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OCTOBER 201017

The Indian FerroAlloy Industry:An OverviewThe Indian ferro alloy industry has successfully met the challenges andfaced the constraints faced by it in a determined manner. This is evident bthe surge in foreign exchange earned by the industry through exportsNotwithstanding a difficult year, value of exports by the Indian Ferro Alloindustry recorded a 37.96 percent hike at US $ 1561.37 million in 2008-09over US $11.38.78 million in the previous year. The IFAPA has madevaluable suggestions to the government for a healthy development andgrowth of the industry and the government should take proactive steps tosolve the problems faced by the industry.


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OCTOBER 201018

erro Alloys are vital additives

that are used in steelmakingFas deoxidants as well asalloying agents. These are added in

steel production process not only for

deoxidation but also for grain sizecontrol as well as for improvements in

the mechanical properties of steel.

Depending upon the process of

steelmaking, product quality envisaged

and the type of steel being made, the

requirement of Ferro Alloys varies

widely. Indian Ferro Alloy industry has

completed 50 yeas of its existence.

Ferro Alloys are used in steelmaking

and consists of less than one per cent of

the total raw materials required for

steel production. Despite being a very

low constituent, ferro alloys are vital

additives for steelmaking.

Demand drivers of FerroAlloys

The demand drivers of Ferro Alloys

are :

lCrude steel production

lAlloy and special steel production

lStainless steel production

Types of Ferro Alloys

The product mix of ferro alloys

consists of bulk ferro alloys and noble

ferro alloys

Bulk ferro alloys are Ferro

Manganese, Silico Manganese, Ferro

Silicon, Ferro Chrome and ChargeChrome. Noble ferro alloys are Ferro

Malybelenum, Ferro Titanium, Ferro

Tungsten, Ferro Vanadium etc.

Capacities of Ferro Alloys inIndia

Capacities of Ferro Alloys in India

during 2008-09 were as follows:

Manganese Alloys

Ferro Silicon

Chrome Alloys

Noble Ferro Alloys

Total

2.50 mt

0.20 mt

1.30 mt

0.04 mt

4.04 mt

In 2007-08, the total capacity of

ferro alloys in India was 3.6 hmt. Hence

there was a growth in capacity in 2009-

10 over the previous years was bout 11

per cent.

Capacities of bulk ferro alloys in

India: MVA, number of furnaces and

number of units are furnished in

Table1:

Table 1: Capacities of Bulk Ferro Alloys in India : 2008-09Alloys/Particulars

Manganese Alloys

Ferro Silicon

Chrome Alloys

Total Bulk Ferro Alloys

Capacity (MVA) No. of Tonnes No. of Units

1574

196

880

2650

203

30

58

291

98

16

30

144

Estimated Capacity Utilisation of Indian Ferro Alloy Industry

Type of Ferro Alloy Capacity (Mt)Production in

2009-10 (Mt) (E)Capacity

Utilization (%)

Manganese Alloy

Ferro Silicon

Chrome Alloys

Noble Ferro Alloys

Total

2.50

0.20

1.30

0.04

4.04

1.40

0.10

0.85

0.03

2.38

56

50

65

75

59

In 2007-08, capacity utilization was 65 percent.

Expected Capacity Additions of BulkFerro Alloys upto 2011-12

Manganese Alloys

Ferro Chrome

Ferro Silicon

Total Additions

42 units

8 units

3 units

980 MVA

440 MVA

54 MVA

1474 MVA

According to IFAPA estimates 13captive power plants with a totalcapacity of 1,000mw may come up by2011-12.Raw MaterialsManganese OreAs per Indian Bureau of Mines(IBM), the reserves as on 1-4-2005were as follows:

Total Infrared Reserves

Proved Reserves

Probable Reserves

Total Recoverable Reserves

378m

77mt

61mt

138 mt

Ferro Manganese Grade

Medium Grade

Total Proved Reserved Ferro Alloys Grade

5 mt

8 mt

13mt

Major reserves of Manganese Ore

are of BE grade and occurs in

Maharashtra, Orissa, Madhya Pradesh,

Karnataka, Jharkhand and Goa. As pe

IBM, India's present production o

Manganese ore is over 2mt.

Manganese is an essential requisite

for steel production for its capability o

sulphur fixing, de-oxidising and good

alloying properties. Manganese alloy i

introduced in steelmaking in the form o

ferro manganese, silico manganese andmanganese metal. These are produced

by the reduction of manganese ore with

carbon silicon at high temperatures in

blast furnaces and electric arc furnaces

(EAFs).

For production of one tonne of ferro

manganese inputs required are: 2.6

tonnes of manganese ore, 0.5 tonnes o

reductant, and 3 MWH of electricity

Silico manganese production is carried

out by reduction of manganese ore

quartizite and manganese slag with

coke.

S t a i n l e s s s t e e

accounts for about 5/6percent of the tota

p roduc t i on o f f e r ro

manganese and silico

manganese in India. The average

consumption of manganese alloys by

the Indian stainless steel industry i


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like to post healthy growth in comingyears, consumption of manganesealloys will also increase substantially.India is the seventh highestproducer of manganese ore in the

world. According to industry experts,the Indian manganese alloy industryhas the potential to meet the challengesdespite various constraints. With thenecessary supportive measures fromgovernment the industry can movefaster towards the path of sustainablegrowth and meet the requirement of theexpanding Indian steel industry infuture.Avai lab i l i ty o f h igh grademanganese ore is critical for theindustry. Manganese Ore (India) Ltd isunable to meet the increasing demandof the domestic producers and they arecompelled to import manganese ore. In2008-09, the import of manganese oreby India stood at 824,297 tonnes asagainst 686652 tonnes in the previousyear for the production of manganesealloy.Chrome OreAccording to Indian Bureau of Mines(IBM), the reserves of chrome ore inIndia as on 1-4-2005 were as follows:

In 2008-09, about 3.5 mt of chrome

ore was produced in India. Orissa

alone produces about 98 percent of

chrome ore in the country.

The sole and major supplier of

chrome ore to the country is ferrochrome industry is the Orissa Mining

Corporation (OMC). But the supply of

chrome ore is not sufficient for the

industry. Tata Steel and other major

chrome ore lease holders have

stopped supplies to other producers

and are using their own ore for their

own ferro chrome plants.

To avoid congestion by allotting

leases to a number of ferro chrome

producers for the captive use and in

the interest of ferro chrome industry,

government has allotted entire

chrome ore deposits in Orissa to OMC

which is a public sector undertaking so

that they can judiciously mine and

supply the materials to the ferro

chrome producers in the country who

do not have their own mining leases.

OMC has now the control over

around 80 per cent of the total chrome

ore leases in Orissa. The industry

maintains that proper allocation is not

taking place and the units outside

Orissa are suffering. The industry,213 mt

31mt

35 mt

6.6 mt

Total Inferred Reserves

Proved Reserves

Probable Reserves

Total Recoverable Reserves

OCTOBER 201020


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Ferro alloy industry is highlypower intensive. IFAPA maintains thatthough the generation cost of power inIndia is not high, the power tariff whichhas to be bourn by the ferro alloysindustry is high because of cross-subsidization to the agriculturalsector, low plant load factor (PLF) ofthe SEBs and other electricityproducing units and high transmissionand distribution (T&D) losses which ispresently estimated at over 35 percent.Electricity duty which varies fromstate to state in India createsadditional financial burden for theindustry. Though power sectorreforms are going on since 2003, theimpact of this development on longterm prices of power, specially to the

power intensive consumers like theferro alloy producers of the country, isdifficult to assess, since the electricitymarket in India still remain in a state offlux.Captive power generation may behelpful for the ferro alloy industry asthe cost of captive power is much lessthan the rates charged by the stateelectricity boards (SEBs).Production of Ferro Alloys inIndiaThe production of various types offerro alloys in India between 2005-06

and 2008-09 are shown in Table 2.

therefore, has to depend on imports. In2008-09, around 94,415 tonnes ofchrome ore was imported by India.The allocation policy of OMC isdisturbing the dynamics of the ferro

chrome industry as most of the unitlocated outside. Orissa has made hugeinvestments particularly to set up theircaptive power generation capacities.The Indian Ferro Alloy ProducersAssociation (IFAPA) is very muchconcerned with the decision to bar thenatural resources all over the country,while exporting the same to othercountries without any restriction.About 80 per cent of high carbonferro chrome produced in India goesfor the production of stainless steel.With projected higher growth instainless steel production in the

country in future, the domesticconsumption of HC ferro chrome willreach much higher levels. India holds aleading position in the world in theproduction of HC ferro chrome as wellas in its exports.India is the third highest globalproducer of chromium ore. Chromeore is used in the production ofchromium metal and various alloys ofchromium with iron, nickel, cobalttungsten, molybdenum etc. Chromiumimparts strength, harness, toughness,magnetism and offers resistance toabrasion, corrosion and also acts asdeoxidant.The u s e o f c h r om ium i nsteelmaking depends on the end-usepurpose. Low chromium steels withless than five per cent chromium andsmall quantity of nickel is used in theproduction of rails, automobiles,armoured plates etc. Intermediatechromium steels containing up to 12per cent chromium along with smallquantities of tungsten, molybdenum orsilicon are used in high speed valuesfor engines and equipment whichrequire resistance to abrasion,

corrosion and oxidation.High chromium steels are stainlesssteel and super stainless steels usedfor the manufacture of cutlery,cooking, utensils, aircraft and highspeed trains.Power

Table - 2 : Production of Ferro Alloys in India between 2005-06 and2008-09 (`000 tonnes)

Ferro Alloys

H.C. Ferro Manganese

Refined Ferro Manganese

Silicon Manganese

Refined Silicon Manganese

Ferro Silicon

HC Ferro Chrome / Charge Chrome

L.C. Ferro Chrome

Other Ferro Alloys

Total

2008-09

370.5

14.1

845.4

46.0

99.6

814.9

2.4

27.5

2220.4

2007-08

378.0

13.2

858.6

52.8

83.7

948.4

0.2

29.7

2364.6

2006-07

281.0

15.7

738.3

44.7

92.6

801.1

0.2

27.3

2000.9

2005-06

256.1

16.9

546.5

31.8

90.7

662.0

0.2

23.1

1645.4

Notes:

1. Refined Ferro Manganese is the total of MC ferro manganese and LC ferro manganese

2. Refined Silico manganese is the total of MC silico manganese and LC silico manganese

3. Other ferro alloys included noble ferro alloys

Perspective


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OCTOBER 201023

Table 3 : Exports of Ferro Alloys by India 2005-06 to 2008-09 (`000 Tonnes)

Ferro Alloys

HC Ferro Manganese


Silicon Manganese

Ferro Silicon

HC Ferro Chrome / Charge Chrome

Other Ferro Alloys

Total

% of Increase

Value in Million US$

% Increase in Value

2008-09

101.3

20.2

300.4

37.2

491.7

9.3

960.1

9.25

1561.37

37.96

2007-08

101.2

12.6

262.6

9.4

483.7

9.3

878.8

72.14

1131.78

199.77

2006-07

42.0

12.2

152.1

7.9

287.7

8.6

510.5

20.51

377.55

38.93

2005-06

19.8

4.0

119.3

7.8

258.9

13.8

423.6

27.62

271.75

(-) 1.24

It is observed that HC ferrochrome/charge chrome had the highest

share in the Indian export of ferro

alloys during the above years. the

growth of total exports in 2007-08 was

very high at 72.14 per cent over the

previous year. The increase in the

value of total exports of ferro alloys inthe above comparative periods at199.77 was also astronomical.Despite a year plagued by the globalcrisis, the Indian ferro alloy producers

maintained a growth in quantity andvalue of exports in 2008-09 over thepreceding year.Imports of Ferro Alloys inIndiaImports of ferro alloys in Indiabetween 2005-06 and 2008-09 areshown in details in Table 4.

Table 4: Imports of Ferro Alloys by India 2005-06 to 2008-09 (`000 tonnes

Ferro Alloys

HC Ferro Manganese


Silicon Manganese

Ferro Silicon

HC / LC Ferro Chrome / Charge Chrome

Other Ferro Alloys

Total

% of Increase

Value in Million US$

% Increase in Value

2008-09 2007-08 2006-07 2005-06

6.0

16.0

0.2

82.7

12.4

15.4

132.7

(-) 15.4

340.99

25.75

2.0

20.0

0.5

96.3

20.2

17.2

156.2

22.80

271.17

5

1.0

11.0

0.2

86.8

19.1

9.1

127.2

30.73

172.13

7.50

3.8

12.3

12.3

62.0

11.2

6.7

97.3

18.5

133.56

10

It is apparent from the above tablethat in 2008-09, production of HC ferromanganese, silico manganese, refinedsilico manganese, HC ferro chrome,charge chrome and other ferro alloyshas gone from the previous year. Thedecrease may be attributed to globalslowdown of steel industry whichstarted in October 2008 and affectedthe Indian steel industry adversely tosome extent.

The total production of ferro alloysin India in 2008-09 declined by 6.1 percent over the preceeding year.Exports of Ferro Alloys byIndiaThe Indian ferro alloys producersare exporting substantial quantities offerro alloys. In 2007-08, the exportshad a share of 37.16 per cent ofdomestic production which increasedto 43.24 per cent in 2008-09 despitethe global slowdown of the global steelindustry during the second half of thefinancial year.The export value in 2008-09reached a lvel of US $1561.37 over US$113678 in the previous year recordinga growth of 37.96 per cent.Detailed figures of the itemwisedexports of various ferro alloys between2005-06 and 2008-09 are furnished inthe Table 3.

It is apparent from the above table

that total import of ferro alloys has

declined by 15.4 percent in 2008-09

over the previous year due to a drop in

demand following the global crisis

which started in October 2008.

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OCTOBER 201024

However, the value of imports hasincreased by 25.75 percent due to highprices during the first half of financialyear 2008-09.M a j o r F e r r o A l l o y sProducers in IndiaThe names and product mix of someof the major producers of ferro alloys inIndia are shown in Table 5.Table 5: Names and Product Mix of Some of Major Ferro Alloy Producers

Name of the Producer Product Mix

Ferro Alloy Corp Ltd, Vizhinagram, A.P. Ferro Manganese Ferro Chrome

Maharashtra Electromelt, Chandrapur,Maharashtra (A subsidiary of SAIL)

Ferro manganese, Silico manganese

Universal Ferro & Allied Ltd.,Bhandara Maharashtra (units 1&2)

Ferro Manganese, Silico Chemicals,Ferro Silicon

Sandur Manganese & Iron Ore Ltd.,Hospet, Karnataka

Ferro Manganese, Ferro Chrome

Ispat Alloys Ltd, Balasore Orissa Ferro Manganese, Ferro Chrome

* Indian Charge Chrome Ltd, Chaudwar,Orissa

Ferro Alloy Corp Ltd, Balasore, Orissa Charge Chrome, H.C. Ferro Chrome

Charge Chrome, H C Ferro Chrome

Ferro Chrome, Charge Chrome,Ferro Silicon

* Indian Metals & Ferro Alloys Ltd.,Rayagara, Karaput, Orissa

* Tata Steel Ferro Alloys Plant, Bamlipar,Kendujhar, Orissa

Hc Ferro Chrome, Charge Chrome

Tata Steel Ferro Alloy Plant, Rawmet,Orissa

Tata Steel Ferro Alloy Plant,Gala Kendujhar, Orissa

Jindal Ferro Alloys Ltd., Kothavasala, AP

Jindal Stainless Ltd., Raigarh, Chattisgarh

VISL, Bhadravati, Karnataka (A SAIL unit)

M.B. Ispat Corp. Banunara, Bardhaman,West Bengal

* 100 percent Expert Oriented Units(EOUs)

Nav Chrome Ltd., Raigarh, Chattisgarh

Ferro Chrome Ltd., Orissa

Navi Bharat Ferro Alloys Ltd., Polanche, AP

Rohit Ferro Tech Ltd., Bankura, WB

VBC Ferro Alloys Ltd., Rudrasa, Medak, AP

Hc Ferro Chrome

Ferro Chrome

Ferro Chrome

Silico Manganese, Ferro OrissaManganese

Ferro Manganese, Silico Manganese

Ferro Chrome

Ferro Chrome

Ferro Chrome, Silico Manganese

Ferro Chrome

Ferro Manganese, Silico Manganese

Silico Manganese, Ferro Manganese

Constraints faced by the Indian

ferro alloy industry

The Indian ferro alloy industry is

facing many constraints, of which some

are highlighted below.

lThe Indian ferro alloy industry has

invested over Rs 5,000 crore and i

provides employment to about 2.4 lak

people both directly and indirectly. Th

industry has created adequate capacit

to meet the domestic demand as well a

to make substantial quantity of exportslAbout 41 per cent of the tota

installed capacity remained idle i

2008-09 for a decline in domesti

demand, high price and scarcity o

chromium and manganese ores.

lCustoms duty on ferro alloys ha

been reduced to zero, which ha

opened flood gates of imports at lowe

cost from China, Kazakhstan, Russi


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OCTOBER 201026

and South AfricaFerro alloy is a power intensiveindustry. The cost of power in Indiavarious from 245 to 490 paise per unitwhereas in China it is 150 paise,

Kazakhstan- 78 paise, Russia-85 paiseand South Africa - 105 paise.lThe Customs Duty on imports offerro alloys is NIL at present whereasthe duty on inputs required formanufacturing ferro alloys varies from2 to 7.5 percent.lStiff rise in the cost of rawmaterials and other inputslIncrease in road and railwayfreight and non availability of railwaywagons as per requirement.Major suggestions of IndianFerro Alloys Producers'Association (IFAPA)The IFAPA has made varioussuggestions to the Government to helpthe Indian ferro alloy industry for itshealthy growth and make it globallycompetitive. Some of these arementioned below:lThe government should reimbursethe Customs Duty on all ferro alloyexcluding ferro nickellThe government has reduced theimport duty on ferro alloy to zero.IFAPA maintains that it is imperativethat inputs like manganese ore, chromeore, vanadium pentoxide and other oresunder Chapter 26 of Customs Tariff asalso the duty on anthracide coal shouldbe brought down to zero percent toreduce the cost of manufacturing allferro alloys.lExports of manganese ore,chrome ore and concentrates should bestopped immediately, for consumingthem for use by the ferro alloy and steelindustry in future.lThe Geological Survey of India(GSI) and Indan Bureau of Mines (IBM)should undertake further exploration ofchrome ore deposits beyond 100 meterdepth seriously and evaluate itsexpected life for the country.

The government should handoverthe work of further mineral explorationto private parties with requisiteexperience. It is necessary to the

government to initiatefast track explorationprogramme like aerialsurvey to look potentialdeposits which needf u r t h e r e x p l o r a t i o nproving deposits.Conclusion

The Indian Ferro Alloyindustry has successfullymet the challenges and facedthe constraints faced by it in adetermined manner. The industryis earning valuable foreign exchangethrough exports. Despite a difficultyear, value of exports by the Indianferro alloy industry recorded 37.96percent hike at US $1561.37 million in2008-09 over US $1138.78 million inthe previous year.The IFAPA has made some valuablesuggestions to the government forhealthy development and growth of theindustry. The government on its partshould consider those suggestionsseriously and take proactive steps tosolve the problems faced by theindustry.The reduction of Customs Duty tozero on imports of ferro alloy isjeopardising the interest of theindustry. The distribution of chromeore by the Orissa Mining Corporation(OMC) should ensure to serve the

interest of the ferro alloy units locatedall over the country. The apparentconsumption of alloy and stainless steelin India in 2008-09 at 3.69 mt recordedgrowth of 9.82 per cent over 3.36 mt inthe previous year. The trend isexpected to continue in future also andwill help the domestic consumption offerro alloys substantially in future.The government should considerthe problems of the Indian ferro alloyindustry and make an in-depth study ofits problems highlighted by IFAPA andtake judicious proactive steps tosupport this small but vital industry inall possible manners.

AcknowledgmentsThis article is presented by T S Sundaresan, SecretaryGeneral, IFAPA at the 9th Asian Steel Conferenceheld on March 19-20, 2010 in Mumbai organised bySteelworld.

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