The document summarizes the outlook for the Indian ferro alloy industry. It discusses key factors driving demand, including growth in crude steel and alloy steel production. The ferro alloy industry's structure and production levels are presented. It also examines raw material availability and infrastructure needs, particularly for power and manganese and chrome ores. The document concludes by noting opportunities for India in global markets given power issues facing competitors.

1. Federation Of Indian Mineral Industries (FIMI)
Presented At
Manganese/Chrome Ores and Ferro-Alloys
Buyer-Seller Interface
Indian Ferro Alloy Industry – An Outlook
Prabhash Gokarn, Tata Steel
13-14 May, 2010

2. 2

3. CONTENTS
 Steel Industry Snap  Demand
Shot Demand of Steel
Expected Production
Ferro Alloy Capacity Utilisation
 Ferro Alloy Industry Capacity Addition
Demand Drivers
Industry’s Structure
Capacity  Infrastructure
Production, Exports & Imports
 India’s Competitiveness
 Raw Materials and
Inputs
 Conclusions
Manganese
Chrome
Power
3

4. STEEL INDUSTRY
A SNAP SHOT
4

5. PRODUCTION OF CRUDE STEEL
60000
50000 16933 18000
15390
40000 INDUCTION FURNACES
30000 13250 14820 14500
EAF UNITS
309 315 264
20000 ASP ,VISL
21868 21789 21759
10000 SAIL,RINL,TISCO
0
2006-07 2007-08 2008-09
2006-
2006-07 2007-
2007-08 2008-
2008-09
50817 53857 54523
9.38 % 5.98 % 1.24 %
QTY IN ‘OOO TONNES 5

6. CRUDE STEEL IN 2009-10(APR’09-JAN’10)
 Production of Crude
Steel was 52.20 MT,
CRUDE APR’ 09 – % CHANGE
a growth of 7.2 % STEEL JAN ’10
 The main producers Main 19.43 MT 5.7 %
produced 19.43 MT, Producers
Others 32.77 MT 8.0 %
a growth 5.7% . Producers
 The other Producers Total 52.20 MT 7.2 %
produced 32.77 MT,
a growth of 8%.
6

7. INDIA AS A GLOBAL MAJOR
INDIA LIKELY TO
OVERTAKE RUSSIA
BY 2010-11
2010-
7

8. STEEL GROWTH PROFILE
 Indian economy is growing @ 8-9 % - Presently
7.75 %
 In January 2010, Index of Industrial Production
Growth was 17.9 % as compared to the level in
January 2009 .The Cumulative growth for the
period April 2009-January 2010 stands at 9.9 %
over the corresponding period of the previous year.
 Growth Index for Consumer Durables – 22 %
 Growth in Automobile production was 17 %.
8

9. STEEL CAPACITY
(In Million Tonnes)
Steel Plants Capacity likely in 2011-12
SAIL 24.80
RINL 6.80
TATA 10.00
ESSAR 14.50
JSW 11.00
JSPL 10.50
ISPAT 5.00
BHUSHAN POWER & STEEL 4.00
BHUSHAN STEEL LTD. 6.00
OTHERS 28.50
TOTAL 124.10
9

10. FERRO ALLOY INDUSTRY
10

11. DEMAND DRIVERS OF FERRO
ALLOYS
Ferro Alloys are used primarily in steel making as
deoxidant and alloying agent. Depending upon the
process of steel making and the product quality
envisaged, the requirement of Ferro Alloys varies
widely.
Demand Drivers of Ferro Alloys:
Crude Steel Production
Alloy Steel Production
Stainless Steel Production
11

12. INTRODUCTION TO FERRO ALLOYS
Principal Functions of Alloying :
Increases Corrosion / Oxidation Resistance,
Increases Hardenability, Tensile Strength Wear & Abrasion
Resistance
Increases High Temperature Strength, Creep, Strength, etc.
Ferro Alloy Industry :
Part of Core Sector under Ministry of Steel
 Supplying Crucial Intermediates to Steel Industry
 Completed Five Decades
Bulk & Noble Ferroalloys used in Steel Production as
De-Oxidant
Alloying Agent
12

13. INDUSTRY STRUCTURE
 Fully Integrated Advantages
- Having Ore and Electricity
- Competitive cost of  Better Cost Advantage
Production
 Partially Integrated
- Having either Ore or
Electricity  Distinct Edge if Ore/
- Having Captive Ore/Electricity
Electricity is available
gives an edge
 CPPs give an alternate
 Non Integrated
revenue stream
- Dependant on buying Ore
and Electricity
- Facing tough Competition
 Benefits if Prices are High
13

14. CAPACITIES
32% 5%
Capacity (in Million Tonnes)
1%
Manganese Alloys 2.50
62% Ferro Silicon 0.20
Chrome Alloys 1.30
Noble Ferro Alloys 0.04
FeSi Mn Alloys Noble Fe Alloys FeCr TOTAL 4.04
14

15. REGION-WISE CAPACITIES
BULK FERRO ALLOYS – CAPACITY in MVA
EAST WEST CENTRAL NORTH SOUTH INDIA
 MANGANESE ALLOYS 875 150 317 7 225 1574
 FERRO SILICON 119 - - 6 71 196
 CHROME ALLOYS 695 24 42 13 106 880
 TOTAL 1689 174 359 26 402 2650
64% 7% 14% 1% 15%
 Ferro Alloy Industry is concemtrated in Eastern India :
 Near major resources – Mn Ore & Chrome Ore
 Near major Steel Plants
 Near areas of cheap, available power
15

16. PRODUCTION PERFORMANCE
Qty in ‘000 Tonnes
Ferro Alloys 2008-09 2007-08 2006-07
HC Fe Mn 370.5 378.0 281.0
Refined Fe Mn 14.1 13.2 15.7
Si Mn 845.4 858.6 738.3
Refined Si Mn 46.0 52.8 44.7
Fe Si 99.6 83.7 92.6
HC Fe Cr 814.9 948.4 801.1
Refined Fe Cr 2.4 0.2 0.2
Other Ferro Alloy 27.5 29.7 27.8
Total 2220.4 2364.6 2001.4
% of Increase (-)6.1 18.15 21.6.
16

17. EXPORT PERFORMANCE
Qty in ‘000 Tonnes
Ferro Alloys 2008-09 2007-08 2006-07
HC Fe Mn 101.3 101.19 42.0
Refined Fe Mn 20.2 12.6 12.2
Si Mn 300.4 262.6 152.1
Fe Si 37.2 9.4 7.9
HC FeCr 491.7 483.0 287.7
Other Ferro Alloys 9.3 9.3 8.6
Total 960.1 878.8 510.5
% of Increase 9.25 72.14 20.51
Value In Million $ 1561.37 1131.78 377.55
% Increase In Value 37.96 199.77 38.93
17

18. IMPORT OF FERRO ALLOYS
Qty in ‘000 Tonnes
Ferro Alloys 2008-09 2007-08 2006-07
HC Fe Mn 6.0 2.0 1.0
Refined Fe Mn 16.0 20.0 11.0
Si Mn 0.2 0.5 0.2
Fe Si 82.7 96.3 86.8
HC /LC Fe Cr/Ch Cr 12.4 20.2 19.1
Other Ferro Alloys 15.4 17.2 9.1
Total 132.7 156.2 127.2
% of Increase 15.04 22.80 30.73
Value in Million $ 340.99 271.17 172.13
% Of Value 25.75 57.54 28.88
Import Duty % 0 5 7.50
18

19. IMPORT CUSTOMS DUTY
120.00%
Import Duty on Ferro Alloys
105.00%
100.00%
85.00%
80.00%
Axis Title
60.00%
50.00%
40.00% 30.00%
25.00%
20.00% 15.00%
25.00% 7.50% 5.00%
5.00%
20.00% 20.00% 0.00%
10.00%
0.00%
1992- 1993- 1994- 1995- 1996- 1997- 1999- Jan-04 Jul-04 Mar-05 Mar-06 22-Jan- 30-Apr- Jan-09
93 94 95 96 97 99 2003 07 08
19

20. RAW MATERIALS & INPUTS
20

21. Manganese Ore
As Per Indian Bureau of Mines Survey Report of 1-4-2005
1-
Total inferred reserves of Manganese Ore - 378 MT
Proved Reserve 77 MT
Probable Reserve 61 MT
Total Recoverable Reserves 138 MT
Present Production: Over 2 Million Tonnes
Imports 2008-
2008-09 2007-
2007-08 2006-
2006-07
(In Tonnes)
Tonnes)
824,297 686,052 284,202
Imports % 41 % 34 % 14 %
(Mainly HG Mn Ores are imported)
21
Source: IBM/Ministry of Commerce

22. Chrome Ore
As Per Indian Bureau of Mines Survey Report of 1-4-2005
Total inferred reserves of Chrome Ore - 213 MT
Proved Reserve 31 MT
Probable Reserve 35 MT
Total Recoverable Reserves 66 MT
Present Production Around 3.5 Million Tonnes
Imports 2008-
2008-09 2007-
2007-08 2006-
2006-07
(In Tonnes)
Tonnes)
94,415 1,21,000 4,800
Imports % 3% 3% 1%
(Imports are negligible, that too of Lumpy Cr Ore, which is in short supply)
Source: IBM/Ministry of Commerce

23. POWER
Low Power Generation Cost in India - Comparable to the
World
High Power Tariff due to :
- Low Plant Load Factor – inefficient generation
-High Transmission & Distribution Losses - inefficient
transmission
-Cross Subsidies to Agriculture
State wise variation in Electricity : availability, power
tariff, power quality
23

24. POWER
Positive Impact of On-going Power Reforms :
- Captive Power Plants – advantage of an alternate
revenue stream.
- Power Wheeling
- - New Generation Capacities being set up
- - Alternative Energy Sources apart from thermal : gas
based, wind, nuclear
CAPACITY ADDITIONS IN NEXT TWO YEARS
(ESTIMATED)
 CAPTIVE POWER PLANTS (13 UNITS) 1000 MW
24

25. POWER CRISIS IN CHINA
Positive Impact On Indian Ferro Alloy Producers of Power Crisis In
China :
China biggest electricity producer & consumer in the world
China has been facing regional power shortages since 2002 (Liaoning, Jiangsu,
Zhejiang, Guangdong provinces in particular)
Lack of long-distance power transmission capacity – no national grid, 6 regional grids
long-
China needs to add new annual capacity of 48GW in a steady state growth model
High dependence of China on Hydro-Power(30%)
Hydro-
Northern areas experience shortages in winter due to increased heating demand &
problems with coal deliveries.
Eastern & southern areas are prone to shortages in late spring/early summer as
temperatures & air-conditioning demand rise, while reservoir levels & hydro-electric
air- hydro-
output falls.
China power tariff increases – competitiveness of India increases.
Opportunity of India to export ferro alloys in markets where
China is till now dominent.
dominent.
25

26. POWER – SOUTH AFRICA
• Electricity supply dominated by the State owned utility of South Africa, ESKOM.
• ESKOM has a capacity of 35 200 MW from 20 power plants.
• ESKOM generates around 2/3rd of the electricity produced in the whole of Africa
• Eskom provides about 95% of South Africa's electrical power
• Generation primarily coal-fired, One nuclear power station at Koeberg, Two gas
coal- Koeberg,
turbine facilities, Two conventional hydroelectric plants, and Two hydroelectric
pumped-
pumped-storage stations.
• In 2008 South African electricity demand exceeded supply capacity.
• Eskom increased tariff by about 30% and 20% recently, More importantly, all
industries face power restrictions – including ferroalloy industry; limiting ability of
South Africans to expand market share temporarily.
Opportunity of India to consolidate position in global ferro
alloys trade & seize the value-buildup opportunity!!
value-
26

27. DEMAND
27

28. FINISHED STEEL DEMAND
(INDIA)
(Million Tonnes)
Product 2011-12
(GDP growth at 9 %pa)
 Flat 41.32
 Non-Flat 29.02
 TOTAL FINISHED STEEL 70.34
28

29. PROJECTION – CRUDE STEEL
PRODUCTION (INDIA) (Million Tonnes)
Producer/Route 2010-11 2011-12
 A) Oxygen Route
 1) SAIL (Incl. VISL) 19.48 21.53
 2) RINL 6.60 7.60
 3) TSL 8.00 9.00
 4) JINDAL:
 a) Corex-BOF 1.50 1.50
 b) BF-BOF 3.50 4.00
 c) MBF-EOF 0.80 0.80
 A) TOTAL OXYGEN ROUTE 39.88 44.43
 B) Electric Furnace (EF) Route
 1) SAIL (ASP & SSP) 0.65 0.65
 2) Other EAF Units 11.25 12.15
 Induction Furnace Units 10.50 11.00
 B) TOTAL EF ROUTE 22.40 23.80
 C) NEW UNITS PROPOSED 10.00 12.00
 D) GRAND TOTAL A+B+C 72.28 80.23
29

30. PROJECTED SS DEMAND IN INDIA
IN ‘000.TONNES
YEAR FLAT LONG TOTAL
 2010 1685 373 2058
 2015 3185 900 4085
 GROWTH 11.5 % 17.5 % 12.3 %
SOURCE: ISSDA MARKET RESEARCH
30

31. CAPACITY UTILIZATION
Quantity in Million Tonnes
Capacity Production Capacity
During 2009-10 Utilization %
 Manganese Alloys 2.50 1.40 56
 Ferro Silicon 0.20 0.10 50
 Chrome Alloys 1.30 0.85 65
 Noble Ferro Alloys 0.04 0.03 75
 TOTAL 4.04 2.38 59
31

32. CAPACITY ADDITIONS
CAPACITY ADDITIONS IN NEXT TWO YEARS(ESTIMATED)
FERRO ALLOYS CAPACITY
MANGANESE ALLOYS (42 UNITS) 980 MVA
FERRO CHROME (8 UNITS) 440 MVA
FERRO SILICON (3 UNITS) 54 MVA
TOTAL 1474 MVA
32

33. INDIA’S COMPETITIVENESS
Ore Power Reductants Logistics Labour Overall
 CIS 2 2 2 3 2 11
 China 1 2 3 3 3 12
 Europe 1 2 1 3 1 8
 India 2 2 2 2 3 11
 Japan 1 1 2 3 1 8
 South Africa 3 2 2 3 1 12
1 – Low availability,
2 – Moderate availability,
3 – Advantageous availability
33

34. SWOT
STRENGTHS: WEAKNESSES:
Mineral Reserves High Cost of Capital
Growth prospects of Steel Industries High Cost of Grid Power
Low Labour Cost Dependency on Reductants
Proximity to Consumers Unavailability of High Grade Ores
Proximity to Ports for Exports Lowering Import Customs Duty
Cheap Power Option from CPP Less importance to R&D and
infrastructure
OPPORTUNITY: THREATS:
Booming Steel capacity/market Mushrooming growth of Ferro Alloy
Plants
Scope for improving infrastructure
Increasing Imports of Ferro Alloys
Industrial & Economic Reforms
Exports of raw materials
Captive Power Plants
Increasing Export Market
Opportunity in Ferro Alloys 34

35. INFRASTRUCTURE –
THE ROAD AHEAD
Infrastructure includes:
 Electricity, Telecommunication, Transport Sectors – Roads
and Bridges, Railways, Ports, Airports, Irrigation,
Water Supply and Sanitation, Storage and Gas Distribution
Sectors
 Project investments as % of GDP – 9 % in 2011-12 from
6.53 % from 2008-09
 Investment Plan during 11th and 12th 5 year plans US$ 15200
trillion
 Ports, Airports, Electricity and Storage are key focus areas
 Private – Public participation to play major role
 Private sector investment to be around 30 % - 40 %
35

36. INFRASTRUCTURE -TARGETS
 POWER
Additional power generation capacity about 78,577 MW
 NATIONAL HIGHWAYS
Constructing 8,737 Km of roads, including 3846 Km of National Highways in the North East
 RURAL
Constructing 1,29,707 Km of new rural roads , and renewing and upgrading existing.
 RAILWAYS
Constructing Dedicated Freight Corridors between Mumbai-Delhi and Ludhiana – Kolkata
8132 Km of new railway lines; gauge conversion of 7148 Km.
Modernisation and redevelopment of 22 railway stations.
Introduction of private entities in containers trains for rapid additions of stocks and capacity
36

37. INFRASTRUCTURE -TARGETS
 PORTS
Capacity addition of 485 MT in Major Ports,345 MT in Minor Ports
 AIRPORTS
Modernisation and redevelopment of 4 metro and 35 non-metro airports.
Constructing 3 Greenfield airports in North East.
Constructing 7 other Greenfield airports .
 TELECOMMUNICATIONS AND INFORMATION TECHNOLOGY
Achieving a telecom subscriber base of 600 million, with 200 million in rural telephone
connections.
Achieving a broadband coverage of 20 million and 40 million internet connections .
37

38. OPPORTUNITIES AND
POTENTIAL AREAS
Power Roads Transmission &
Generation Distribution
US $ 143bn US $40bn US $116bn
Coal Refineries
US $ 26bn Investment US $22bn
Estimated
in Energy &
Cross Country Infrastructure Oil & Gas
Pipelines Upto 2012 US $100bn
US $ 10bn US $ 587 bn
Ports LNG Terminals Railways
US $ 20bn US $ 10bn US $ 100bn
38

39. CONCLUSIONS
 Indian Economy is expected to grow at an accelerated growth
rate of 8-10%.
 Steel Production is expected to be around 75 million tonnes by
2011-12.
 Welcome sign for Ferro Alloy Industry as domestic consumption
of Ferro Alloys will increase.
 Raw Material and Logistics will play a crucial role.
 Captive power plants give the option of cheap, un-interrupted
power as well as alternate revenue streams.
39

40. CONCLUSIONS
India has the potential to be a major player in the Global Ferro
Alloy Industry replacing China in the coming years.
 Industry’s dominance in Asian market to rise in future.
 Industry’s capacity is more than sufficient to meet the domestic
requirement of Steel Industry.
 If export growth rate is not maintained domestic market will be
plagued with overcapacity.
 Need to acknowledge market factors & seize market opportunity
ferro alloys and steel, now!!
40

41. Minerals Ferro
Alloys
Mineral Ferro Alloy
Producers Steel Producers
WORKING TOGETHER TO DOMINATE THE WORLD 41

42. 42