RELEVANCE OF DRI IN THE SUSTAINABLE GROWTH OF INDIAN STEEL INDUSTRY 3RD INDIA INTERNATIONAL DRI SUMMIT 2016 Aditi Tarafdar & Saptarshi Bhattacharya 19th August 2016, New Delhi

CONTENT PRESENT STEEL SCENARIO PRESENT DRI SCENARIO IRON AND STEEL MAKING ROUTE ADOPTED IN INDIA CRUDE STEEL PRODUCTION SHARE EXPECTED STEEL AND DRI SCENARIO CHALLENGES DUE TO NATURAL GAS CHALLENGE DUE TO ENERGY AND ENVIRONMENTAL ISSUES LONG TERM SUSTAINABILITY CONCLUDING REMARKS 3rd largest producer of steel after China and Japan. 19.08.2016 Company Confidential

PRESENT STEEL SCENARIO World steel production, 2015 : 1621 MT Indian steel production, 2015 : 89 MT Indian steel consumption, 2014 : 84 MT World ranking in steel production : 3rd World ranking in steel consumption : 3rd Indian steel industry has maintained its growth path, even the industry in general has confronted the adverse effect of global over capacity and economic volatility. World prod in 2005: 1148, representing a CAGR of 3.5% Indian steel prod in 2004-05: 43.4, representing a CAGR of 7.4% Source : World Steel in Figures 2016, WSA 19.08.2016 Company Confidential

MAJOR STEEL PRODUCING COUNTRIES OF WORLD - 2015 3rd Capacity 110 MT in 2014-15 in india Cap utilisation 81 % 2014 scenario: 1st – China – 822.8 2nd – Japan – 110.7 3rd – USA – 88.2 4th – India – 87.3 5th – S. Korea-71.5 6th- Russia – 71.5 Source : World Steel in Figures 2016, WSA 19.08.2016 Company Confidential

DOMESTIC STEEL SCENARIO The National Steel Policy 2005 envisaged steel production to reach 110 mt by 2019-20. Expansion plan KPO- 3+3 JSW, Dolvi-2 JSPL, angul POSCO Tata Gopalpur SAIL VSP BSL BPSL Unfavorable issues or challenges are land acquisition and regulatory clearances. Foreign direct investment (FDI) in steel not geeting meaningful due to regulatory bottleneck. NOTE : (1) As per JPC Statistics 2014-15 (2) As per Working group on Steel for 12th Five Year Plan 19.08.2016 Company Confidential

STEEL CONSUMPTION TREND Steel consumption CAGR (2005 to 2014) : 7.7 % Steel production CAGR: 7.43% (2004-05 to 2014-15) Source : Steel Statistical Yearbook 2015, WSA 19.08.2016 Company Confidential

WORLD DRI SCENARIO Sustenance and continued growth of India steel industry will necessitate huge input of raw materials Source: World Steel Association, 19.08.2016 Company Confidential

DOMESTIC DRI PRODUCTION 2004-05 to 2010-11 2011-12 to 2014-15 GROWTH RATE: 2.35% 2004-05 to 2010-11: CAGR: 12.7% 2011-12 to 2014-15: CAGR: -5.3% 2014-15 to 2015-16: GR: 2.35% Source: SIMA, 2015 19.08.2016 Company Confidential

DRI CONSUMPTION IN INDIA 24.3 25. 1 CAGR: 4.2% 2004-05: 10.29 2015-16: 16.14 Source : JPC statistics, several editions 19.08.2016 Company Confidential

DRI CONSUMPTION PER TON CRUDE STEEL CAGR: 4.2% DRI kg/ton of total CS: 300 (avg) DRI kg/ton of electric CS: 500 (avg) Source : JPC statistics, several editions 19.08.2016 Company Confidential

IRON & STEEL MAKING ROUTES CURRENTLY ADOPTED IN INDIA IRON MAKING BLAST FURNACE HOT METAL STEEL MAKING COREX HOT METAL BOF EAF DR-SHAFT FURNACE LIQUID STEEL DRI INDUCN FCE DR-ROTARY KILN DRI OPEN HEARTH 19.08.2016 Company Confidential

CRUDE STEEL PRODUCTION SHARE 58% crude steel by EAF/EIF route Process Route World India Oxygen Route (%) 70 BF/COREX /BOF/THF/EOF : 42 Electric Route (%) 30 DRI - EAF : 26 DRI – EIF : 32 Source: JPC, Year 2014-15 Major Indian steel production is dependent on EAF/EIF route Hot metal can replace DRI partially in EAF/EIF charge Scrap availability is an issue DRI will continue to be one of the main charge material for electric steel making 19.08.2016 Company Confidential

STEEL AND DRI DEMAND IN INDIA Steel consumption, 2014 : 84 MT Projected steel demand, 2025 : ~ 155 – 190 MT Expected domestic crude steel : ~ 132 – 162 MT production Expected crude steel production : ~ 46 – 57 MT (through Electric steel making route) Projected DRI demand, 2024-25 : ~ 23 – 28 MT Steel demand: CAGR 7.7%: 190 CAGR 5.75%: 155 Considering 85% of CS demand by domestic production in 2024-25 : Considering 35% through EF route in 2024-25 : DRI 500 kg per ton of EF steel making Considering past trend of DRI consumption growth rate of 4.2%, demand in 2024-25 will be around 23.5 MT 19.08.2016 Company Confidential

CHALLENGE DUE TO NATURAL GAS Restricted availability of natural gas for production of gas based DRI. Imported liquefied natural gas (LNG) more costly, and not feasible. Alternatives of gaseous reductant source need to be developed at cost effective price. 19.08.2016 Company Confidential

CHALLENGE DUE TO NATURAL GAS (CONT’D) RECENT INNOVATION IN GAS BASED PROCESS : 19.08.2016 Company Confidential

CHALLENGE DUE TO ENERGY AND ENVIRONMENTAL ISSUES Pollution control measures gained more prominence in the steel sector in recent past. Energy Intensity and CO2 emission have become the key parameters, influencing the DRI industry. Aim is to reduce specific energy consumption below 25 GJ/tCS in future. 19.08.2016 Company Confidential

CARBON EMISSION FOR DIFFERENT PROCESS ROUTES IN INDIAN STEEL PLANTS 8 40 19.08.2016 Company Confidential

LONG TERM SUSTAINABILITY Adoption of appropriate production processes/technologies Environment friendliness Proper utilisation of locally available raw materials Financial viability Long Term Sustainability 19.08.2016 Company Confidential

CONCLUDING REMARKS To improve the quality of basic raw materials and develop suitable beneficiation technologies to suit the Indian condition. To utilize iron ore fines, including beneficiated micro fines, in relevant agglomeration techniques like pelletising. Coal gasification to produce syn-gas for use in direct reduction or use of alternative fuel replacing natural gas. Explore possibility of utilising alternative energy sources eg. Coal Bed Methane. 19.08.2016 Company Confidential

CONCLUDING REMARKS (CONT’D) To develop and adopt technologies and practices which will have favorable impact on energy consumption and carbon dioxide emission. To focus on technologies for reducing water consumption in sponge iron plants, including program to ensure zero discharge Considering limited availability of scrap for electric steel making, there will be substantial demand of DRI in future With adoption of appropriate policy framework, the outlook would appear to be bright for the DRI industry, particularly in view of small and medium scale steel industries. 19.08.2016 Company Confidential

THANK YOU Aditi Tarafdar aditi.t@dastur.com Chief Engineer +91.9830681668