NAGENDRA NATH SINHA ASHWINI KUMAR AAYUSH RAJ SINHA
Economic growth and the government’s focus on infrastructure development are likely to spur steel demand in the country by over 10 per cent. This rapid growth must address environmental sustainability concerns, specifically the issue of carbon emissions. The use of ferrous scrap in steel production can reduce greenhouse gas emissions by up to 58 per cent. If renewable energy is used, emissions could drop by as much as 80 per cent, oering a promising path towards sustainability.
Steel is almost infinitely recyclable.
Its recycling in the form of scrap can save 1.1 tonnes of iron ore, 630 kg of coking coal, and 55 kg of limestone for every tonne of scrap. This transition also reduces water consumption by 40 per cent making it a significantly greener and a more sustainable approach to steel-making.
The global average per capita steel consumption is around 233 kg, but in India, it’s only about 98 kg, even with a 50 per cent increase over the past eight years. This is about 40 per cent of the global average. A key issue for India is that its domestic scrap supply is likely to stay limited due to past low steel consumption and a relatively young infrastructure. Since steel products usually last about 40 years, India will likely continue to face a shortage of domestic scrap.
Thus, India’s reliance on ferrous scrap imports is unavoidable. As the world’s second-largest importer, India brought in 9.9 million tonnes in fiscal year 2023. This heavy import dependency underscores the urgent need for strategies to ensure a stable scrap supply while meeting the growing demand for steel in the domestic market.
Alang, often regarded as the world’s largest ship recycling yard, can process over 4.5 million tonnes of steel a year, contributing significantly to the regional steel supply in western India and helping to balance the country’s overall steel production.
However, the Indian steel industry’s dependency on scrap imports presents unique challenges, especially with the largest global exporter of scrap, the European Union, and other nations implementing restrictive practices to control industrial emissions. The EU’s Waste Shipment Regulations, following China’s move to tighten scrap metal exports, signal a broader trend towards restrictive trade practices in scrap labelled as environmental standards. Given India’s role as a significant importer of ferrous scrap, these constraints could severely impact the country’s steel industry.
India’s dependence on imported scrap highlights the need for alternative steel-making sources. Direct Reduced Iron (DRI) is a promising option. With a surplus in DRI manufacturing capacity, India’s DRI output rose from 34.7 million tonnes in fiscal 2019 to 43.6 million tonnes in fiscal 2023, oering a potential solution to the constraints caused by limited scrap imports.
However, much of India’s DRI production still uses coal-based processes, indicating a need to shift to greener methods like hydrogen-based DRI to meet decarbonisation targets. To stay competitive with scrap, DRI prices must be at least ₹2,500-3,000 per tonne lower than domestic High Melting Scrap (HMS) prices. This cost advantage is key for DRI adoption and a sustainable steel industry in India.
CONDUCIVE POLICIES
To adapt to the evolving scrap market, the Indian government has implemented policies to boost scrap use and increase its availability. The Steel Scrap Recycling Policy and Vehicle Scrappage Policy aim to promote scrap-intensive steel production and cut carbon emissions. The Vehicle Scrappage Policy operates in 12 States with over 98 scrappage centres, ensuring a steady scrap supply. Further expanding Extended Producer Responsibility and tightening oversight of scrapping centres would enhance scrap from ‘end of life vehicles’.
To secure its scrap supply, India could form strategic partnerships with Middle Eastern and African countries for shorter lead times and to oset European restrictions. Collaborations with nations like Papua New Guinea can provide more stable scrap sources, aiding India in a rapidly changing global market where around 73 countries have banned or restricted scrap exports. India should firmly oppose new barriers to scrap trade.
To ensure sustainable growth in India’s steel industry, a multi-faceted approach is needed. This involves expediting customs clearances with key partners like the UAE, using RFID technology for ecient scrap tracking, and adopting Industry 4.0 for better resource management.
Additionally, incentives for scrapping vehicles at certified facilities and using blockchain technology can boost transparency and reduce fraud in the scrap supply chain.
Opportunities to gather scrap from sources like railways and defence should be explored, alongside building systems for detailed scrap data collection and classification.
In conclusion, scrap-based steel-making is crucial for India’s decarbonisation. By using innovative techniques and strategic partnerships, India can navigate policy barriers to scrap supply, building a more sustainable steel industry.
This approach reduces waste, boosts resource eciency, and fosters a greener future, reinforcing India’s commitment to sustainable growth.
Indian steel industry’s dependency on scrap imports presents unique challenges, especially with the largest global exporter of scrap, the European Union, implementing restrictive practices.