India Needs Local Steel Equipment to Manufacture 120 Million Additional Tons

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--According to steel industry ball-park figures, the investment needed to create 1 million tons of incremental steel production capacity is about $1 billion, and plant and machinery constitutes more than 60% of that total investment.

Steel Authority of India Limited's (BSE:500113) (Kolkata) chairman C.S. Verma said that as India is targeting 120 million additional tons of steel production capacity by 2020, it will require a $120 billion investment, including $72 billion on plant and machinery. "But not even a single manufacturing facility to make machinery for steel-making is here, we need to have some," he said.

In the 2011 financial year, Indian primary and secondary steel producer output reached a total of about 78 million tons. In the coming two years (through 2014), a further 30 million tons of additional pipeline capacity is expected.

The availability of indigenous steel-making equipment would reduce the cost of projects, but there is not a single manufacturing unit in the country to supply the massive production increase, Verma said.

"Almost all that is required in an integrated steel plant is being imported," Verma said. "Had there been a manufacturing base in the country, the cost of projects would have come down and we would have the advantage of procuring machinery from indigenous sources."

D.R.S Chaudbury, India's steel secretary, added that efforts were being made to reopen the steel equipment capacity of the Ranchi-based, state-owned Heavy Engineering Corporation (HEC) (Jharkhand). The technology and the capability to manufacture equipment is available. "If the economy works out right, we can make it. I presume the heavy industry ministry is taking steps to reopen that," he said.

HEC was manufacturing machinery for steel making, but was not getting enough orders from the steel sector to maintain production. In its heavy engineering division, the company has a floor area of almost 200,000 square meters. It is well-equipped with sophisticated machine tools and handling equipment.

The company is capable of designing and manufacturing equipment and components for steel plants, mining, mineral processing, crushers, material handling, cranes, power, cement, aluminum, space research and nuclear power facilities. HEC also has a world-scale foundry forge plant.

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