Future of coal, iron and steel – ET Infra


Vikram Mehta, Partner EYG Member firm & India Region Leader – Mining & Metals and Ashish Joshi – Director EYG Member firm

In India’s march to becoming an economic powerhouse by 2047, it is a tightrope walk for the government and industry as they balance the increasing need for coal, iron ore and steel –all required for growth targets – with Sustainable Development Goals (SDGs) and stiff climate targets.

The steel, coal, and iron ore industries are foundational pillars of global and Indian economic growth. The inter-connections between these industries are complex and dynamic, as are the driving forces of supply and demand that determine their performance.

The global steel market reached a value of US$874.6b in FY22. The market is predicted to reach a value of US$1,052.25b (Source-IMARC) by 2027, with a CAGR of 3.02% from 2022 to 2027. The government’s target is to achieve 300 MT crude steel capacity by 2030-31.

Iron ore is the source of primary iron for the world’s steel industry with almost all (98%) iron ore is used in steelmaking. India has one of the largest (Over 30 billion Tons) reserves of iron ore but has deposits which are of lower grade. India ranks fourth globally in iron ore production.

Coal is the world’s most affordable energy fuel and extensively used for electricity generation. The country’s power demand is expected to double in the coming decade. At present, more than half of the country’s installed power generation capacity is coal-based.

By 2030, the share will be similar at about 54%, according to a recent EY survey on emerging trends and challenges in coal, iron ore and steel. Moreover, in the energy mix, coal scores in reliability over the seasonal and diurnal cycle of renewable energy. Coking coal reserves in India stands at 34.5 billion tons however it is not of adequate quality to form good coking coal on account of high impurities. India largely fulfils its coking coal requirements through imports from Australia.

While clean energy capacity in the country is growing exponentially, India will continue to require coal, iron ore and steel for economic development. Even developed economies have realised since last year that coal, often touted as ‘pollutant’ in the fight to reduce emissions, cannot be wished away. Nor can mining of metals such as iron ore or making steel.

Digitisation and adoption of technology
According to the World Economic Forum (WEF), technological advances in mining have the potential to deliver more than $425b to the industry. There are several tangible benefits that may be realized by increasing adoption of emerging technologies in mining & steel making.

India’s digitization roadmap, however, must cover the coal, iron and steel sectors end-to- end. In addition to technologies that improve downstream processes, a more comprehensive set of digital measures is needed.
Innovation in automation, digitisation and electrification can have a fundamental impact.

According to the same EY report mentioned earlier, autonomous vehicles, remote operating centers, automated drilling and boring systems, GIS/GPS and drones are among the new technologies that can reshape the mining sector itself.

Sensors, an Internet of Things environment, big data and artificial intelligence will enable decision-makers to monitor as well as gather data in real-time. In coal and iron ore mining, big data can improve the end-to-end logistics supply chain, predictive maintenance systems and overall safety levels. ML algorithms can analyse images taken by drones to determine the mineralogy of mining areas.

Integrated solutions will include steel plant operations such as procurement plan based on need and the properties of the feed material, inventory norming, and optimised blending in, say, sinter plants.

Broader Clean Technology Roadmap

Sustainable supply of energy and raw materials is a compelling enough reason to find newer ways to attract investments and funnel expertise into R&D as well as proven sectors such as Clean Coal Technologies (CCTs).
Given that more than 90% of coal mined in India is from opencast mines, improved coal washing and beneficiation (to remove impurities before combustion) can lead to higher quality supplies from mechanical opencast mines.
Carbon Capture, Utilization and Storage (CCUS) is another technology in use. It captures CO2 emission from fossil fuel-based power plants and stores it underground or uses it elsewhere.

Top gas recycling can recycle up to 90% of the exhaust gas from blast furnaces and reuse it for combustion. This, along with CCUS, offers a solution to significantly reduce emissions in iron ore and steel production.

Technologies such as coal gasification, liquefaction and hydrogen production convert coal into gaseous or liquid forms, which can be used as feedstock for various chemical and industrial processes.

Till recently, funding was mostly directed towards renewable energy sources. But there is a shift in mindset as it is becoming evident that phasing out coal completely in the near future is not possible. In June 2020, Prime Minister Narendra Modi announced an INR 20,000 crore investment by 2030 in coal gasification projects to utilize 100 MT of coal.

Beneficiation also leads to higher iron content while reducing silica and alumina in the feed material. This can result in more consumption of lower-grade ore and fines for steelmaking as well as lower temperatures and coating built-up in kilns. If the dependence on high grade ore is continued, the resources would get depleted in another 15 to 20 years considering expected growth in steel production.

Among clean technologies, it is early days for green hydrogen, but it holds a lot of promise in decarbonisation. Several large companies have plans in this direction, according to the same EY report.
Policy interventions

The Government of India has also helped in the development of the metals and mining sector in India by:
a) Launching key policy initiatives
b) Regulatory interventions in the auction process and Levy of duties and land availability

The Steel plants in India are in the inlands, often in remote areas with severe logistics challenges. Digital solutions can optimize the logistics for inbound and outbound materials flows and ensure the least fuel burned per ton of material moved.

Anticipating the needs of the future, the government has already started working on the infrastructural readiness of mega projects in logistics, like Sagarmala, Bharatmala and Dedicated Freight Corridor. With the budget announcement of highest capital outlay for Indian Railways of INR 2.4 Lakh Crores and 100 transport infrastructure projects identified for end- to-end connectivity for ports, coal, steel and other sectors, these logistical challenges can be gradually mitigated.

Conclusion

While large-scale operations recognize this and are already applying digital and other technologies, for best results, digital transformation solutions should be tailored to smaller operators’ capabilities.
Focus on clean technologies can address the challenge of affordability, reliability and sustainability in the core sectors of coal, iron and steel.

India has much at stake as it balances economic and climate imperatives. Therefore, close collaboration between policymakers and industry will be vital for sustainable outcomes.

(Authored by Vikram Mehta, Partner EYG Member firm & India Region Leader – Mining & Metals and Ashish Joshi – Director EYG Member firm)

  • Published On Jun 5, 2023 at 03:54 PM IST

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