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Sustainable development based on environmental analysis for global competitiveness of Indian steel industry

Dr Ranajit Chowdhury

20 Aug' 04

So far as potential capabilities of Indian steel plants are concerned, India has a rich resource for steel making with plenty of raw materials including Good quality of iron ores with high percentage of iron contents. Abundant source of coal of different grades Cheap labour source and I sound technological base. Adequate deposits of limestone, dolomite and other fluxes India has potential for sustaining a large steel capacity to meet the domestic demand as well as export steel to earn foreign exchange for the nation. Strength of Indian steel industry is due to the infrastructure support from core sector like coal, power, chemicals, fertilizer, petroleum, textile, machine building, transport, ancillary etc. Qualitative steel (clean technology for green steel production) for sustainable development Clean technology i.e. upgradation through LD, BOF, dry quenching improved raw material handling with energy saving with improve production quality of steel, environment friendly with cost benefit in world market. This need has promoted development in the direction of evolving Environmental Management System (EMS) which can provide on organisation a frame work to balance and integrate economic and environmental interest. In fact, there are new entrants in steel making in India. Capacities for production of sponge iron, mild steel and downstream long and flat products are now there in our country . India's capabilities to produce pig iron, slab, seamless tube and cold rolling sheets at competitive price have been established. With devaluation of rupees and increased duty on scrap, import of scrap has become prohibitive for foundries and mini steel plants resulting in greater demand for pig iron. Cost of production of pig iron in India is lower than international price exporter of pig iron to countries like Japan and South East Asia rather than exporting iron ore. With the closure of a number of steel plant in USA and Germany, there is increased demand of seamless steel tube pipe. Developing countries like Brazil and Mexico have started exporting to USA. India, with its lower cost of production of seamless tube can enter into the market in a big way. On declining of export 1995-96 onwards with the achievement of rated capacity, by the new hot strip mill, of TISCO, commissioning of new mills of Essar Steel, Gujarat and Lloyd Steel and the modernisation of BSL and RSP for the production of high grade HR coil, has gone up, while export of steel has come down. Integrated steel plants, EAF, Corex, Ro melt process in EAF, Rolling mills, produces a wide variety of products in carbon as well as alloy and special steel meeting international specification. Innovative technology of micro addition of more earth (RE) to liquid steel and its wonderful effects on quality steel. The primary role of RE in steel is that of a scavenger of undesirable elements and a modifier of inclusion morphology. RE in steel is that of a scavenger of undesirable elements and a modifier of inclusion morphology. RE as a group are very surface reactive and combine readily with oxygen, sulphur, nitrogen to remove them from liquid steel bath. The deoxidation with RE gives lowest possible residual O2 lower than even that attainable by vaccum degassing. They also form high melting point intermetallic compounds with tramp elements 1 (Lead, Antimony, Arsenic, Tin etc.) ~ and neutralise their harmful effects. As a modifier of inclusions, HE have beneficial influence on the number, size, shape, hardness and composition of retained non-metallic of retained inclusions. They change the chemistry of inclusions by virtue of their strong reactivity to oxygen and sulphur, and form new compounds that constitute the main body inclusion in steel. The resultant inclusions being more refractory in nature, precipitate while the steel is still liquid, thus distributing them uniformly within the grains, which greatly increase the strength and ductility of steel at low temperature resulting in better mechinability and fatigue life. HE additions also change the character morphology of inclusion. Since the different inclusion types and their hardness and plasticity, having influence on the mechanical properties of steel, can be altered significantly in the presence of RE. Energy optimizing furnace Energy optimizing furnace (EOF) is the basic unit proposed in place of basic oxygen furnace used for conventional steel making process. This technology has been developed by KORF KG of Federal Republic of Germany in the early eighties for production of steel without the use of electricity. The process is being commercially exploited since 1982 but has been introduced in India, quite recently. The EOF process is essentially an oxygen steel making process using combined submerged (bottom) and atmospheric (top) blowing. Oxygen is injected horizontally through specially designed tuyers into the molten bath, and also into the furnace atmosphere through water-cooled injectors. The EOF process owes it's thermal efficiency to the optimized use of energy derived from the following three sources: Chemical energy released in the bath and from its greatly extended surface by the reactions between injected oxygen and the oxidizable elements including added carbon; Chemical energy derived from the gaseous oxidation reactions in the furnace atmosphere, involving CO and H2 released from bath; Sensible heat transferred by the hot gases from the furnace to the cold scrap charged into the pre heater. Solid Waste Generation in Indian Steel Plants (in Kg/t of CS) The present practice. is to dump them in open space or in excavated ponds, which creates environmental pollution in form of dusts and leachate and also needs huge investment. The solid by-products generated in SAIL plants can become profitable when disposed as saleable products. Out of total solid waste generated in our steel plants, 21 per cent are solid, 23 per cent are recycled and rest 56 percent is dumped. Future plans Utilisation of fly ash by making in bricks for use in building structure. Utilisation of fly ash in cement at making. Use of LD slag as railway truck ballast. Use of LD & BF slag for road making road and embankments. The last two points have been implemented. Particularly with regard to the utilisation of process slag and fly ash, railways, government bodies, construction agencies, PWD etc have shown keen interest in the use of slag as a substitute of the materials currently being used. Discussions are on with brick manufacturers for using power plant fly ash for the manufacture of bricks. Greenery efforts at SAIL plant & mines Massive afforestation programmes have been started at all plants & mines to maintain the ecological balance, which was distributed by the construction of plants and operation of mines to counteract the result of the adverse effect of the plant & mine operations. Plantations In 19934-95, around 11,554,000 saplings of different species suited to local conditions were planted in and around the steel plants. Cleaner technology options Considering the conventional steel 'making processes, some less polluting technology options in steel making such as new coke making technology and steel making energy optimizing furnace are discussed below. Coke making M/s. PACTI, U.S.A. have introduced a new technology for coke making, which is pollution free. The PACTI coke/energy production technology system provides a means by which energy (electricity or stream) can be produced utilizing recovered exhaust heat of coke plant. The exhaust heat is recovered with a modular boiler system and power generation plant. The following pollution control systems have been developed by : PACTI to assure a "a" base pollution free coke making system. Fugitive particulate' control system consists of a canopy enclosing the entire oven face during door opening, coal charging, and door closing operations. Particulate are trapped in a fabric filter collector and are recycled back into the coal charge. The pushing emissions are controlled by means of a pushing control shed to capture the push plume. The particulate matter captured by a fabric filter collector. Gaseous emission control system j includes the following technologies: Sulfur dioxide (S02) For Indian conditions with the use] of low sulfur content coal, adequate stack height can be provided to ensure the dispersion of 502 as per guidelines of central pollution control board. Nitrogen oxide (NOx) A staged generates combustion technique minimal amount of nitrogen oxide (NOx). The selective admission of primary air into the \ oven cavity, and the admission of secondary air into the sole flues, provide a "low temperature" (2,600° F) environment for combustion. This minimizes the potential of "Thermal NOx" generation and restricts NOx C formation to less than sixty (60) PPM. Hydrocarbons The ovens operate under negative ~ pressure. Toxic hydrocarbons are destroyed in the incineration chamber. Through the continuous temperature control during all phases of the process, the PACTI system achieves the complete (99.9%) thermal destruction of carcinogenic hydrocarbons, deriving from the contaminants in the process. Role of ISO 14000 standards 1ISO 14001 has generated. Considerable interest among corporate environmental managers. However, it is not only a tool for environmental management, it is likely to be a condition which is imposed on the market place. The ISO-14001 may be imposed by transnational corporation and importers on their global suppliers. While at present ISO 14001 is generally not a requirement for I: international markets, the signal T' received cleanly indicate that all I: corporations interest in being s internationally competitive should have ISO 14001 certification. Green engineering Green engineering is an emerging e concept, which is being increasingly c accepted for managing the b environmental effects for product a manufacture. The key elements of n green engineering are waste reduction, materials, pollution prevention and product enhancement. Green Engineering has a great potential for changing the observed conflicts between profitability and environmental quality into a win-win opportunity. Global competitiveness The review should include: Results from audits. Extent to which, the objectives and targets have been met. Continuing suitability of environmental management system in relation to changing conditions and information Concerns among relevant interested parties. ISO 14000 & ISO 9000 ISO - 14000 shares common management system principles with ISO - 9000 series of quality system standards i.e policy, planning, Implementation and operation, monitoring and corrective action and management review. Organisation may elect to use an existing management systems consistent of ISO - 9000 series as a basis for its EMS. However, the application of various elements of management system may differ due to different purposes and different parties. While quality Management Systems deal with customer's needs, EMS addresses the' need of broad ranges of interested parties any individual or group concerned 'with or affected by the environmental performance of an organisation and the evolving needs of society for environmental protection. Significance Environmental consideration like quality aspects is integral part of overall system - which are of concern to one and all. The role of s specification issued by ISO on environmental management is expected to be accorded with international acceptance similar to ISO 9000 series. Once these standards are published in the final form, it is expected that they would be made applicable in India by BIS in the form of IS/ISO 14000 as in the case of ISO 9000 by superseding the current standards i.e. IS 13967. Certification under ISO 14000 is c expected to become an essential e requirement for all organisations interested in export activities. Even for trading in the national market, this certificate would assume increasing importance with the role of multi-national expanding in the national scenario. This certificate shall, therefore, normally be an internal tool, desirable for improving enyironmental performance but as also a necessity for coping with the external pressure. Price cost competitiveness Cost comparison and profitability alone do not reflect a true picture as it avoids the problem of prices. . Local factors such as availability of cheap trained workforce, low power cost and low specific investment through adoption of most effective process technology make a substantial difference in the cost of production. Steel pricing There is a growing tendency to judge the international price competitiveness of Indian steel losing at the domestic price of steel products, which reflect the actual cost of production that may be higher than the international price. The major reasons for the rising cost r of production has been the use of r energy intensive technologies such: Open hearth furnace Wear absence of continuous casting Low productivity Deterioration of raw material quality Rising costs of inputs The three major determinants affecting the relative cost competitive positions are Domestic inflation rate Capacity utilisation of industry, and fluctuation Exchange rate Foreign exchange rates continue to have the greatest impact on relative international cost. It can be seen that the present exchange rate structured price of coal in India is comparable with those of other countries. The price of iron ore is very favourable for Indian steel makers. However, high consumption figure as well as poor yield have worked off advantage and lead to high cost of production. However, for electric steel making route (EAF), there is a need for radical structural changes in the pricing of domestic scrap and power to enable this industry to compete globally. In the area of total energy consumption against the figure of 4.5 to 6 G Cal/t of crude steel in other countries, the Indian figure ranges from 8 to 11 G Cal/t. However, these figures are expected to come down with for use of imported coal and washing of indigenous coal. India enjoys considerable edge over other countries, in terms of low employment cost (0.9 to 1.0 US $/h). However, man hours required to produce a tonne of steel in India is abnormally high at around 40-50. Other major components of the cost of production is the cost of financing which is quite low in USA and European countries even after restructuring and in countries like Brazil, South Korea and Japan whose industries are of relatively recent origin. In India, the main plant units are oversized due to poor process parameters achieved in the countty. Action plan/suggested strategies The Indian steel industry would need to move step by step to remain competitive in the global arena. The following aspects need close attention and monitoring. Attention and monitoring : Improvements in terms of road/rail linkage, port facilities and transformation, and communication. Time has come for the steel maker to develop their own infrastructure facility jointly or independently. Coastal supply is the cheapest mode of bulk transport. This mode has not been developed to any significant extent. Investment in the development of small harbours and inland waterways could be a significant step towards promoting global trade of Indian steel. Upgradation of technology in mini steel sector by increasing production of high value items through electric arc furnace/induction furnace units and with the use of improved quality/sizes of input materials. Increase in capacity of furnace in secondary steel sector with installation of UHP Transformers and facilities for continuous charging of DRI in line with international norms to achieve quality and cost effectiveness. Improvement in product quality, customers services and supply in tailor made sizes and lots. Progressive reduction in import duty must be proceeded by a special thrust on export. Further rationalisation of interest. rates/cost structures. Removal of customs duty or imports of second hand mill. Change in production strategy such as market driven. production/product mix planning, smaller batch site production, and shortening of production cycle. Changes in marketing strategy taking into account the abolition. of the freight equalisation fund. Export may be used as a strategy to combat instability of the. domestic market. To build up long relationship with major consumer segments similar to the partnership between auto and steel sectors developed in North America. To develop lighter, thinner and stronger material in order to defend the competitiveness of steel against threats from substitute materials such as plastic, aluminium etc. To persue measures to promote consumption of steel in the developing world by way of aggressive publicity and sale's promotion campaign for use of steel in movable areas i.e. packaging, storage of materials, interior decoration, seismic engineering, besides traditional areas. Utilising opportunities of the vast market potential in developing countries. Improving skill of negotiation with foreign buyers. Greater thrust on pre-sales and after sales service in tune with international market with focus on creation as well as maintenance of customers. Efforts directed towards improving productivity of production units. Improving labour productivity through training/retraining and. implementation of self-discipline and work culture. Adoption of right type of new technologies with adequate. consideration to the following aspects: Energy efficiency Compatibility of Indian raw materials and operating conditions Environment friendliness Cost effectiveness Thrust on R & D efforts directed towards future technologies as well as improving the quality of raw materials. Restructure of organisational set up for quicker response to changes in the market place in order to remain competitive. Global trade through entering into international joint venture through Financial and equity with-back participation arrangement; Technical, managerial and marketing co-operation; such joint venture should permit speedier market access than mere technology transfer arrangements. Merger, amalgamation or acquisition with the aim of achieving lower cost of production, higher profitability, more share of the target market and dominant presence in international market. Efforts to conform to ISO -9000 standards to take advantage of the export opportunities presented by the enlarged euro market. Greater participation of labour in all aspects of production, sales improvement, modernisation, restructuring etc. The challenges being faced presently by the Indian steel industry is not only the need for peaceful industrial relation scenario, but also for a positive attitude towards facing the competition from the international market and sustaining. Shifts in steel capacities towards third world war would mostly be in primary steel making area, with re-rolling capacities continuing to grow in the developed countries. Consequently, developing countries such as India may have to judge its trade of semis. Change in business strategy from the tonnage orientation to profit orientation. E Green accounting Conventional calculation Domestic Product (GDP) and Gross Nation Product (GNP). Environmental cost information In the new economic order of liberalization and globalisation unfolded in the 1990s, we have come to realize that despite its shortcomings, market forces are the best guarantee for human welfare. Admittedly, the dreams of common man have not been realised by the liberalisation and globalisation. It may even be argued that their economic situation was worsened and the environment has been degraded as a consequence of liberalisation and globalisation. It has opened new vistas and fresh choice. The problem arises because of the lack of information and transparency in economic systems required for that free play of market forces. Our inability to determine the true ecological costs and their, application in all our calculations distorts the picture. There is enormous potential of implementing I activity based costing to determine environmental cost of each activity. Eco-management Eco-management is the extension of TQM, which has as its basic belief in 1 the satisfaction of customers needs, by involving and empowering every one in the organization for minimisation of waste. Innovation and not incremental improvement Most business are engaged in incremental improvements. But mastering the dynamics of innovation can only change our life style. Environment-a competitive advantage Few business realize that environment is going to provide a competitive advantage to the business in 21st century just as TQM did in eighties and nineties. Markets in 21st century shall be driven by the imperatives of sustainable development. Sustainable feature is the end game Sustainability has now become the ultimate end game of business. Products which are not sustainable, will become obsolete. Sustainability has now become the ultimate end game of the business. Product, which are not sustainable, will become obsolete in the not too distant future. Our greatest challenge lies in transforming our products and processes in such a way, that they enhance customer value while radically reducing environmental impact. Introduction of life cycle assessment Life Cycle Assessment (LCA) is a tool to evaluate the environmental consequences of a product through all the stages right from its production to making the end product. Here it involves the energy and raw material consumed throughout the entire life cycle, beginning with sourcing of raw materials from the earth through manufacturing and distribution to consumer use and disposal. A complete LCA is carried out through; four components. Initiation (goals, definition and scooping). Inventory ~ analyses, impact analyses and improvement analyses. Life cycle analyses A Environmental quality assessment is a holistic environmental accounting procedure which quantifies ail wastes discharged to the environment and energy and raw material consumed throughout the entire life cycle, beginning with sourcing of raw material consumed throughout the entire life cycle); beginning with sourcing of raw materials from the earth through manufacturing and distribution to); consumer use and disposal. There are several advantages of life cycle analyses, methodology to understand and improve the environmental quality of packages raw materials and total products. First it enables the consumer products industry to identify the opportunities of waste reduction and utilization and thereby improving the products, packages and processing continuously. Second it represents an approach potentially acceptable to all legislators, scientists and environmental experts and hence a common basis for measuring waste and/or energy reduction. Third, it offers the consumer products industry a rightly credible technical justification for the choice feed materials, sourcing strategies and processing options. Life cycle analysis examines the four major stages of the 'Life' of a product quantitatively. This is also called life cycle inventory (LCI). Conclusion After considering these technical parameters and environmental analysis like life cycle, EMS and quality, the Indian steel plant can be considered globally competitive after implementation of those parameters.