India's sponge iron production set to rise with upcoming capacities

Demand for steel in India is projected to grow manifold in the coming decade as per National Steel Policy, 2017, and forward and backward integration are happening at a time when the market is upbeat.

Steel360 accessed details related to upcoming new capacity expansion or existing unit expansions in states such as Chhattisgarh, West Bengal, Maharashtra, Tamil Nadu and Odisha. Other states such as Andhra Pradesh, Goa, Bihar and Punjab are also on the list.

Steel360 notes that expansion through new technology is envisaged under consent to establish (CTE) projects.

It deserves mention that CTE projects have been tracked, “with existing unit capacity expansion through process optimization, modification and increase in operational days from 300, 330 to 345 days without installation of any new machinery and get the consent to establish.”

Existing unit capacity expansion through establishment of new machinery and equipment also falls under CTE, which is followed by consent to operate (CTO). This lengthy process is an outcome of the government’s environment clearance mechanism.

1.05 mn t expansion in sponge iron capacity

Steel360 data shows that new induction furnace (IF) capacity addition is expected to happen to the tune of a little over 1.249 mn t/year, while sponge iron capacity is set to rise to around 1.05 mn t/year from the states that have been analyzed for CTE. Steel360 tracked the permissions granted in Mar’21 with the span for implementation extending, on average, from 2025-2028.

While a Chhattisgarh-based leading pellet and long steel producer is investing on a 2.28 mn t/year iron ore processing unit, longs rolling capacity is expected to increase by close to 1 mn t from the states under purview.

In addition, investments are anticipated to trickle into waste heat recovery boilers (WHRB) for power plants and CC billet casting facilities. Total coal washing capacity enhancement is pegged at over 3.4 mn t/year. Also, ferroalloys production (silico and ferro manganese) is set to inch up by 60,000 t annually.

Steel360 expects more capacity to come online in the months to come, especially with many new projects awaiting clearances.