Informist, Friday, Sep 27, 2024

--Steel secy: Need to diversify coking coal imports

--Steel secy: Considering coking coal imports from Mongolia

--CONTEXT: Steel secy Poundrik speaking at CII's Steel Summit 2024

--Steel secy: Primary objective now is to define green steel

--Steel secy: Hope to issue green steel taxonomy report by Oct-end

--Steel secy: Aware that domestic steel prices under pressure

--Steel secy: Taking steps to protect local industry's margins

--Jr steel minister: Despite robust growth, sector faces challenges

--Jr steel minister: Need to focus on R&D to meet global standards

--CONTEXT: Jr Steel Minister Varma speaking at CII Steel Summit 2024

--Steel secy: Look to extend output-linked sops for specialised steel

--Steel secy: Mulling over recommendations against carbon tax

NEW DELHI – The steel ministry is looking at diversifying the partner countries from whom India imports coking coal--the key raw material for the steel industry--to ensure that supply chain disruptions do not impact domestic capacity building, Secretary Sandeep Poundrik said Friday. The government is considering Mongolia as a potential source for importing coking coal, which will thereby cut India's over dependence on Australia for the primary raw material, he said, speaking at the Confederation of Indian Industry's Steel Summit 2024.

India, the world's second-largest steelmaker, is the largest importer of coking coal with Australia accounting for 70% of supplies. Coking coal is a key feedstock material and accounts for 35-40% of the steel-making costs.

The government's move to diversify import sources of coking coal comes against the backdrop of India's rising demand for steel, which will mean a sharp scaling up of domestic capacity to meet that demand, Poundrik said. The rising demand for steel is aligned with the government's thrust on infrastructure spending, he added.

The Narendra Modi government has been going big on its capital expenditure outlay in the past few budgets to crowd-in private investment. In the last five years, the government has increased capital expenditure by more than three times.

On protecting the domestic steel industry, Poundrik said the government was aware of the price pressure in the industry owing to cheap imports from neighbouring countries, primarily China. He said the government has been taking steps to mitigate exogenic issues in the sector to ensure that the industry's margins are protected.

"The influx of cheaper steel imports has led India to transition into a net importer, underscoring the urgency of achieving self-reliance in this critical sector. This necessitates a focus on developing indigenous capabilities for high-quality steel production and enhancing local raw material sourcing," Minister of State for Steel Bhupathi Raju Srinivasa Varma, who was also present at the event, said.

In the last few weeks, the top brass of the steel ministry has spoken at multiple forums about reaching out to the finance ministry to increase import duties on steel to counter the dumping of cheap steel from China. Steel Minister H.D. Kumaraswamy, speaking at the Indian Steel Association's conclave on Sep 4, had said he would engage with the finance ministry to raise import duties from the current 7.5% to 10-12%. The steel secretary today said his ministry's job is to recommend to the finance ministry, the call will be taken by the latter.

"...despite the robust growth of the steel sector, several significant challenges impede its trajectory," Varma said, adding that raw material procurement, generating demand in end-user industries, and navigating complex trade dynamics present substantial hurdles.

To mitigate these issues, he said the government and the industry should prioritise investments in research and development to enhance efficiency while allowing India to produce high-quality steel that meets international standards. "By exploring new materials and sustainable practices, the steel industry can adapt to evolving market demands while ensuring compliance with global regulations," he said.

Innovation towards sustainable and global standards will also help the steel sector grow aligned with international relations, like the European Union's much talked about Carbon Border Adjustment Mechanism, Varma said. "Such regulations are increasingly relevant as the world moves towards more stringent environmental standards, and India must adapt accordingly."

In order to mitigate the risks of climate change, the EU announced the phased implementation of the Carbon Border Adjustment Mechanism in October last year. Under this, those importing goods into the EU have to report the carbon content of the commodity, based on which, they would be taxed. The carbon tax collection is expected to begin from 2026. Implementation of this tax, which is commonly called carbon tax, may impact India's steel sector significantly.

Recently at an event, Commerce Minister Piyush Goyal assured stakeholders, especially the steel industry, that the government is fully committed to safeguarding its interests. "The government is invested in infrastructure and the industry has to find newer ways of lowering carbon emissions and promoting high quality and productivity in India," Goyal said.

Poundrik today said the ministry was still considering the suggestions it would send to the commerce ministry as a protection against this tax. The commerce ministry is already holding the ninth round of negotiations with the EU on a free trade agreement, where the two sides will discuss the Carbon Border Adjustment Mechanism.

In the context of moving towards a more environmentally sustainable model, Poundrik said the primary objective of the government is to now define the concept of green steel which will be applicable across the sector. Green steel refers to steel produced using environmentally friendly and sustainable methods. This usually involves using renewable energy sources, reducing carbon dioxide emissions, and minimising and recycling waste during the production process.

Currently, many industry players are taking the green steel approach, but because it varies from company to company, there are divergences in standards, he said. "That is a challenge that we need to address."

The government is developing a taxonomy, which will give a legal definition for green steel that can help guide the industry in making the right investments for decarbonisation. "We hope to release this report by the end of October," Poundrik said.

Lastly, to incentivise the speciality steel sector, the steel secretary said the government is working on another round of the production-linked incentive scheme as the off-take of the first round of the initiative did not meet expectations. "So we are bringing another round of PLI so that we can get more interest in the speciality steel business," he said. Speciality steel is steel of high grade used in sectors like defence, automobile, and electricals.

Later speaking to the media, the secretary said the government had launched 64-bln-rupee production-linked output plan for speciality steel, but by the end of 2023-24, only 26 bln rupees were allocated. "The new PLI will be on the same specifications with a few more additions," he said. End

Reported by Priyasmita Dutta

Edited by Ashish Shirke

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