The Steel Authority of India (SAIL) has requested the Government to set up a dedicated institution to finance capacity expansion in the sector.
Domestic capacity
This demand has come at a time when the Prime Minister has set a target of increasing domestic steelmaking capacity to 300 million tonnes (mt) by 2025. At present, the capacity is 77 mt, and with expansion plans already implemented, it is expected to touch 100 mt in the next few years.
“The balance 200 mt increase in steel capacity on incremental basis would require huge capital investments — almost about $200 billion. Such massive investments would entail coming together of banks and financial institutions to pool in their resources and come up with a dedicated body to finance these projects on the similar lines of Power Finance Corporation, which is committed to the integrated development of the power and its associated sectors. Therefore, a dedicated financial institution on the lines of PFC in the power sector should be floated by the Ministry of Steel,” said C.S. Verma, Chairman of SAIL, while addressing the CII Steel Summit here. Expansion of capacity would require more iron ore. It is estimated that a 300 mt capacity would require 400 mt of iron ore.
At present, there is a ban on mining in several Sates, forcing companies to go in for imports. Hence, Verma suggested expanding the reserve base through more exploration activities.
At the same time, a large capacity of mechanised iron ore mines and extensive beneficiation for utilisation of low-grade ores should also be promoted.
“We also need to maximise utilisation of iron ore fines through sintering, pelletising and introducing alternate iron-making technologies that can use fines directly,” he added.