15.

The capital investment made by existing DRI plants is summarised

below:

Plant Capacity Year of commis- Investment

TPA sioning Rs. crores

SIIL, Unit 1 30,000 1980 11.8

SIIL, Unit 2 30,000 1985 8.2
OSIL 1,35,000 1984 39.8

IPITATA 90,000 1986 35.0

BSIL 1,50,000 1989 112.0

The present requirement of capital investment for smaller size (up to

60,000 TPA) coal based plant adopting indigenous technology varies
between Rs.6500 to Rs.8000 per ton of yearly installed capacity. Thus,
the capital investment for 30,000 TPA plant based on this technology
has been indicated to be varying between Rs.45 crores to Rs.49 crores.
The operating costs of the plants comprises variable costs like costs of
raw materials, fuel, power, stores etc. and fixed costs for salaries and
wages of employees, repair and maintenance, depreciation, interest and
others. The present day typical cost of production of sponge iron is
Rs.2,954 per ton (including Rs.1,754 per ton variable cost and
Rs. 1,200 per ton fixed cost) for coal based plant. A reduction upto
about 3% in cost of production is possible by utilising some of the
waste products. The present selling price of coal based sponge iron is
reported to be varying between Rs.3500/t to Rs.4100/t.

16. The existing coal based sponge iron units in the country include the
plants of SIIL, OSIL, IPITATA, BSIL AND SISCL. The total installed
capacity of the existing coal based plants is 5.85 lakh TPA. The gas
based plant of Essar Gujnarat based on Midrex technology having a
capacity of 8.8 lakh TPA comprises two modules. The first module
was commissioned in March '90 while the second was commissioned
in July 1990. Most of the existing plants have plans to expand their
capacities. The additional planned capacity of existing coal based
plants is 5.2 lakh TPA while EGL's plant is planned to have an
additional capacity of 7.2 lakh TPA. Grasim Industries, Goldstar, Ispat
Group, Bharat Forge, Usha Rectifier, Jindal and Mukand are some of
the other companies having proposals for putting up large capacity new
plants. Thus, the installed capacity of sponge iron at present including
Plant SIIL OSIL IPITATA BSIL SISCL

Production:
Period 1989-90 1987-88 1988-89 (15 1990-91 No commer-
months) (7 months) cial pro-
duction
Tonnage 52930 89000 68937* 71.300
Cap. Utili- 88.0 65.9 61.0 81.0
sation %
Av. Metalli- 90+2 90 90 91-92
sation %
Consumption /ton of DRI
Iron ore t 1.90-1.95 1.45 1.54-1.77 95% yield
NC Coal t 1.50-1.55 1.1 to 1.15 1.20-1.53 0.45 CFix/Fe
ratio
Water Cum 10.0 7.0 7.0
Power kwh 155-170 141 140 80
*Since August '90, production higher than rated capacity

18. Orissa Sponge Iron Limited : The OSIL plant is based on ACCAR
technology of Allis Chalmers Corporation of USA. The technology
uses non-coking coal and HSD. The installed capacity of plant was
150,000 TPA. During the initial years of operation, OSIL faced a
number of problems in plant operations, but with dedicated research
and development, they have been able to solve many of the problems
and in the process, were successful in absorbing the technology. The
main problems faced were the accretion or ring formation in the kiln,
poor metallisation of the product and higher coal consumption.
OSIL were successful in overcoming the problem of accretion and poor
metallisation by controlling the raw material feed and the temperature
profile of the kiln. For reducing the high consumption of coal, OSIL
modified their coal feeding system by introduction of coal slinging
from the kiln discharge end and achieved the desired results.

19. Ipitata Sponge Iron Limited : Ipitaita is the first plant where
indigenously developed direct reduction technology was put on
commercial scale. The plant was commissioned in 1986 and since then
there had been a number of problems in the plant operations. The main

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 Iron (HBI) has opened new avenues to DRI like oxygen steel
making and foundaries. Many of the Midrex plants also have
achieved capacity utilisation of over 100%.
iv) SL/RN technology of Lurgi GmbH is the most favoured coal
based technology and 31 units at 10 different places with a
total annual installed capacity of over 4.8 million tonne are
operating on this technology.

v) Lurgi after comprehensive development work have modified

their heating technology. The new system involves partly
feeding of coal through the kiln discharge end. This is done by
pneumatic injection of fine and coarse coal through two separate
tubes. Air injection in preheat zone is done through air nozzles
as well as tubes while in reduction zone air is introduced
through tubes only.
vi) Submerged air injection to the charge bed, newly developed
pneumatic coal injection from discharge end of the kiln, waste
gas system and recovery of sensible heat, injection of iron ore
fines through discharge end are some of the salient features of
the process.

23. The other coal based processes, namely CODIR process of Krupp
MDH. DRC process of Davy Mckee, ACCAR process of Allis
Chalmers/Boliden and indigenously developed TDR technology have
only limited commercial application. Out of these, CODIR process,
which had only one plant to its credit in South Africa, has some
commercial success recently. SISCL's plant based on this technology
has just been commissiosned and two more plants are under
construction and would be ready in 1991 and 1992 respectively. Only
one plant each is operating on DRC (Scaw Metals, S.A.), ACCAR
(OSIL, India) and TDR (Ipitata, India) processes. Jindal Strips
Limited are installing plant based on their recently developed coal
based technology.

24. Most of the available DR technologies both the coal based and gas
based have been so far imported in the country. The gas based
plants on imported technology have been commissioned recently but
the plants based on solid reductant technologies have been erected,
commissioned and operated for quite some time and the plant operators
had good opportunity of technology absorption. They have been able
to overcome the technological problems in the initial stages and bring
about certain improvements in the operations. Sponge Iron India
Limited, the first entrants in the sponge iron field, have also
engineered, erected and commissioned the second DRI unit and with

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 this experience they are offering technology and engineering services
for setting up coal based DRI plants up to 30,000 TPA capacity with
98% indigenous equipment.
25. Indigenously developed TDR process have now been proven and the
technology is available for setting up of plants up to 90,000 TPA
capacity. Indigenously developed technology of Jindal Strips Limited
is being adopted at their Rigarh plant in M.P. Jindals are also using
100% indigenously manufactured equipment. The capacity of each of
the two units being installed is 100,000 TPA. This indicates that there
are no technological gaps in respect of coal based technologies
especially for the plants of capacity up to 100,000 TPA DRI. As
regards the gas based plants, the reforming of natural gas with steam is
not new to Indian industry and the knowhow for engineering, erection
and commissioning of the same is available in the country. But
technology for gas reforming by reactor top gas used in Midrex
process is not available in the country.

26. The following conclusions relating to sponge iron industry could be

drawn from the present study :
i) To meet the country's demand of 31.0 million tonne per annum
of finished steel by the end of the century, substantial
contribution is expected from mini steel industry. For the
purpose, it is necessary that mini steel industry upgrades the
technology for minising energy consumption and improving
productivity and product quality.

ii) To overcome the shortage of scrap, mini steel industry should

establish facilities so as to use maximum proportion of DRI in
the charge.

iii) Replacement of scrap by EAFs is possible to the extent of 20%

to 30% when charged in batches. With provision of continuous
feeding arrangements, the proportion of sponge iron can be
increased to 40% to 50% in the charge. With UHP furnaces, use
of sponge iron exceeding above limits is possible.

iv) Power generation by utilising waste heat of the DR process and

utilising the same in arc furnaces will help ease the problems of
power shortage to mini steel industry.
v) Most of the existing coal based DR plants have now been
stabilised and the plant operators have successfully absorbed the
imported technologies. TDR the indigenous technology has also
been proven to be successful now. EGL's plant based on gas

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 based Midrex technology, though commissioned recently, has
achieved rated capacity in a short time.

vi) The installed capacity of sponge iron is expected to exceed 6.5

million tonne per year by 1994-95 with about 70% contribution
by gas based plants.

vii) SIIL, IPITATA and Jindals have developed capabilities of

providing completely indigenous technologies for coal based
DRI plants. Indigenous machinery manufacturers are also
capable to supply almost 100%, equipment indigenously.
However, technology for reforming of NG by reactor top gas and
certain equipment for gas based plants are not available in the
country.

27. The following recommendations are made to ensure the desired growth
of the industry:-
i) Adopting indigenously available technologies for settingg up of
coal based DRI plants.

ii) For gas based, technology may have to be imported. In that case
negotiations may be held for maximum indigenisation of the
equipment and time bound arrangements of technology transfer.

iii) Increasing pellatisation capacity of the country based on large

iron ore deposits with high proportion of fines/blue dust.
iv) Long term policy in respect of allotment and pricing of natural
gas and coal to sponge iron industry.

v) Coal authorities should pay special attention for production of

superior grade noncoking coal to cater to the needs of sponge
iron industry.

vi) Incentives to new integrated Direct Reduction Electric Furnace

(DREF) units and for modernisation of existing steel units.

vii) For testing of raw materials for new projects, facilities of

laboratory and pilot and demonstration scale plants available
with SAIL, SIIL and other organisations, may be utilized.

viii) Provision of emergency power in new plants and power

generation units based on waste heat utilisation in DR process
plants.

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