SPONGE IRON INDUSTRY IN INDIA SCOPE FOR CLEAN TECHNOLOGY

1. SPONGE IRON INDUSTRY IN INDIA SCOPE FOR CLEAN TECHNOLOGY

2. Eco Efficiency WORLD STEEL: PRODUCTION AND DEVELOPMENTS CC thin slabs Secondary Metallurgy CC slabs Economic Developments BOF Customer Engineering CC Billets Cost Management Quality Hot Strip Mill Business Developments EAF Mass Production Year • Eco Efficiency is the primary focus since 1995. • Steel industry’s future would critically depend on this factor.

3. GLOBAL TREND IN DRI PRODUCTION • Growth of direct reduction technologies all round the world has been extremely significant. • World DR production has jumped from0.8 Mt in 1970 to around 67.2 Mt in 2007. The steel industry has not always done well in this period, but DR has progressed – DRI is a vital material now

4. DRI PRODUCTION IN INDIA Overall CAGR 4-5% • Growth of DR industry till mid 1980’s was slow because of restrictive licencing. • After 1985, this industry has “exploded” – from 0.2 Mt in 89-90 to 20.1 Mt in 07-08. India is now the largest producer of DRI in the world.

5. GLOBAL DRI PRODUCING COUNTRIES (2005-07) India’s position as the largest producer of DRI in the world has been consolidated over the last 3 years.

6. PROCESS-WISE BREAK UP OF GLOBAL DRI PRODUCTION Total DRI production 2006 59.8 Mt 2007 67.2 Mt DRI’s contribution is very small to total world steel (>1300 Mt) Globally, Gas-based DR processes dominate – Coal 20-23%

7. GROWTH OF COAL-BASED VIS-À-VIS GAS-BASED DRI PRODUCTION (INDIA / ROW)

8. BREAK-UP OF INDIA’S DRI PRODUCTION Year • Initially, gas based processes were adopted. • Coal based DRI then became gradually become more popular. Today, DR production through Coal-based processes is almost 70% – reverse of rest of the world.

9. DETAILS OF DRI PRODUCTION IN INDIA • Three large gas-based units (Essar Steel, Ispat Industries and Vikram • Ispat) have capacities of 3.60, 1.60, and 0.9 Mtpa. • Over 700 coal-based plants with capacities ranging from 30-400 ktpa • are in operation in Orissa, Chattisgarh, Jharkhand and West Bengal. As India consolidates its position as the world leader in DRI, coal-based plants will predominate. EAFs and even ISPs will use DRI.

10. HOW STEEL IS MADE IN INDIA (Mt) Despite problems with quantity/quality of electricity, contribution of EAFs/IFs in total production has increased over the years and reached almost 50% in recent times. DRI usage will certainly keep increasing.

11. UNIQUE FEATURE OF INDIAN DR INDUSTRY • In India, unlike in many other countries, both coal and natural gas have been used. • First coal and then natural gas had been predominant -- today coal’s share is 70%, while in ROW gas is 75-80%. • Installation of a large number of small coal-based rotary kilns plants uneconomical in ROW – is another distinctive feature . • These units often have induction furnaces capable of directly using DRI fines below 3mm. • India is the only country in the world using IFs on such a large scale to produce steel in the secondary sector. Reason? • Many mini-mills have shutdown their EAFs and installed IFs of 1 to 20 t capacity. • Melting has been optimised to even produce low phosphorus and low sulphur steel of high quality. • Upto 30% DRI has been continuously charged in IFs without changing the normal operating procedure; in some furnaces, upto 85% DRI has been used. Kudos to an Indian innovation.

12. ESTIMATE OF FUEL RESERVES IN INDIA AND FORESEEN LIFE Both from longevity as well as price viewpoints, coal has advantages. Availability of coal remains a question mark.

13. PRESENT AND FUTURE INDIAN COAL SITUATION Import of coal in large tonnages is necessary in long run.

14. RECENT TREND IN IMPORT OF NON COKING COAL INTO INDIA

15. FUTURE OF DR INDUSTRY IN INDIA • Gas price and gas availability would be critical for gas-based plants. Gas price very likely to increase. Economics ?? • Availability of appropriate coal would decide the future of coal- based plants. Washing of non-coking coal will be necessary to cater to total DRI demand. • Import of non-coking coal from Australia, SA, etc will supplement demand. • Ecology in India’s coal-based plants has NOT always received attention. Requires nation-wide focus to ensure sustainability. • Rotary kilns using coal and shaft furnaces using natural gas will be supplemented by fluidised bed, multi-hearth and rotary hearth furnaces to treat fine materials even in integrated plants. • Gas generated from coal and gas from other sources (CBM, etc.) likely to play important role.

16. COAL VS GAS-BASED DR TECHNOLOGIES • Gas-based DR involves gas-solid reactions – faster at lower temp. • Cracking of natural gas produces both CO and hydrogen – hydrogen, is a better reductant, DRI then has higher metallisation. • The nascent carbon available from the cracking combines with iron to form Fe3C and carbon contents between 1.0-2.5% can be obtained. • Coal-based DRI – irrespective of the operating conditions – has carbon content between 0.10 to 0.12%. • Higher carbon in DRI gives advantages in steelmaking – lower melting point, higher opening carbon in the bath, etc. • Gas-based DRI is produced at 950-980oC -- porosity is greater, tendency towards re-oxidation and even self-ignition in extreme cases. • Coal-based DRI is produced at 1050-1080oC -- an outer “slaggy” layer protects the DRI from re-oxidation. • Coal-based DR plants are smaller in size (maximum 500 tpd) -- lower total capital investment but specific investment/tpa is higher. Gas-based technology is intrinsically cleaner; coal- based DR plants have to contend with fine coal as dust as well as extensive waste generation.

17. POLLUTION HAZARDS IN DRI PRODUCTION Sponge Iron plants release hazardous pollutants like cadmium, nickel, hexavalent chromium (most dangerous through air and water), arsenic, manganese, and copper. The heavy metals in these particulate matters are most dangerous and cause quick damage to fruit bearing trees, agricultural harvest and the human body, especially the lungs. To control pollution in sponge iron industries, Central Pollution Control Board has put down the norms to be followed. Unfortunately these norms exist only on paper. Very little actual pollution control is visible.

18. KYOTO PROTOCOL: GLOBAL STEEL INDUSTRY • Kyoto Protocol will soon become effective. • Global climate policy will further constrain and complicate decision-making in steel business. • The world average of 1.7 tonnes of CO2 per tonne of crude steel reflects a mix of integrated and electric arc furnace production. • EAF not much superior when electricity generation is included, but pollution abatement will cost more in ISPs. • CO2 abatement = reduction in energy consumption. Average 19 GJ energy required per tcs. India higher by 25-35%. Only major evolution in technology can lower energy. • Room for energy reduction in developed countries EU, USA, Japan, etc. minimal. Must be done in emerging regions.

19. IMPORTANT INSIGHTS TO CONSIDER • Industry accounts for 36% of global CO2 emissions. CO2 • emission mainly from primary materials production. • Energy intensive industries have made strides to improve • efficiency, but overall industrial energy usage continues • to grow strongly, particularly in the emerging economies. • Large energy efficiency potential remains and moving to • best practice would save 1.9 to 3.2 Gt CO2 each year • (7-12% of total global emissions). Key areas for efficiency gains include chemicals, iron and steel, cement, motor systems, combined heat and power. STEEL IS A CRITICAL INDUSTRY FOR IMPROVEMENT

20. LEGISLATIVE ACT ON MINIMUM CO2REDUCTION Act is under formulation to include the following: • Contain CO2 emissions in 2050 to same level as • 2005. • Provide incentive of USD 50/t CO2 worldwide. • This would be consistent with +3 degrees C. • This implies a significantly adjusted energy • system. • Not the best solution; but tolerable. Conformation to this ACT NOT a matter of choice. IT IS THE ONLY MEANS OF SURVIVAL.

21. ‘BLUE CASE’: STRICTER NORMS • CO2 emissions in 2050 to be half of the level of 2005. • This could be consistent with 450 ppm (depending on • post-2050 emissions trends). • Incentive of USD 200/t CO2 needed worldwide. • ‘Blue’ is only possible if the whole world participates • fully. • This implies a completely different energy system. This option is ideal, but extremely difficult. It has to be followed worldwide without exception. Indian DR (coal-based) industry will be scrutinised.

22. EMISSION REDUCTION REQUIRED IN DIFFERENT SECTORS IN 2050 COMPARED TO 2005 Power generation will require maximum attention; closely followed by fuel transformation.

23. CO2 IN WORLD STEEL INDUSTRY: PRESENT AND FUTURE

24. ENERGY IN WORLD STEEL INDUSTRY Coal is and will be the major energy source

25. CO2 EMISSIONS AS A FUNCTION OF SOURCE OF ENERGY Natural gas is a much cleaner energy source than any type of coal. However, both coal and NG used in DR.

26. MAIN DRIVERS WORLDWIDE Total CO2,Energy Intensity and CO2 Intensitywill be the main factors requiring attention.

27. CO2 EMISSION IN STEEL PROCESSING (t per tcs) Recycling 0.68 t Reduction, 0.86 t Primary process, 1.54 t Steel – excellent material in terms of sustainability – can be infinitely recycled without loss of quality. Steel from ore produces 1.54 t CO2 per tonne of crude steel globally; 2.4-2.6 t CO2 in India. EAF steelmaking using recycled scrap generates only 0.68 t CO2.

28. CO2 EMISSIONS (t/t product) FOR STEEL, ALUMINIUM AND COPPER in 2007 Steel is the least CO2 generating metal.

29. CO2 EMISSION IN SELECTED COUNTRIES In terms of CO2 emission per inhabitant: China is 79, and India 116. Only because of population.

30. Total CO2 Emission: India vs. Others Total CO2 emitted in India is very high. Future steel production could be limited by this factor – CO2 emission t / t of steel, 2.9-3.1 in India; 1.4-1.6 in World. EC considering CO2 penalty for steel industry (150-200 USD/t CO2 ).

31. GLOBAL CO2 EMISSIONS : THE CHALLENGE FROM CHINA AND INDIA CHINA

32. ENERGY REQUIREMENTS AND CO2 EMISSIONS FOR VARIOUS STEELMAKING ROUTES

33. EXTENT OF POLLUTION IN INDIAN DR INDUSTRY DR industry grew in haphazard manner. DR plants are relatively easy to set up. Liberalised financial support coupled with low-cost technology encouraged many entrepreneurs not familiar with the iron and steel business to enter this field. Initial investment of Rs 7-12 crores on a 100 tpd sponge iron plant, can be recovered within just 12-18 months. • For every 100 tpd of sponge iron produced, the consumptions are: • 160-175 tonnes of iron ore, • 120-150 tonnes of coal, • 3.5-5 tonnes of dolomite and • 2.0-2.2 tonnes of water. Generations from the kiln are: • 1.8-2.0 tonnes of carbon dioxide. • 10-15 tonnes of dust from pollution control equipment • 2.5-3.5 tonnes of kiln accretion (expressed on per day basis) • 25-30 tonnes of char as solid wastes. The total solid disposal load per 100 tpd DRI production can be as high as 40-50 tpd.

34. TOTAL POLLUTION IN INDIAN SECONDARY SECTOR • Mini coal based sponge iron units (more than 700 kilns) each producing less than 100 tpd, operating without much (sometimes any) pollution control equipment (proper GCP, effluent water treatment, etc). • 940 Induction Furnaces with a total installed capacity of 9.86 mtpa have very few pollution abatement measures. • 1192 Re-Rolling units with a total installed capacity of around 24 Mtpa are not all environment conscious. • Future Indian steel expansionafter Kyoto protocol (WTO) may be constrained unless it is GREEN. Pollution control measures will add 20-30 % to Capex. This is a major concern unless addressed vigorously.

35. GUIDELINES FOR CONTROLLING STACK EMISSIONS FROM ROTARY KILNS Adequately designed ESP (or any other adequate air pollution control system) should be installed to achieve the prescribed standards. Installation and operation of pollution control equipment for plants less than 100 tpd may not be economic. Therefore, such plants should NOT be permitted in future. Phasing out old plants is a must – must be worked out by the State Pollution Control Boards. All pollution control equipment to be provided with separate electricity meter and totalisers for continuous recording along with the amperage of the ID fan. Timely collection/removal system of the flue dust generated in ESP. Guidelines can be made. Whether they are religiously followed, depends on each plant. Spirit is important if this industry has to survive. Otherwise, …….