Accelerating the Green Industrial Transition: The Urgent Need to Decarbonize the Steel & Ferroalloys Sectors

New Delhi, 19 September 2024 - The Indian Ferroalloys & Producers' Association (IFAPA) successfully concluded the 4th International Ferro Alloys Conference, gathering over 550 delegates and featuring more than 30 industry experts across 10 comprehensive sessions. The event was inaugurated by Hon'ble Shri HD Kumaraswamy, Minister of Heavy Industries and Steel, Government of India, who underscored the vital role of ferro alloys in supporting India's robust steel industry, both in domestic consumption and as a key contributor to foreign exchange earnings.

In his opening address, Minister Kumaraswamy highlighted the pivotal role ferro alloys play in the steel value chain and also acknowledged several pressing challenges. These include high power tariffs, restricted high grade domestic ore supply, and a shortage of high-quality coke, which have collectively impacted the competitiveness of India's ferro alloys industry. "The Steel Ministry is aware of these issues and is committed to taking timely measures to support the ferro alloys sector," the minister assured.

Stainless Steel Growth and Constraints

India's stainless steel demand is poised to expand by 8-10% annually over the next two to three years, driven largely by government-backed infrastructure projects. However, the sector's growth is hampered by high import costs and electricity tariffs, leading to reduced capacity utilization among domestic producers. The conference brought attention to these barriers, stressing the importance of cost efficiency and improved energy strategies.

Shifting Global Manganese Alloy Production and Exports

Production cuts of manganese alloys in China, Japan, and South Korea are expected to be offset by increased output in India and Malaysia. However, the conference highlighted that India's share of manganese alloy exports may shrink in 2024. Experts urged Indian producers to explore non-renewable energy sources such as natural gas to remain competitive, especially in light of the upcoming Carbon Border Adjustment Mechanism (CBAM) implementation in 2026. The CBAM is expected to impose stringent environmental regulations on exports, and Indian producers will need to adopt more sustainable production practices.

MOIL's Expansion Plans and Manganese Ore Imports

MOIL, India's largest manganese ore producer, outlined its target to achieve 3.5 million tonnes of manganese ore output by 2030. To reach this goal, the company is focused on improving exploration efforts, enhancing environmental clearance limits, and expanding operations into new states, including Gujarat, Madhya Pradesh, and Chhattisgarh. Despite these expansion efforts, manganese ore imports to India are expected to continue due to the necessity for higher grades imported ores. MOIL's greenfield projects were also highlighted as crucial steps in ensuring the country's manganese supply meets future demand.

Ferro Chrome Market Pressures and Indian Challenges

The ferro chrome market is currently under pressure due to weak demand in the European Union and the United States, coupled with high production volumes in China. Indian ferro chrome producers are facing significant challenges, including limited availability of lumpy chrome ore and a growing price disparity in global markets. The conference emphasized the need for Indian producers to enhance their operational efficiencies to navigate these difficult market conditions.

Technology and Sustainability: Moving Towards Renewable Energy

The importance of adopting advanced technology and transitioning towards renewable energy sources was a major theme throughout the conference. Experts stressed that ore beneficiation is crucial in the Indian context, given the need to maximize domestic resource utilization and improve material efficiency. To counter the high costs of volatile thermal power prices in India, the energy-intensive ferro alloys sector was encouraged to shift towards renewable energy, leveraging the lower cost of renewable energy to gain long-term cost benefits, in addition to environmental sustainability.

Ferro Molybdenum and Ferro Vanadium: Growing Demand

India's ferro molybdenum (FeMo) and ferro vanadium (FeV) demand is projected to rise in near future. The growing demand for these critical alloys is driven by India's expanding infrastructure, manufacturing, and railway sectors. The conference also highlighted that India's dependence on ferro molybdenum imports has decreased due to the imposition of safeguard duties on imports from South Korea as well abolition of Basic Custom Duties (BCD) on the raw materials.

Carbon Emissions and the Road Ahead for India's Steel Sector

The conference underscored the environmental challenges facing India's steel industry, which accounts for 12% of the country's total carbon dioxide (CO2) emissions. India's emission intensity, at 2.55 tCO2 per tonne of crude steel, exceeds the global average of 1.85 tCO2 per tonne. As Indian manganese alloys exporters face the upcoming CBAM regulations, emissions monitoring, reporting, and verification will become inhabitable, adding additional administrative costs to their operations. Industry leaders emphasized the need for greater investment in low-carbon technologies and greener production methods to remain competitive in the global market.

The 4th International Ferro Alloys Conference successfully brought to light the critical issues facing India's ferro alloys industry while providing a roadmap for future growth and sustainability. The conference concluded with a call for greater collaboration between industry stakeholders and the government to support the growth of India's ferro alloys sector and its contribution to India's steel production as well as global market.