1. Ferro Alloy Industry in India – Challenges & Opportunities
Steel Furnace Association of India
Subodh Pandey
Chief of Marketing & Sales
Ferro Alloys & Minerals Division, Tata Steel India

2. DISCLAIMER:
The presentation is an amalgamation of author’s own views and thoughts.
Tata Steel does not necessarily subscribe to the views and thoughts expressed in the presentation and should not be held responsible for the same.

3. CONTENTS
CHROME ALLOYS INDUSTRY IN INDIA
MANGANESE ALLOYS INDUSTRY IN INDIA

4. Ferro Chrome Demand in India (‘000MT)
STAINLESS STEEL DEMAND: SHIFT IN USAGE PATTERN
All figs in million MT
Consumption mix shifting towards premium grades: 300S+400S likely to become 40% of total demand
Construction, transport & industrial applications to drive future growth 7% 7%
Ferro Chrome Demand in India (‘000MT)
2005
2010
2015
300
350
500
End use application:
300S: Rail, Construction, Process Equipment & Transport
400S: Electronics & Transport
200S: Tubular Products, Kitchenware

5. INDIA FERRO CHROME PRODUCTION
fig in ‘000 MT
India has been a net exporter of value added Ferro Chrome to the world
Further capacity additions are also planned in the next 5 yrs
While the demand of Ferro Chrome in India would increase, still India will continue to be a net exporter of Ferro Chrome.
60% production by 6 players while the balance is fragmented 7%
10%
India’s position in the Ferro Chrome market is primarily because of the Chrome Ore availability in Orissa belt
Source: IFAPA

6. 3.5 million MT production in 2010 Proven reserve: 213 million MT
CHROMITE RESERVES IN INDIA
SUKINDA VALLEY: The Chrome Capital
8 players are having Cr ore mines with most of them having downstream Ferro Chrome production facilities
U/G mines likely to be explored in next five years with higher grade of Cr Ore.
Higher refractoriness in Indian ore
3.5 million MT production in 2010
(12% of world in 2010)
Proven reserve: 213 million MT
Cr Ore Reserve
Source: IBM
Source: IBM

7. ADVANTAGE INDIA:
Stainless Steel production in India is projected to ~7-8% in the next five years including potential for increasing exports of Stainless Steel from India.
This will lead to a sustained demand of FeCr in line with the Stainless Steel production.
Strong Growth in Demand
Backward linkage
Indigenous Chrome ore available of High grade quality.
Power cost
Commissioning of many new power plants including captive ones(CPP)- may help reduce the gap in cost of power compared to SA, China
Proximity to market
Freight advantage in SS markets such as China, Korea & Japan compared to Kazakh, South Africa
Short sailing time.

8. HOWEVER, COMPETITIVE ADVANTAGES OF INDIA IS A CONCERN COMPARED TO OTHER PRODUCING REGIONS
Key Success Factor SA
Kazakh
China
India
Power +
+++ -
Chrome ore reserves ++
Availability of Chrome ore
Reductants (Coke/Char/Anthracite)
Proximity to markets
Basic infrastructure (ports/ Rail/road)
Government Support
Overall Competitive Advantage
+++ : Strongly positive

9. CONTENTS
CHROME ALLOYS INDUSTRY IN INDIA
MANGANESE ALLOYS INDUSTRY IN INDIA

10. CARBON STEEL OUTLOOK IN INDIA
Projected Indian Carbon Steel Growth (Mn MT)
PMT of FP FeMn : ~3.5 kg SiMn : ~ 2kg
PMT of LP: FeMn : ~2 kg SiMn : ~12kg
Source MBR, CRU

11. SiMn Demand – Domestic (kT)
SILICO MANGANESE DEMAND IN INDIA
SiMn Demand – Domestic (kT)
Indian LP Steel production at CARG of 9% based on expected infrastructure lead demand in the 5 year period.

12. FeMn Demand – Domestic (kT)
MANGANESE ALLOY DEMAND IN INDIA
FeMn Demand – Domestic (kT)
Indian Steel & Stainless Steel (200S) production at CARG of 9% in the 5 year period.

13. MANGANESE ALLOY PRODUCERS IN INDIA
449
Key concern:
Availability of High Grade Mn Ore in India
Increase in power cost across India
SiMn Production in 2010
FeMn Production in 2010
Many Producers (~ 50) with wide range of furnaces : 4 to 33 MVA
Export led production growth (50% exports) of Mn Alloys based on imported ore
Capacity addition of ~ 954 kt in next 5 yrs in SiMn and ~ 223 kT in Fe Mn

14. DEPENDENCE ON Mn ORE ON GLOBAL ORE MARKET
in million MT Mn content
SA, Gabon, Brazil & Australia have high grade ore reserve( >44% Mn content).
China has primarily low grade ore reserves(<30% Mn Content)
India Produces ~ 3MnT of Mn Ore mainly Medium Grade

15. MAJOR MN ORE PRODUCERS (INDIA)
MOIL is the largest player in open market for HG Mn

16. ADVANTAGE INDIA Large Capacity for Ferro Alloys Ability to immediately
Industry currently operating at 60% of rated capacity
New capacities coming up. Capacities coming up near ports (Vizag, Haldia).
Ability to immediately
scale up
Freight advantage in markets such as China, Korea & Japan compared to Ukraine or South Africa
Short sailing time, freight advantage
Location near high growth regions
Domestically sourced LG & MG Mn Ore available for blending with imported HG Mn Ore.
Comparable power, labour & inland freight costs to China.
Cost Advantage over China
Import of Mn Ore has increased from ~ 0.3 MnT in FY07 to 1.3 MnT in FY11

17. IN SUMMARY…
India has grown rapidly in Ferro Alloy Production and is a significant producer with more than 50 % getting exported
Robust growth in domestic consumption of both Ferro Chrome & Ferro Manganese alloys due to strong growth in both Crude & Stainless Steel
Apart from domestic demand, proximity to fast growing developing & developed economies provides exciting export opportunity
Likely future growth of Ferro Alloys in India augurs well for demand of furnaces. However…
Impending power crisis – availability and prices of coal is a cause of concern
Infrastructure issues – bottleneck in road, rail transport, port etc may impede export driven growth as well imports of higher grade Mn Ore
Investments in existing & new mines needs to be expedited to augment mineral resources
Technological investments: Usage of low grade mineral resources; increase efficiency of furnaces for cost reduction / productivity enhancement

18. THANK YOU

19. FeCr / Ch Cr producing countries
POWER TARIFF IN INDIA
CY11 (c/kwh)
FeCr / Ch Cr producing countries
CY12 (F) (c/kwh) 8
China 9
7.6
SA – Winter Season
9.5
5.4
SA – Normal
6.8 4
Kazakh
4.5
10.3
India - Orissa
10.9
5.9
India – Andhra
9.6
CY12 rates considered at same exchange rate as in CY11 for all currencies
Likely increase in power tariff in India/China due to escalation in raw material and input cost
South African tariff continue to be on rise during winter season ~ 40%.
Normal tariff in SA also to increase by 25%
Indian power tariff to increase further due to unavailability and high sourcing cost of imported thermal coal
Source : Own resources, info in public domain