Perspective

The Indian Ferro Alloy Industry: An Overview

The Indian ferro alloy industry has successfully met the challenges and faced the constraints faced by it in a determined manner. This is evident by the surge in foreign exchange earned by the industry through exports. Notwithstanding a difficult year, value of exports by the Indian Ferro Alloy industry recorded a 37.96 percent hike at US $ 1561.37 million in 2008-09 over US $11.38.78 million in the previous year. The IFAPA has made valuable suggestions to the government for a healthy development and growth of the industry and the government should take proactive steps to solve the problems faced by the industry.
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erro Alloys are vital additives that are used in steelmaking as deoxidants as well as alloying agents. These are added in steel production process not only for deoxidation but also for grain size control as well as for improvements in the mechanical properties of steel. Depending upon the process of steelmaking, product quality envisaged and the type of steel being made, the requirement of Ferro Alloys varies widely. Indian Ferro Alloy industry has completed 50 yeas of its existence. Ferro Alloys are used in steelmaking and consists of less than one per cent of the total raw materials required for steel production. Despite being a very low constituent, ferro alloys are vital additives for steelmaking.

Capacities of bulk ferro alloys in India: MVA, number of furnaces and number of units are furnished in Table1:

Table 1: Capacities of Bulk Ferro Alloys in India : 2008-09

Alloys/Particulars Manganese Alloys Ferro Silicon Chrome Alloys Total Bulk Ferro Alloys Capacity (MVA) 1574 196 880 2650 No. of Tonnes 203 30 58 291 No. of Units 98 16 30 144

Estimated Capacity Utilisation of Indian Ferro Alloy Industry

Type of Ferro Alloy Manganese Alloy Ferro Silicon Chrome Alloys Noble Ferro Alloys Total Capacity (Mt) 2.50 0.20 1.30 0.04 4.04 Production in 2009-10 (Mt) (E) 1.40 0.10 0.85 0.03 2.38 Capacity Utilization (%) 56 50 65 75 59

Demand drivers of Ferro Alloys

The demand drivers of Ferro Alloys are : l steel production Crude l and special steel production Alloy l Stainless steel production

In 2007-08, capacity utilization was 65 percent.

Expected Capacity Additions of Bulk Karnataka, Jharkhand and Goa. As per Ferro Alloys upto 2011-12 IBM, India's present production of
Manganese ore is over 2mt. Manganese is an essential requisite 8 units 440 MVA Ferro Chrome for steel production for its capability of 54 MVA 3 units Ferro Silicon sulphur fixing, de-oxidising and good Total Additions 1474 MVA alloying properties. Manganese alloy is introduced in steelmaking in the form of According to IFAPA estimates 13 ferro manganese, silico manganese and captive power plants with a total manganese metal. These are produced capacity of 1,000mw may come up by by the reduction of manganese ore with 2011-12. carbon silicon at high temperatures in blast furnaces and electric arc furnaces Raw Materials (EAFs). Manganese Ore For production of one tonne of ferro As per Indian Bureau of Mines (IBM), the reserves as on 1-4-2005 manganese inputs required are: 2.6 tonnes of manganese ore, 0.5 tonnes of were as follows: reductant, and 3 MWH of electricity. 378m Total Infrared Reserves Silico manganese production is carried 77mt Proved Reserves out by reduction of manganese ore, quartizite and manganese slag with Probable Reserves 61mt coke. Total Recoverable Reserves 138 mt Stainless steel Ferro Manganese Grade 5 mt accounts for about 5/6 percent of the total 8 mt Medium Grade production of ferro Total Proved Reserved Ferro Alloys Grade 13mt manganese and silico Major reserves of Manganese Ore manganese in India. The average are of BE grade and occurs in consumption of manganese alloys by Maharashtra, Orissa, Madhya Pradesh, the Indian stainless steel industry is Manganese Alloys 42 units 980 MVA

Types of Ferro Alloys

The product mix of ferro alloys consists of bulk ferro alloys and noble ferro alloys Bulk ferro alloys are Ferro Manganese, Silico Manganese, Ferro Silicon, Ferro Chrome and Charge Chrome. Noble ferro alloys are Ferro Malybelenum, Ferro Titanium, Ferro Tungsten, Ferro Vanadium etc.

Capacities of Ferro Alloys in India

Capacities of Ferro Alloys in India during 2008-09 were as follows: Manganese Alloys Ferro Silicon Chrome Alloys Noble Ferro Alloys Total 2.50 mt 0.20 mt 1.30 mt 0.04 mt 4.04 mt

In 2007-08, the total capacity of ferro alloys in India was 3.6 hmt. Hence there was a growth in capacity in 200910 over the previous years was bout 11 per cent.

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like to post healthy growth in coming years, consumption of manganese alloys will also increase substantially. India is the seventh highest producer of manganese ore in the world. According to industry experts, the Indian manganese alloy industry has the potential to meet the challenges despite various constraints. With the necessary supportive measures from government the industry can move faster towards the path of sustainable growth and meet the requirement of the expanding Indian steel industry in future. Availability of high grade manganese ore is critical for the industry. Manganese Ore (India) Ltd is unable to meet the increasing demand of the domestic producers and they are compelled to import manganese ore. In 2008-09, the import of manganese ore by India stood at 824,297 tonnes as against 686652 tonnes in the previous year for the production of manganese alloy. In 2008-09, about 3.5 mt of chrome ore was produced in India. Orissa alone produces about 98 percent of chrome ore in the country. The sole and major supplier of chrome ore to the country is ferro chrome industry is the Orissa Mining Corporation (OMC). But the supply of chrome ore is not sufficient for the industry. Tata Steel and other major chrome ore lease holders have stopped supplies to other producers and are using their own ore for their own ferro chrome plants. To avoid congestion by allotting leases to a number of ferro chrome producers for the captive use and in the interest of ferro chrome industry, government has allotted entire chrome ore deposits in Orissa to OMC which is a public sector undertaking so that they can judiciously mine and supply the materials to the ferro chrome producers in the country who do not have their own mining leases. OMC has now the control over around 80 per cent of the total chrome ore leases in Orissa. The industry maintains that proper allocation is not taking place and the units outside Orissa are suffering. The industry,

Chrome Ore
According to Indian Bureau of Mines (IBM), the reserves of chrome ore in India as on 1-4-2005 were as follows: Total Inferred Reserves Proved Reserves Probable Reserves Total Recoverable Reserves 213 mt 31mt 35 mt 6.6 mt

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therefore, has to depend on imports. In 2008-09, around 94,415 tonnes of chrome ore was imported by India. The allocation policy of OMC is disturbing the dynamics of the ferro chrome industry as most of the unit located outside. Orissa has made huge investments particularly to set up their captive power generation capacities. The Indian Ferro Alloy Producers Association (IFAPA) is very much concerned with the decision to bar the natural resources all over the country, while exporting the same to other countries without any restriction. About 80 per cent of high carbon ferro chrome produced in India goes for the production of stainless steel. With projected higher growth in stainless steel production in the country in future, the domestic consumption of HC ferro chrome will reach much higher levels. India holds a leading position in the world in the production of HC ferro chrome as well as in its exports. India is the third highest global producer of chromium ore. Chrome ore is used in the production of chromium metal and various alloys of chromium with iron, nickel, cobalt tungsten, molybdenum etc. Chromium imparts strength, harness, toughness, magnetism and offers resistance to abrasion, corrosion and also acts as deoxidant. The use of chromium in steelmaking depends on the end-use purpose. Low chromium steels with less than five per cent chromium and small quantity of nickel is used in the production of rails, automobiles, armoured plates etc. Intermediate chromium steels containing up to 12 per cent chromium along with small quantities of tungsten, molybdenum or silicon are used in high speed values for engines and equipment which require resistance to abrasion, corrosion and oxidation. High chromium steels are stainless steel and super stainless steels used for the manufacture of cutlery, cooking, utensils, aircraft and high speed trains. Ferro alloy industry is highly power intensive. IFAPA maintains that though the generation cost of power in India is not high, the power tariff which has to be bourn by the ferro alloys industry is high because of crosssubsidization to the agricultural sector, low plant load factor (PLF) of the SEBs and other electricity producing units and high transmission and distribution (T&D) losses which is presently estimated at over 35 per cent. Electricity duty which varies from state to state in India creates additional financial burden for the industry. Though power sector reforms are going on since 2003, the impact of this development on long term prices of power, specially to the power intensive consumers like the ferro alloy producers of the country, is difficult to assess, since the electricity market in India still remain in a state of flux. Captive power generation may be helpful for the ferro alloy industry as the cost of captive power is much less than the rates charged by the state electricity boards (SEBs).

Production of Ferro Alloys in India

The production of various types of ferro alloys in India between 2005-06 and 2008-09 are shown in Table 2.

Table - 2 : Production of Ferro Alloys in India between 2005-06 and 2008-09 (`000 tonnes)
Ferro Alloys H.C. Ferro Manganese Refined Ferro Manganese Silicon Manganese Refined Silicon Manganese Ferro Silicon HC Ferro Chrome / Charge Chrome L.C. Ferro Chrome Other Ferro Alloys Total 2008-09 370.5 14.1 845.4 46.0 99.6 814.9 2.4 27.5 2220.4 2007-08 378.0 13.2 858.6 52.8 83.7 948.4 0.2 29.7 2364.6 2006-07 281.0 15.7 738.3 44.7 92.6 801.1 0.2 27.3 2000.9 2005-06 256.1 16.9 546.5 31.8 90.7 662.0 0.2 23.1 1645.4

Power

Notes: 1. Refined Ferro Manganese is the total of MC ferro manganese and LC ferro manganese 2. Refined Silico manganese is the total of MC silico manganese and LC silico manganese 3. Other ferro alloys included noble ferro alloys

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It is apparent from the above table that in 2008-09, production of HC ferro manganese, silico manganese, refined silico manganese, HC ferro chrome, charge chrome and other ferro alloys has gone from the previous year. The decrease may be attributed to global slowdown of steel industry which started in October 2008 and affected the Indian steel industry adversely to some extent. The total production of ferro alloys in India in 2008-09 declined by 6.1 per cent over the preceeding year. value of total exports of ferro alloys in the above comparative periods at 199.77 was also astronomical. Despite a year plagued by the global crisis, the Indian ferro alloy producers maintained a growth in quantity and value of exports in 2008-09 over the preceding year.

Imports of Ferro Alloys in India

Imports of ferro alloys in India between 2005-06 and 2008-09 are shown in details in Table 4.

Exports of Ferro Alloys by India

The Indian ferro alloys producers are exporting substantial quantities of ferro alloys. In 2007-08, the exports had a share of 37.16 per cent of domestic production which increased to 43.24 per cent in 2008-09 despite the global slowdown of the global steel industry during the second half of the financial year. The export value in 2008-09 reached a lvel of US $1561.37 over US $113678 in the previous year recording a growth of 37.96 per cent. Detailed figures of the itemwised exports of various ferro alloys between 2005-06 and 2008-09 are furnished in the Table 3. Ferro Alloys HC Ferro Manganese Refined Ferro Manganese Silicon Manganese Ferro Silicon HC Ferro Chrome / Charge Chrome Other Ferro Alloys Total % of Increase Value in Million US$ % Increase in Value

Table 4: Imports of Ferro Alloys by India 2005-06 to 2008-09 (`000 tonnes)

Ferro Alloys HC Ferro Manganese Refined Ferro Manganese Silicon Manganese Ferro Silicon HC / LC Ferro Chrome / Charge Chrome Other Ferro Alloys Total % of Increase Value in Million US$ % Increase in Value 2008-09 6.0 16.0 0.2 82.7 12.4 15.4 132.7 (-) 15.4 340.99 25.75 2007-08 2.0 20.0 0.5 96.3 20.2 17.2 156.2 22.80 271.17 5 2006-07 1.0 11.0 0.2 86.8 19.1 9.1 127.2 30.73 172.13 7.50 2005-06 3.8 12.3 12.3 62.0 11.2 6.7 97.3 18.5 133.56 10

Table 3 : Exports of Ferro Alloys by India 2005-06 to 2008-09 (`000 Tonnes)

2008-09 101.3 20.2 300.4 37.2 491.7 9.3 960.1 9.25 1561.37 37.96 2007-08 101.2 12.6 262.6 9.4 483.7 9.3 878.8 72.14 1131.78 199.77 2006-07 42.0 12.2 152.1 7.9 287.7 8.6 510.5 20.51 377.55 38.93 2005-06 19.8 4.0 119.3 7.8 258.9 13.8 423.6 27.62 271.75 (-) 1.24

It is observed that HC ferro chrome/charge chrome had the highest share in the Indian export of ferro alloys during the above years. the growth of total exports in 2007-08 was very high at 72.14 per cent over the previous year. The increase in the

It is apparent from the above table that total import of ferro alloys has declined by 15.4 percent in 2008-09 over the previous year due to a drop in demand following the global crisis which started in October 2008.

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However, the value of imports has increased by 25.75 percent due to high prices during the first half of financial year 2008-09. invested over Rs 5,000 crore and it provides employment to about 2.4 lakh people both directly and indirectly. The industry has created adequate capacity to meet the domestic demand as well as to make substantial quantity of exports. l About 41 per cent of the total installed capacity remained idle in 2008-09 for a decline in domestic

Major Ferro Producers in India

Alloys

The names and product mix of some of the major producers of ferro alloys in India are shown in Table 5. Name of the Producer Ferro Alloy Corp Ltd, Vizhinagram, A.P. Maharashtra Electromelt, Chandrapur, Maharashtra (A subsidiary of SAIL) Universal Ferro & Allied Ltd., Bhandara Maharashtra (units 1&2) Sandur Manganese & Iron Ore Ltd., Hospet, Karnataka Ispat Alloys Ltd, Balasore Orissa * Indian Charge Chrome Ltd, Chaudwar, Orissa Ferro Alloy Corp Ltd, Balasore, Orissa * Indian Metals & Ferro Alloys Ltd., Rayagara, Karaput, Orissa * Tata Steel Ferro Alloys Plant, Bamlipar, Kendujhar, Orissa Tata Steel Ferro Alloy Plant, Rawmet, Orissa Jindal Ferro Alloys Ltd., Kothavasala, AP Tata Steel Ferro Alloy Plant, Gala Kendujhar, Orissa Nav Chrome Ltd., Raigarh, Chattisgarh Ferro Chrome Ltd., Orissa

Table 5: Names and Product Mix of Some of Major Ferro Alloy Producers
Product Mix Ferro Manganese Ferro Chrome Ferro manganese, Silico manganese Ferro Manganese, Silico Chemicals, Ferro Silicon Ferro Manganese, Ferro Chrome Ferro Manganese, Ferro Chrome Charge Chrome, H C Ferro Chrome Charge Chrome, H.C. Ferro Chrome Ferro Chrome, Charge Chrome, Ferro Silicon Hc Ferro Chrome, Charge Chrome Hc Ferro Chrome Ferro Chrome Silico Manganese, Ferro Orissa Manganese Ferro Manganese, Silico Manganese Ferro Chrome

Jindal Stainless Ltd., Raigarh, Chattisgarh Ferro Chrome

VISL, Bhadravati, Karnataka (A SAIL unit) Ferro Chrome Navi Bharat Ferro Alloys Ltd., Polanche, AP Ferro Chrome, Silico Manganese Rohit Ferro Tech Ltd., Bankura, WB M.B. Ispat Corp. Banunara, Bardhaman, West Bengal * 100 percent Expert Oriented Units (EOUs) Constraints faced by the Indian ferro alloy industry The Indian ferro alloy industry is facing many constraints, of which some are highlighted below. lIndian ferro alloy industry has The demand, high price and scarcity of chromium and manganese ores. l Customs duty on ferro alloys has been reduced to zero, which has opened flood gates of imports at lower cost from China, Kazakhstan, Russia Ferro Chrome Ferro Manganese, Silico Manganese

VBC Ferro Alloys Ltd., Rudrasa, Medak, AP Silico Manganese, Ferro Manganese

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and South Africa Ferro alloy is a power intensive industry. The cost of power in India various from 245 to 490 paise per unit whereas in China it is 150 paise, Kazakhstan- 78 paise, Russia-85 paise and South Africa - 105 paise. l Customs Duty on imports of The ferro alloys is NIL at present whereas the duty on inputs required for manufacturing ferro alloys varies from 2 to 7.5 percent. l Stiff rise in the cost of raw materials and other inputs l Increase in road and railway freight and non availability of railway wagons as per requirement. government to initiate fast track exploration programme like aerial survey to look potential deposits which need further exploration proving deposits.

Conclusion
The Indian Ferro Alloy industry has successfully met the challenges and faced the constraints faced by it in a determined manner. The industry is earning valuable foreign exchange through exports. Despite a difficult year, value of exports by the Indian ferro alloy industry recorded 37.96 percent hike at US $1561.37 million in 2008-09 over US $1138.78 million in the previous year. The IFAPA has made some valuable suggestions to the government for healthy development and growth of the industry. The government on its part should consider those suggestions seriously and take proactive steps to solve the problems faced by the industry. The reduction of Customs Duty to zero on imports of ferro alloy is jeopardising the interest of the industry. The distribution of chrome ore by the Orissa Mining Corporation (OMC) should ensure to serve the interest of the ferro alloy units located all over the country. The apparent consumption of alloy and stainless steel in India in 2008-09 at 3.69 mt recorded growth of 9.82 per cent over 3.36 mt in the previous year. The trend is expected to continue in future also and will help the domestic consumption of ferro alloys substantially in future. The government should consider the problems of the Indian ferro alloy industry and make an in-depth study of its problems highlighted by IFAPA and take judicious proactive steps to support this small but vital industry in all possible manners.
Acknowledgments This article is presented by T S Sundaresan, Secretary General, IFAPA at the 9th Asian Steel Conference held on March 19-20, 2010 in Mumbai organised by Steelworld.

Major suggestions of Indian Ferro Alloys Producers' Association (IFAPA)

The IFAPA has made various suggestions to the Government to help the Indian ferro alloy industry for its healthy growth and make it globally competitive. Some of these are mentioned below: l The government should reimburse the Customs Duty on all ferro alloy excluding ferro nickel l government has reduced the The import duty on ferro alloy to zero. IFAPA maintains that it is imperative that inputs like manganese ore, chrome ore, vanadium pentoxide and other ores under Chapter 26 of Customs Tariff as also the duty on anthracide coal should be brought down to zero percent to reduce the cost of manufacturing all ferro alloys. l Exports of manganese ore, chrome ore and concentrates should be stopped immediately, for consuming them for use by the ferro alloy and steel industry in future. l Geological Survey of India The (GSI) and Indan Bureau of Mines (IBM) should undertake further exploration of chrome ore deposits beyond 100 meter depth seriously and evaluate its expected life for the country. The government should handover the work of further mineral exploration to private parties with requisite experience. It is necessary to the

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