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Pellet Industry - The Indian Scenario

Steel enjoys an ever-increasing demand all over the world. Iron ore reserves, therefore, tend to get gradually depleted due to constant mining. The iron and steel industry worldwide, thus, in the process of looking for alternatives to make use of low grade iron ore fines for ironmaking, has taken to the manufacture of iron ore pellets. In this way, it makes the best use of the available resources of iron ore. Modern technologies of beneficiation, sintering and pelletization of iron ore fines have brought about a paradigm change in the entire steelmaking domain. They enhance the productivity of the blast furnaces in steelmaking, thus lowering the cost of steel production.

This article discusses the process, technologies and advantages of pelletization and further, delves into the scenario of the Indian iron ore pellet industry.   

Pelletization Process & Technologies

The pelletization process is essentially a process of agglomeration and involves the rolling of micro iron ore fines into green balls (9-16 mm) prior to exposing them to high temperature for heat hardening. These micro fines (ultra fines) are either in the form of beneficiated concentrate or without beneficiation. Sintering is the alternative route of agglomeration. Thus, through pelletization, iron ore fines are converted to iron ore pellets (Fe2O3) of uniform size to be fed in the blast furnaces or DRI kiln (DRI). These iron ore pellets are regarded as superior ready-to-use feed material with better tumbling index and at lower cost when compared to calibrated iron ore. Their use, thus leads to considerable economic gains over time.  

The pelletizing process essentially consists of four basic stages – raw material preparation; formation of green balls or pellets; induration (heat hardening) of the pellets; cooling, storage and transport of pellets. 

There are several iron ore pelletizing technologies, such as Shaft Furnace Process, Straight Traveling Grate Process, Grate Kiln Process, Cement Bonded Process, etc. However, out of these, two technologies are the most popular ones – the Straight Traveling Grate (STG) Process developed by former Lurgi Metallurgie (now, Outokumpu) and the Grate Kiln (GK) Process developed by Allis Chalmer. Among these two technologies, the former, i.e. the STG Process is used in majority of the installed capacities the world over. In India, both – STG and GK processes are used with STG process gaining more popularity. This is more because of the fact that there are huge reserves of haematite available in the country.

Advantages of Pellets

Usage of pellets for ironmaking has the following advantages:

•   Pellets are uniformly sized (9-16 mm), having 63 per cent-68 per cent purity (mainly Fe2O3), and high porosity (25-30 per cent), thereby leading to speedy reduction and high metallization rates

•   Pellets with their high, uniform mechanical strength (even under thermal stress) and high abrasive strength, increase production of sponge iron by 25 per cent to 30 per cent, that too, with same amount of fuel

•   Quality is enhanced substantially. Sulphur/phosphorous content is reduced marginally. Iron content is increased by 0.5 per cent

•   Productivity is increased. Almost 20-25 per cent rise in sponge ironmaking, enhanced productivity of ironmaking through blast furnace route are observed. Uniformity of pellets leads to better permeability. Blast furnace operation is also stabilized

•   Cost-effectiveness is another advantage. That is, there is no loss while handling iron ore owing to the fact that pellets, due to their high and uniform mechanical strength, will never break at the time of transport or handling. Again, usage of pellets leads to reduced consumption of coal in sponge iron- making with lower fines generation. The cost of maintenance is also low since there is no need for crushing/screening of iron ore lumps. Refractory repairing cost is also reduced. When pellets are used in the steelmaking process, direct cost saving of around Rs. 1800/Tonne of hot metal is observed

•   Coke/coal consumption is reduced by 25 per cent thereby, resulting in low process gas emissions and as a result, improving the environment

The Indian Pellet Industry

The Indian steel industry has walked a long way – from a million tonne industry during the country’s independence to the world’s fourth largest crude steel producer and the leading direct reduced iron or sponge iron producer, today. The nation’s steel industry follows both – the traditional blast furnace route of steelmaking, as well as the DRI route. Iron ore, in both the cases, is the key raw material. India, although rich in iron ore reserves, however, is posed with some challenges, particularly, environmental and regulatory thereby, restricting its availability.

A steady growth of sintering/pelletization facilities is observed in the country. Although the domestic iron ore pellet industry is still considered to be in a nascent form, however, today, the Indian pellet industry has the working capacity of 66 Million Tonnes and has emerged as an independent economic activity, spread across the country’s mineral-rich belts.   

The Indian sponge iron industry dates back its emergence significantly, during 2005-2010 period. The industry, further, took up pace in the five yearly period after that. The period 2010-2013 experienced the highest growth in the country’s iron ore pellet industry. JPC’s (Joint Plant Committee) survey shows that as many as 17 units were commissioned at that time. Today, the industry employs more than 23,149 people, directly and indirectly. Odisha provides the highest employment in the Indian iron ore pellet industry. 

Units

As per the JPC data collected for the year 2013-2014, there are about 33 iron ore pellet units in India, most of them concentrating in the eastern region i.e. about 18 units (55 per cent) of the total. The rest, i.e., 45 per cent are almost spread equally between the southern (8 units) and western (7 units) regions of the country. The pattern of the spread of the pellet units in the country is much in accordance with that of the nation’s sponge iron industry. In the eastern region, Odisha alone has 12 units i.e. 36 per cent – the highest number in the country. After Odisha, the states are Karnataka (7 units), followed by Chhattisgarh (5 units).

Major Players 

The Indian pellet industry has some major players, including some integrated steel producers like Essar Steel, Jindal Steel & Power Limited (JSPL), JSW Steel Ltd., and some other players like KIOCL, Jindal SAW Ltd., Xindia Steels, Brahmani River Pellets Ltd. (BRPL), etc.

Production/Consumption/Exports from 2014-2017

Production, consumption, sales and exports of  domestic pellets are discussed below in the form of a table:

Projects & Acquisitions

The Bhilai Steel Plant (BSP) of Steel Authority of India Limited (SAIL), faces a challenge of depleting iron ore reserves, indicating further raw material supply issue. BSP’s Dalli-Rajhara iron ore complex in Chhattisgarh is witnessing exhausting ore reserves. Analysts apprehend the reserve to last for hardly 5-6 years at the current rate of mining. This might lead to a shortfall of about 3 MT of iron ore at 7.5 MTPA hot metal stage of BSP, after expansion. Therefore, in the process of ensuring raw material security, BSP is planning to set up a pellet plant at Dalli mine itself.   

Another ace steelmaker, Tata Steel, has signed an agreement for the acquisition of Odisha-based iron ore pellet manufacturer Brahmani River Pellets Ltd. (BRPL) for Rs. 900 Crore. BRPL has a 4 MTPA capacity pellet plant in Jaipur and a 4.7 MT iron ore beneficiation plant in Bardil. A 220 KM slurry pipeline connects the pellet plant with the beneficiation plant. By this acquisition, Tata Steel, apart from meeting its metallic requirements, will also be at the advantage of improving the feed mix for its Kalinganagar and Jamshedpur steel plants. The pellet plant is also going to enhance the operating efficiency and mitigate costs of blast furnace and operations in Kalinganagar.     

Forecasts

The domestic steel industry which primarily uses expensive lump ore, is gradually heading towards the usage of sintered ore and pellets. Therefore, more companies are taking initiatives in setting up pellet plants to produce iron ore pellets of reliable quality at lower costs of production. This would further lead to considerable higher efficiencies, both – in production of DRI (Sponge Iron) and in blast furnaces, as well, for production of iron. These pellets will cater to the export markets like China, Japan and Korea, besides the domestic iron and steel industry. The overseas markets are heavily dependent on imported iron ore to feed their blast furnaces and DRI (Sponge Iron) kilns.   

Pelletization in India, believe some industrialists, is forecast to achieve multi-fold growth, as India targets to achieve a capacity of 300 MT of steel by 2025. India’s pellet production capacity has the probability to cross 95 MTPA and out of this, 56 MT would be merchant plants. Although in a nascent stage and standalone mode of operation, there are, however, plans to carry on operation in an integrated mode with a growing consciousness of utility of pellets in steelmaking.  

What’s more, India’s steel production, as per some industry leaders, is going to touch 110 MT from the current level of approx. 45-50 MT (growing at an average 8-10 per cent annually) primarily, owing to a rising need for infrastructure. Therefore, it is crucial that the fines generated in iron ore mining are utilized for steel production.

Challenges

There are high possibilities of major changes in the domestic iron ore pellet industry. Issues, such as the on-going policies on the Indian iron ore market, the uncertainties prevailing in the global iron ore & steel market, the changing perception on pellets and their optimal usage in iron- and steelmaking are going to affect the domestic pellet industry.   

The overall capacity utilization level of the Indian iron ore pellet industry is low, with the average utilization level, as on 2013-2014, being only 38 per cent alone, when compared to 46 per cent of the units, taken separately. There are various reasons behind such low rate. However, the primary ones, which together pose as challenge for the industry are – slowing domestic economy; varying feed ore and additives quality; existing policy regulations; issues with land acquisition and statutory clearances; project financing and delays; unpleasant mining situation; uncertainties of supply in the domestic iron ore market; adopting process to changing process conditions; lack of R&D and technological bottlenecks. All these have collectively affected the input dynamics of the iron ore pellet industry, as well.

The greatest challenge, perhaps, is the non-availability of high grade iron ore for the domestic pellet market in the coming days. Again, the current export policy regime is considered ‘restrictive’ since it aims at regulating export-led production.  

Iron ore pellets exports witnessed a sharp rise from 0.8 mt in 2015 to 5.7 mt in 2016 from the Paradip Port. Indian pellet exports, overall, during April’16-January’17, were reported to be 6.7 MT, showing an increase. However, the recent round of auctions for iron ore plots, which observed a considerable rise in the price of the plots, might have negative impacts on exports of iron ore pellets, as well as iron ore. This is more because of the volatile nature of the global iron ore market, further resulting in unsustainability of the plot rates. Exports, therefore, may be jeopardized if global iron ore prices start dropping.

The second half of 2016 witnessed the domestic pelletmakers worry over a rise in the cost of main inputs like iron ore fines and furnace oil along with a fall in the realizations in exports, especially to China. Most of the domestic pelletmakers operate at depleted capacities. Some of them were even reported to have shut operations. Increase in furnace oil prices resulted in the rise in production cost by Rs. 50 per Tonne. With rising input costs, the average cost of pellet production would be between Rs. 2,900 – 3,200 per Tonne.       

Conclusion

From inadequate sintering and pelletizing capacities in India, a growing inclination towards pelletization and sintering is observed in the country. Today, they are considered as independent economic activities with substantial cost and operation gains. The domestic pellet capacity has reached an overwhelming 66.30 Million Tonnes.

More efforts should be directed towards fortifying India’s iron ore pellet industry. In order to meet the total demand for iron ore, efforts should be made towards – systematic development, including additional mining capacity in a ‘well calibrated manner’; encouraging investment in advanced mining methods; issuance of environment and forest clearances within specified time frame; grant and renewal of leases according to mining plans; encouraging the pelletization process through fiscal and other incentives for commissioning pellet plants; tapping India’s magnetite iron ore resources from haematite; expanding the country’s raw material base; developing R&D sector; giving more stress on centralized research units, etc.

Enough researches should be carried out to enhance the beneficiation potential, which is low in case of low grade haematite ores in the country’s eastern region. This, apart from raising costs, leads to environmental hazards including tailings. Indian government should come up with policy of setting up more and more beneficiation plants, that too in the mining areas themselves. The policy should also aim at facilitating setting up of SPVs with miners and end users for installing beneficiation plants of capacities, economically viable. The Indian government should also aim at new financial support schemes in form of subsidies, liberal tax schemes and incentives for the pelletizing sector, in order to make the sector more lucrative. Import duties on beneficiation and pellet plant equipments/components should be wiped out; import duties on pellets should be increased and export duty on the same should be abolished; export duties on iron ore fines should be held on to. All these collective efforts will help flourish the domestic pellet industry and consequently, the steel industry.      

(Sources: JPC, PMAI, Xindia Steels)