New Delhi: India is set to become the second largest steel producer in the world by 2013 with installed capacity increasing to 120 million tonnes, industry body ASSOCHAM said today.
Currently it produces 80 milliion tonnes per year and ranks fourth after China, the United States and Japan. Huge infrastructure needs of the country call for rapid expansion of steel production capacities, said The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
In the past one decade, the consumption rose at a compound annual growth rate of 9.4 per cent against the GDP growth of 7.7 per cent. But high levels of growth in construction, housing, automobiles and agriculture point towards steel demand exceeding by 12 per cent in the near future.
“At this rate, India will have installed capacity to produce 150 million tonnes by 2020,” said secretary general D.S. Rawat. The government has decided to fast-track the new Mine and Mineral Development and Regulation Act.
India’s iron ore reserves are estimated at 25 billion tonnes but the proven economically mineable reserves are only seven billion tonnes of which the high reserve grades are 1.3 billion tonnes.
Various studies show that steel intensity goes up exponentially until the per capita GDP reaches 10,000 dollars. China – with increase in per capita GDP from 2,600 dollars to 7,500 dollars in the past one decade – has been driving the demand and accounts for nearly half of global steel production.
“India’s per capita GDP of 3,300 dollars is expected to grow on similar pattern with steel consumption set to top 200 million tonnes by 2020,” said Mr Rawat.
As the cost of imported dry fuel continues to rise, Indian steel companies are seeking to secure supplies of iron ore and coking coal by imports. Access to new reserves within the country has often involved litigation and delays in environmental and other regulatory clearances in the recent past.
A consortium of seven Indian companies has lately bid to develop the Hajigak iron-ore mines in Afghanistan which have an estimated reserve of 1.8 billion tonnes. The final bidder will be shortlisted by October 4.
JSW Ispat Ltd, Monnet Ispat and Energy Ltd, Rashtriya Ispat Nigam Ltd and Jindal Steel & Power Ltd are other members of the Indian consortium in which SAIL holds a 20 per cent stake. The Indian consortium has also proposed setting up a steel plant in Afghanistan.