Indian Sponge Iron Industry Shifts To Electric Arc Furnace Technology to Reduce Costs

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Researched by Industrial Info India (Delhi, India)--The increase in raw material prices has led to an increase in the production cost of sponge iron. Coking coal has seen sharp increase in price during past few years. Most Indian steelmakers have no captive coking coal resources and must import it at very high price. In electric arc furnaces, which use sponge iron as feed, normal thermal coal can be used instead of coking coal.

According to Sponge Iron Manufacturer's Association (SIMA) (New Delhi), India's sponge iron industry continues to be a global leader, with current production of 33.3 million tons. According to the Centre for Monitoring Indian Economy (CMIE), steel production is expected to grow by 11 % and 15 %, respectively, in 2011-12 and 2012-13. Sponge iron production is expected to grow 14 % in 2011-12 and 18.4% in 2012-13.

Sponge iron companies have implemented huge capacity additions in recent times, and will further increase in the next two years. This increase will include several mid-size and small companies. Jay Iron and Steels Limited is expanding its sponge iron plant in Orissa. Sri Bava Steel and Power Limited is constructing a grassroot sponge iron plant in Chattisgarh.

Although electric arc furnaces act as a major hedge against volatile price movements of coking coal, major steelmakers still use blast furnaces for steelmaking, as it is difficult to achieve large-scale production through electric arc furnaces. Also, production from electric arc furnaces is directly linked to electricity costs. Currently, electric arc furnaces are used for producing specialized steel on a small scale, but electric arc furnaces will undoubtedly become more cost-effective in the future.

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