Sponge Iron Plants in India Expand to Integrated Steel Mills

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Researched by Industrial Info India (Delhi, India)--Indian companies are undertaking major initiatives to upgrade their sponge iron plants to integrated steel mills. Many of these companies are small and medium companies that are expanding to integrated steel mills in a phased manner. These companies have long-term strategic goals of moving into wholesale distribution of steel billets and manufacturing of structural steel.

Sponge iron companies are adding huge capacities in coming years. The capacity expansion is expected to gather pace in the next two years. Approximately 2.28 million tonnes of capacity is expected to be commissioned in 2011-12 and another 1.35 million tonnes in 2012-13. This will increase the country's total sponge iron manufacturing capacity to 38.3 million tonnes by March 2013.

Raigarh Ispat and Power Limited is expanding its sponge iron plant in Raigarh to an integrated steel mill. Jay Iron and Steels Limited is also in the process of upgrading its sponge iron plant to integrated steel mill. These companies are thus moving into forward integration mode to form the final product, which will have higher market value.

Major steelmakers in India use blast furnaces for steelmaking, as achieving large-production through electric arc furnaces is difficult. Setting up a blast furnace is capital intensive; hence, it is used for large-scale production. Production costs using electric arc furnaces are directly linked to electricity costs. Right now, these furnaces are used mainly for producing specialized steel on a small scale. In the future, sponge iron could be used for large production only if steelmakers using electric arc furnaces achieve economies of scale through the consolidation of smaller players.

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