Jayaswal Neco to expand capacity despite slowdown

Jayaswal Neco Industries Ltd (JNIL), one of the leading DRI makers in the country, is all set for capacity expansion and is going ahead with its plans to set up a new unit at Bilashpur in Chhattisgarh. The proposed plant is likely to begin operations by 2014, a senior official of the company told Steel Insights.

The DRI plant with a total capacity of 2X500 tons per day (tpd) will be accompanied by a captive power plant with a capacity to produce 50 MW per hour. The company is also setting up a pellet plant at Raipur with a total production capacity of 1.2 million tons per annum (mtpa). This plant is also likely to be operational soon, the official said.

"We have not started construction of the plant at Bilashpur yet but other necessary approvals required to set up the plant including land acquisition, MoEF approvals etc. have already been received," he said.

"In fact, we are about to start the construction work soon so that we can operationalise the plant by 2014," he added.

Meanwhile, the DRI industry in the country continues to suffer from adverse market conditions. Abundant availability of non-coking coal reserves in India and successful generation of power through waste heat recovery methods had prompted the rapid development of this industry in the 1990s. But the increasing coal crisis and stagnant demand from the steel market in last few years has put the sector under duress.

The raw material supply is currently the main problem for the DRI sector. The move by the government of Odisha to slap huge penalties of over Rs 50,000 crore on mining companies for alleged illegal and excess evacuation of ore has further worsened the supply of iron ore. Also, the overall scenario of the real estate sector being not so well, demand for sponge iron has dropped significantly. However, there is a possibility of the demand to increase in the next few months.

For the DRI plants, high grade domestic coal gives better output than Indonesian coal as the latter contains high volatile matter (VM), high moisture, low char strength and is highly fragile. Indonesian coal can be used for DRI industry provided it is cost effective, but for most of the DRI makers, procuring imported coal is posing a problem due to the escalating cost. Hence, at the present scenario the industry needs more captive coal blocks to sustain their operations, A.K. Maitra, DGM of the DRI unit of Jayaswal Neco said.

"Since we have our captive coal mines, sourcing of coal is not much of a problem for us but every DRI producer is not that lucky. However, since we mainly depend on Odisha mines for iron ore supply, we are facing huge problems. But we expect NMDC to improve supply of iron ore in the next few months," Maitra said.

From a broader perspective, the overall scenario of the sponge iron sector of India is not much satisfactory as most of the small DRI makers have stopped production. However, the midsize and big players are continuing their production at 60-65 percent of their total installed capacity. There is an expectation that with the monsoons over, the real estate sector will start pulling up the demand for sponge iron along with it. How far this expectation is fulfilled would decide the fate of the industry in the near term. 

Source: Steel Insights
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