Steel, Jindal Steel & Power Ltd. and Bhusan Steel ltd) but also public sector investments (SAIL, RINL) ( break-up given at Annexure IV ).

Creation of new capacities in steel making is always subject to a number of bottlenecks like the long gestation periods, the time involved in getting the requisite statutory clearances, provision of crucial raw material / infrastructure linkages etc. While these factors can delay the realisation of the additional capacity no one disputes its requirement given the fact that India is today one of the fastest growing economies and with substantial opportunities for increased steel usage across diverse sectors including specialised steel and alloys which at present is mostly being procured through imports.

The strategic plan would be specially focusing on the capacity creation in the public sector including the ambitious on going expansion and modernisation programme of SAIL and RINL. As per the programme SAIL will increase its production capacity from existing 14.6 million tonnes to 23.46 million tonnes per annum in Phase I by 2012-13 and RINL its existing capacity of 3 million tonnes to 6.3 Million tonnes per annum respectively. Many projects initiated under the programme have already been completed and commissioned.

(2) Raw material linkages

The competitive strength of the steel industry is derived to a large extent from its raw materials base. Even in a market economy, the government has an important role to play in augmenting and ensuring the best possible utilisation of the country's natural resources (this includes coal and iron ore) which in turn, will influence the technology choice and investment decisions taken by the manufacturing unit dependent on such resources as raw materials.

Iron ore is the basic raw material used in steel making. 60 percent of our production of iron ore comes in the form of fines (including concentrates) during the course of mining operations itself. A further 5-6

18 per cent of the lump is broken into fines in transit and handling which creates a mismatch between demand and supply in the case of lumps and fines. The sintering and pelletisation capacity in the country is not sufficient to make full use of the fines and concentrates. Another problem is that even steel plants with acesss to technology for use of fines are normally reluctant to do so given the easy availability of lump ores. There is a need to change the blast furnace change/feed for better utilization of fines and higher productivity.

Most of the iron ore mines are having hematite iron ore and the cut off grade of run-of-mines is in the range 60-62% Fe, depending upon the iron ore reserve quality. Iron ore with less than 60% Fe are discarded as overburden or waste and are dumped.

Indian iron ore processing technology have technological gaps with respect to processing low-grade iron ores. The challenge is to beneficiate these iron ores to improve their iron content by development of relevant method of beneficiation to reduce the slime generation and to achieve reasonably high yield through recovery of iron values. Such technologies are emerging in pockets and need to be successfully emulated.

Coking coal is another vital raw material required for steel making. With limited domestic production and the policy of priority based allocation, the steel industry has no choice but to be dependent on imports to meet its requirements. Given the inferior quality of indigenously available coal it is usually blended with imported varieties for steel making. Since such import dependence can be risky in the long run specially as the sectoral requirements are only going to increase further with the proposed capacity additions (including by PSU majors like SAIL, RINL etc) the ministry had taken the initiative to set up the International Coal Ventures Limited (ICVL) for acquisition of coal assets abroad. ICVL has equity participation by two steel and three mining PSUs i.e. SAIL, RINL, NMDC, CIL & NTPC. Over the next five years, one key strategic objective would be to acquire coking coal assets abroad either by direct ownership, or by acquiring stakes in coal companies through ICVL. A proposal for expediting decision making processes in the context of acquiring commodity assets overseas is to be shortly submitted to the Council of Ministers, and it is hoped that this would facilitate faster decision-making by the organisation.

19 Availability of coal is also vital for sponge iron production. An alternative and more environment friendly option available to these units is to switch over to a gas based technology. But this is not going be easy as sectoral allocation for natural gas is normally decided on priority basis and that covers sectors like fertiliser or transport and not steel. Given these constraints the industry has to go in for increased use of non coking coal based technology including alternatives like Pulverised Coal Injection(PCI)/Coal tar etc and that may to some extent help in reducing the over dependence on coking coal imports. The sponge iron industry contributes substantially to domestic steel production and ministry will encourage new capacities which conform to the pollution control norms.

On coal availability for the sector t he suggestion received on reserving weakly grade of coking coal exclusively for the requirement of the steel industry will be pursued with the Ministry of Coal. In this context the issue raised by M/o Coal on the need for full and optimal utilisation of the already allocated coal blocs by the existing lease holders will also have to monitored .

Finally besides the issue of acquisition and conservation of critical raw materials like iron ore, coal etc for the industry, there is also the need to examine possibilities of development and promotion of alternative inputs sources for future use. The obvious and eco friendly input substitute for steel making is metal scrap and therefore emphasis on improving the scrap quality and usage will be an integral part of the strategic plan .

(3) Infrastructure Development

Steel manufacturing involves bulk movement of raw materials and finished products over long distances and across the country. The existing infrastructural constraints (poor road / railway, ports, power facilities etc.) reduce considerably the industry’s competitiveness on account of higher transportation cost, higher power tariffs, delays at ports etc.

For supportive infrastructure development, the strategy plan would need to focus on new railway lines and upgradation including doubling of existing lines, construction of new link roads and upgradation of national highways, upgradation of ports including provision of additional berths etc. Some of the crucial infrastructure projects whose completion is critical for

20 the sector and will need to be pursued as part of the strategic plan cover the following :

Railway Projects:

i) New Line – Dallirajahara-Riwghat-Jagdalpur in Chhaattisgarh. ii) Haridaspur-Paradeep rail link connecting main railway line with Paradeep port and important steel projects in Orissa.

iii) Paradeep - Dharmra port link in Orissa. iv) Surat - Haziraport rail line linking Essar Steel Plant in Gujrat. v) Banspani- Talcher rail link in Orissa. vi) Puttur – Attputp link connecting Ennore port (Andhra Pradesh & Karnataka).

vii) Direct line from Ranchi to Ramgarh for ease in coal transportation (Jharkhand).

viii) Doubling of Banspati – Jakhpura railway line in Orissa.

ix) Third line between Jakhpur – Haridaspur in Orissa. x) Doubling of Kottavalsa – Kirandul line connecting Kirandul mines to Visakhapatnam Port.

xi) Third Line between Manohapur – Asamboni (Jharkhand) with connectivity to Chiria mines.

xii) Doubling of Chandi – Muri – Patratu line in Jharkhand. xiii) Doubling of Barsuan – Kiribura – Bimlagarh – Bondamunda linking mines of SAIL to the steel plants.

xiv) Doubling of Talcher – Angul – Sambalpur railway line.

Road and Highway Projects

(i) Conversion of NH-42 between Cuttack and Sambalpur, from 2 – lane to 4 - lanes.

(ii) Conversion of NH-200 between Anaul – Jaipur Road (Orissa) from 2 – Lane to 4-Lane.

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(iii) Conversion of NH-5 from Kolkata – Visakhapatnam from 4-6 lane.

(iv) Additional 2-lane on NH-6 from Kolkata to Bhilai.

(v) Urgent repair and conversion to 4-lane on NH-215 from Joda-Jaipur Road.

(vi)Conversion of NH-16 from Jagdalpur to Dantewada, and NH-43 from Jagdalpur-Raipur from 2-lane to 4-lane (Chattisgarh)

(vii) Conversion of NH-6 from Kharagpur to Bankura (West Bengal).

Port Development

i) Development of Dhamra port in Orissa

ii) Development of Captive berths (4 nos) at Paradeep port for coal and finished steel for exclusive use of the steel sector.

iii) Two additional berths at Haldia port for handling of steel sector.

iv) Development of steel captive berth at Visakhapatnam port.

On account of the large scale investment levels as well as the long gestation period involved development of infrastruture is normally the the responsibility of the government. But there also exists the option for completing such projects as required through joint participation with the private sector. Since, Infrastructure Development is an issue requiring consensus of a number of departments and state governments concerned for acquisition of land etc. the possibility of having an Integrated Infrastructure Development Policy for the mining and steel industry in the country will be explored as part of the strategic plan.

(4) Promotion of Research & Development

Steel making is today a highly specialised industry involving heavy investments in terms of capital and technology. Such operations call for continuous upgradation of technology and introduction of innovative production strategies to stay ahead of one’s rivals . However despite

22 opening up of the sector, the Indian steel makers have largely remained dependent on either old & outdated machinery/technology or else prefer to go in for costly imported technology. This aversion and low priority for investment in R&D efforts to develop locally adaptable technology has affected their competitiveness and may even have serious implications for survival in a fiercely competitive environment .

During the stakeholders discussions many other departments like Commerce, Mines and Planning Commission had also emphasised on aggressive policy initiatives to ensure increased usage of iron ore fines through beneficiation/agglomeration. Simultaneously, the ministry is also interested in exploring the option of developing technology to use these fines directly. This is still a new concept but it is going to be examined under the ministry’s on-going plan scheme for Promotion of Research and Development for steel industry. As of today, a total of eight projects worth Rs. 143.87 crores have already been approved for implementation under the scheme and in the coming years many more innovative research projects are to be identified for implementation.

The Strategic Plan intends to give a big push to the R&D initiatives for the industry. Amongst the areas requiring specific attention would include the following:

(a) Initiatives for accelerated adoption/assimilation of new technology specially technologies consistent with our domestic resource endowment like :

 Beneficiation of low-grade iron ore from 45+% to 65% Fe for hematite ores and from 35+% to 64% for magnetic ores.

 Development of relevant pelletisation technology for Indian iron ore fines/concentrates.

 Appropriate beneficiation and agglomeration technologies for utilisation of low grade iron ores and fines.

 Beneficiation of high ash coking coal to produce below 10% ash coking coal.

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(b) Developing domestic capabilities in equipment designing, innovative / path breaking technologies utilising iron ore fines and non coking coal like:

 Utilization of steel making slag in construction activities as well as for soil conditioning.

 Improving the productivity of by product and non-recovery coke ovens and making them more environments friendly.

 Development of technology for improving coal injection rate in blast furnaces, and also for injection of natural gas, coal bed methane in blast furnace.

 Improving productivity of LD convertors and also improving lining life to 15000-20000 heats.

 Reduction of power consumption in electric Arc Furnace to 300 KWH/tonne of crude steel.

 Alternative routes of iron making using low-grade iron ore and non- coking coal.  Utilization of slimes and over-burden of iron ore and other minerals.  Development of ultra high strength steel for automotive sector, construction etc. c) Improved quality of products through induction furnace route, beneficiation of raw materials etc like:

 Beneficiation of raw materials required for manufacturing refractories – magnesite, bauxite and graphite.

 Continuous casting of thick plates (+60mm).

 Improving efficiency and environment friendliness of sponge iron making by rotary kiln.

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(5) Promotion of Product development, Designing and Diversification

In a globally competitive business environment a critical criteria for commercial viability as well as survival is going to be how innovative is one’s product vis a vis that of one’s competitors. The Indian industry has by and large remained risk averse and played safe by going in for only proven technologies or ideas. As compared to their competitors in other countries the domestic steel manufactures continue to lag in identification and launching of new products or acquisition of patent rights etc. The strategic plan will therefore support more investments in market oriented research surveys for tracking potential new consumers, their preferences, product designing/processing etc. as part of overall business strategy. One specific area for diversification already identified is to go in for local manufacture of special grade steel categories (at present completely met through imports) for which specific production capacity will have to be created in the country.

(6) Promotion of Steel usage

While the world per capita consumption of steel is 190 kg. (for developed countries it is 400 kg) that of India is only 50 kg. Besides lower per capita consumption levels there are also wide variations in consumption levels between urban and rural areas in the country. The estimated urban consumption per capita per annum is around 77 kg., which is expected to be higher than 165 kg in 2019-20. The rural consumption of steel in India is at around 10 kg per capita per annum which may be expected to grow faster given the potential for future growth in rural consumption.

For promotion of steel usage, a National Steel Promotion campaign was launched in 2007. This was followed by constitution of a Steel Promotion Coordination Committee (SPCC) in 2008 to formulate initiatives for improving the consumption levels across the country on a sustained basis. Parallelly, the Ministry had also initiated a study for assessment of consumer demand specially in our rural areas and some of the potential areas/products for growth identified were storage bins, bullock carts,

25 school buildings, panchayat halls, health centres, water tanks, bus stops/waiting sheds etc. As part of the promotional campaign strengthening of the steel retail distribution network in rural areas was also recommended. The findings of the study are presently under examination.

A generally accepted theory on pattern of growth in steel consumption is that at low level of economic development of a nation, its per capita consumption remains low but as economic growth starts taking place, growth in total consumption of steel as well as per capita consumption accelerates, once again when the economy matures its per capita consumption plateaus off after reaching a very high level.

Given India’s pace of economic growth in recent years, and increased focus on inclusive growth in planning process raising of steel usage should not be difficult.

The National Steel Policy has identified a number of steps that need to be taken to augment demand for steel in the country. Apart from the anticipated growth in the construction, automobile, oil and gas transportation, and infrastructure sectors of the economy, conscious promotion of steel usage among architects, engineers and students by the Institute of Steel Development and Growth (INSDAG) and the large producers will drive this additional consumption. Steps would be taken to encourage usage of steel in bridges, crash barriers, flyovers and building construction.

However in the case of an ordinary consumer (specially in the rural areas) there will have to be conscious efforts made to popularise steel usage including through school / technical curriculum.

(7) Improving performance of Steel PSUs

The ten PSUs under the Ministry’s administrative control include one Maharatna(SAIL) and two Navaratna (RINL and NMDC) companies. The companies are engaged in either steel making (SAIL and RINL) or mining of various ores required for the industry (NMDC, MOIL, KIOCL and Bird Group) or other related activities like steel construction and maintenance(HSCL), metal scrap recovery for reusage (FSNL), engineering and consultancy (MECON) & trading (MSTC).

26 In order to improve the operational efficiency of these undertakings the Ministry will emphasise on regular monitoring of techno- economic parameters vis a vis global bench marks, implementation of mandatory quality control orders, increased investment in training and skill development, rationalisation of existing workforce with focus on recruitment of specialised and technical personnel and strengthening consumer grievance redressal mechanism including Sevottam compliance.

As regards, specific policy measures for improving the performance of smaller PSUs under the Ministry , there will be focus on initiative for various possible mergers, joint ventures and diversification projects and the restructuring of the Hindustan Steel Construction Works Ltd. (HSCL), on which a draft cabinet proposal has already been moved.

(8) Environment Protection and Sustainability

Sustainability was not an issue when the existing corporate or business practices were designed but today it has become a global imperative because of - the alarming levels of carbon emissions (over and above what has already been built up) with its disastrous impact on world climatic conditions. Sustainability in steel making is crucial because unlike most other industries it is basically a ‘energy and fossil fuel’ intensive industry. Therefore the potential for introducing sustainable practices at every stage of operations (ore extraction, coking, sintering etc.), raw material/product innovation through reusage/recycling, waste management etc will be a focal point of the Strategic Plan and specially with respect to the smaller and secondary level producers like Sponge Iron making units, Induction furnace units etc.

(9) Implementation of Quality control standards by the industry

The Department of Consumer Affairs in consultation with Steel ministry has identified for quality certification, 17 steel products having direct bearing on consumer health/safety and critical for infrastructure development. Of these at present, seven steel products have been covered under the Quality Control Orders issued based on ISI specifications (deliberation are going on to enforce the remaining 10 steel items also) including steel wires/strands for pre-stressed concrete;

27 specification for epoxy coated bars; and specification for galvanized steel sheets.

The strategy plan will focus on enforcement of the above Order by the industry or otherwise as specified by the Order the sub-standard or defective steel products have to be disposed off as scrap. It is also proposed take up coverage of more items for quality certification like hot rolled structural steel; deformed steel bar/wires for concrete reinforcement; carbon steel billets/Ingots/slabs for re-rolling; steel plates for pressure vessels; electrical steel sheets; and electrolytic tin plate etc.

(10) New Policy Initiatives for the Steel Industry

As part of the stake holder discussions four new policy proposals have come up for consideration for the benefit of the steel industry. This includes (i) Introduction of a Mega Steel Plant Policy providing a comprehensive framework of approvals required for setting up steel plants like identification of sites, requisite statutory clearances, acquisition of land etc. (ii) Setting up of a separate Sovereign Fund for acquisition of foreign assets (iii) Constitution of a separate Steel Finance Corporation and (iv) Introduction of a ‘single window clearance system’ for greenfield project approvals. As part of this strategic plan it is proposed to constitute an internal Task force to examine these proposals and based on whose recommendations further follow up action will be taken.

(11) Implementation of Sevottam compliance

A key focal area of the strategic plan will be to ensure introduction of administrative checks improving efficiency through speedy disposal of consumer grievances, introduction of Citizen/Client Charter and improved service delivery by steel manufacturers. A policy in this regard has already been finalised by the ministry.

(12) Strengthening of database and monitoring

In today’s competitive business environment all decision making are influenced by not only domestic but also global market trends and in the case of steel making this applies to both raw materials as well as finished products. For taking timely and right business decision there is

28 an urgent need for a coordinated and consolidated data base system for the industry.

Following the de-regulation of the industry, the Joint Plant Committee (JPC) - the organisation in charge of data compilation and monitoring has lost the necessary administrative powers to ensure regular and timely feed back from the Industry on crucial data indicators like production, consumption, pricing, investments, external trade etc. So as part of the Strategic Plan, the formal appointment of JPC as the official ‘statistical authority/agency ’for the Steel sector will be pursued with the Ministry of Statistics and Programme Implementation under their recently amended Collection of Statistics Act, 2008.

(13) Corporate Social Responsibility (CSR) for Inclusive growth

CSR has been identified as an important parameter in the MOU’s signed with all the PSUs. The activities under its framework is also being closely monitored separately. All profitable PSUs have earmarked at least 2% of their distributable profits for such activities and to date around 167 villages are being developed into model villages under the CSR by SAIL, RINL, NMDC and MOIL. As part of the strategy the department intends to ensure that the fund utilisation is made more inclusive aimed at local area development including innovative initiatives like encouraging talented wards of employees in not only academics but also extra-curricular activities including sports.

4. Implementation Plan

Following deregulation of the industry the Ministry’s regulatory functions were dropped and it was recast as a facilitator for the industry.

As a result, implementation of most of the initiatives (as already outlined under prioritisation) will have to be through mutual consultation and consensus building with all the stake holders involved with the sector. But wherever there is direct involvement like promotion of research and development in iron and steel industry or performance of PSUs under its administrative control the Ministry will ensure results through periodic assessment as well as mid course correction including suggestions for changes / amendments.

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5. Linkage between Strategic Plan and RFD

The RFD covers not only the agreed objectives, policies, programmes and projects of the departments but also includes the success indicators and targets to measure the progress in implementing them. The proposed strategic plan for the domestic steel Industry and its implementation is consistent with the Vision, Mission, Functions and Objectives as outlined in the RFD document but applicable for a longer period i.e. for next five years. There are differences as it has also covered some important issues not included in the RFD like the need for adoption of environmental friendly/sustainable production methods and of building up a world class data base and monitoring system specially by the PSUs and a number of specific policy suggestions received during Stakeholders discussions held. Overall there is actually a convergence between the two in the sense that while the Strategic plan broadly identifies on all the priority areas for the sector’s growth in the next five years - the RFD will focus on the specific deliverables on these priorities depending on the actual action taken by the steel Ministry and other departments concerned on a yearly basis. Eventually the final goal in either case remains the same i.e. of creating a steel industry of global standards and efficiency.

6. Cross Departmental and Cross Functional Issues

Steel making as a manufacturing process covers various stages starting from accessing of raw materials to processing, finishing, upgrading, transporting, retailing and finally external trade. This implies close coordination and consultation with a number of other sectors, administrative ministries, state governments, retailers, importers/exporters etc. Many of these cross departmental issues involved require detailed consultations and often consensus building to arrive at a solution as the following:

i) Provision of crucial raw material linkages like iron ore (Ministry of Mines, State governments with such natural reserves). (ii) Provision of crucial fuel/energy linkages (Ministry of Coal, Ministry of Petroleum and Natural Gas, Ministry of Power).

30 (iii) Crucial Transportation linkages from pit head to plants and to ports (Ministry of Railways, Ministry of Road Transport, Ports and Shipping). (iv) Quality control of steel and steel based products (Ministry of Consumer Affairs). (v) Statutory issues linked to environment/forest clearance, land acquisition and rehabilitation (Ministry of Environment & Forest, Rural Development, state governments concerned) (vi) Export of crucial raw materials like iron ore (Ministry of Commerce & Industry) (vii) Fiscal policy / tax proposals relating to the sector (Ministry of Finance)

7. Monitoring and Reviewing Mechanism

Despite the reduced direct involvement, the Ministry still plays an active role in policy formulation for the sector. It continues to be responsible for the planning and development of the sector, facilitating allocation of essential raw materials and other facilities for growth and other related functions including performance of PSUs under its administrative control. It provides the forum for interaction amongst various stakeholders for resolving various issues whether it is pricing, external trade in raw materials in steel & steel based products, or formulation of sectoral tax proposals for inclusion in the Union budget. It also constantly interacts with premier Industry Associations like CII, FICCI, ASSOCHAM etc., various Producer Associations, Consumer forums, state governments, Ministries etc. via discussions, seminars, workshops, meetings, etc. on the industry’s specific issues/concerns. The annual budget exercise including the Outcome budget is another important source for the sector’s performance review.

Appraisal of the performance of PSUs is another important responsibility conducted on a regular basis. Based on the monthly and quarterly reviews covering their physical, financial and techno-economic performance, as well as other activities like CSR initiatives necessary directives are conceptualised for improvement in the outcomes.

There is also an Inter Ministerial Group (IMG) constituted under Secy(Steel) (which has as members the Secy (IPP), the Secy

31 (Environment), the Secy (Roads and Highways), the Member (Traffic), Railway Board, and Chief Secretaries of the concerned state governments) to conduct regular review and coordination meetings on new investment proposals. To ensure that the committee’s recommendations do help in speeding up the proposals, the IMG may need to have more administrative powers and this is likely to be pursued as part of the strategic Plan.

IXXXXXXXI

32 Annexure-I

Category-wise Production of Finished Steel, 2001-02 to 2009-10 (Million tonnes) Categories 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 (P) Bars & Rods 12.966 13.14 11.146 15.347 16.636 18.811 20.188 20.427 22.317 Structurals 2.939 3.693 3.066 4.008 4.484 4.884 5.043 5.366 5.202 Railway Materials 0.702 0.884 0.929 1.007 1.013 1.038 1.086 1.182 1.041 Total (Non-Flat) 16.607 17.717 15.141 20.362 22.133 24.733 26.317 26.975 28.56 Plates 1.865 1.7051 2.182 2.575 2.974 3.342 4.057 4.004 3.977 HR Coils / Sheeets / Skelp 7.864 9.254 10.136 10.325 10.124 11.884 12.431 11.782 12.048 CR Coils / Sheets 4.648 5.041 5.507 3.485 3.989 4.322 4.439 4.615 5.736 Gav. Coils / Sheets 2.356 2.79 3.13 3.672 3.782 4.391 4.381 4.554 4.47 Electrical Steel 0.84 0.158 0.139 0.121 0.148 0.143 0.159 0.146 0.166 Tin Plates 0.136 0.148 0.165 0.174 0.182 0.172 0.183 0.201 0.21 TMBP 0.025 0.033 - 0.014 - 0.009 0.006 0.004 - Tin Free Steel - - - 0.002 - 0.002 - 0.006 - Pipes 0.541 0.487 0.557 0.588 1.058 1.198 1.335 1.865 1.636 Total (Flat) 18.275 19.6161 21.816 20.956 22.257 25.463 26.991 27.177 28.243 Total (Finished Steel)Non-Alloy 34.171 37.46 38.584 41.318 44.39 50.196 53.308 54.152 56.803 Alloy steel 1.08 1.756 2.125 2.195 2.176 2.333 2.767 3.012 2.889 Total Finished Steel 35.251 39.216 40.709 43.513 46.566 52.529 56.075 57.164 59.692 Growth over previous year (%) 9.9 9.8 8.4 11.20 13.08 6.20 1.58 4.90 CAGR (2002-03 to 2009-10) 8% Source: Joint plant Committee

33 Annexure-II

Categorywise Consumption of Finished Steel 2001-02 to 2009-10

(Million tonnes) Categories 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Bars & Rods 9.68 10.34 10.71 15.259 16.689 18.782 20.381 20.552 22.621 Structurals 2.33 2.42 3.02 4.011 4.482 4.905 4.99 5.333 5.241 Railway Materials 0.71 0.88 0.93 1.007 0.998 1.045 1.083 1.191 1.03 Total (Non-Flat) 12.72 13.64 14.66 20.277 22.169 24.732 26.454 27.076 28.892

Plates 1.93 1.96 2.29 2.84 3.568 4.346 5.396 4.661 4.752 HR Coils / Sheeets / Skelp 6.95 7.89 8.55 9.768 10.162 11.993 14.033 13.093 14.243 CR Coils / Sheets 3.1 3.21 3.02 3.153 3.991 4.53 4.73 4.999 6.157 Gav. Coils / Sheets 1.75 1.27 1.69 1.926 2.051 2.4 2.617 3.018 3.358 Electrical Steel 0.18 0.19 0.18 0.221 0.336 0.393 0.379 0.358 0.442 Tin Plates / Tin Free Steel 0.28 0.24 0.22 0.218 0.262 0.32 0.338 0.288 0.364 Pipes 0.52 0.5 0.55 0.468 0.998 1.063 1.218 1.383 1.178 Total (Flat) 14.71 15.26 16.5 18.594 21.368 25.045 28.711 27.8 30.494 Total (non-Alloy) 27.43 28.9 31.16 38.871 43.537 49.777 55.165 54.876 59.386 Total Alloy+Non-alloy 32.149 34.586 37.225 40.916 45.83 52.263 57.932 58.283 63.135 Double Counting 3.626 3.909 4.106 4.539 4.40 5.48 5.807 5.932 6.66 GRAND TOTAL 28.523 30.677 33.119 36.377 41.43 46.783 52.125 52.351 56.475 Growth over previous year (%) 7.55 7.96 9.84 13.89 12.92 11.42 0.43 7.88 CAGR (2002-03 to 2009-10) 8.91% Sources: Joint Plant Committee

34 Annexure-III

Overall Crude Steel Production, Capacity, Capacity Utilisation, 2001-02 to 2009-10

(Million tonnes) Year Capacity Production % Utilization

2001-02 34.172 27.964 82%

2002-03 35.09 30.443 87%

2003-04 39.383 34.248 87%

2004-05 47.995 43.437 91%

2005-06 51.171 46.460 91%

2006-07 56.843 50.817 89%

2007-08 59.845 53.857 90%

2008-09 66.343 58.437 88%

2009-10(P) 72.963 64.875 89%

Sources: Joint Plant Committee

35 Annexure-IV Capacity additions in steel sector projected for 2011-12 (Million tonnes) S.N. Investor Existing Brownfield Greenfield Total capacity Capacity expansion expansion (Col. 2+3+4) 1 2 3 4 5 6 a: Public sector 1 SAIL 12.84 12.00 24.84

2 RINL 2.90 3.40 6.30

Sub-Total (a) 15.74 15.40 31.14 b: Private Sector

3 Tata Steel Ltd. 6.80 3.20 3.00 13.00

4 Essar Steel 4.60 3.90 6.00 14.50

5 JSW Steel 6.90 4.10 11.00

6 JSPL 2.40 4.80 3.25 10.45

7 Ispat Industries * 3.00 2.00 5.00

8 Bhusan Power & Steel 1.20 2.80 4.00

9 Bushan Steel 0.80 5.20 6.00

Sub-Total (b) 25.70 18.00 20.25 63.95 c: Other & Secondary Producers 23.00 5.97 28.97 Grand Total (a+b+c) 64.44 33.40 26.22 124.06 * recently acquired by JSW Steel Source: Policy Division, Ministry of Steel

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