India’s ambitious green steel goals depend on challenge of scrap supply

India has tough targets when it comes to increasing the volume of steel scrap being consumed by the country’s steel sector, but to reach its targets it will have to consider the supplies of such material that are available to Indian mills, an industry conference has heard

“It is our commitment that, by 2030, we should reduce CO2 emissions by 50%. [To be] able to do that, scrap is an extremely important resource,” Jyotiraditya Scindia, India’s minister of steel, said on Saturday February 4 at the International Indian Material Recycling Conference, organized by the Material Recycling Association of India (MRAI) in Kochi, southwest India.

“Today’s 15% of scrap usage will increase to almost 25% in the next five years, which means the percentage of scrap used in the production of steel should go up to 50%, with only 50% being dependent on iron ore,” the minister said. Achieving this would help save tonnages of coking coal, iron ore and limestone, he added.

“[Indian] domestic scrap generation will increase, and there is increasing investment in [scrap] processing and yards in India,” Ruchika Chaudhary Govil, joint secretary at the ministry of steel, said at the same event on February 2. India currently consumes around 30 million tonnes per year of steel scrap.

Demand for scrap will rise to 65 million tpy by 2030, while local scrap supply will be just 59 million tpy, according to industry analyst PwC, so imports will be required to fill the gap.

India currently has crude steelmaking capacity for 154 million tpy, panelists at the event said, but the government has long aimed to have capacity for 300 million tpy by 2030.

To ramp-up steel scrap use, industry figures say that the country will have to both improve its collection processes and bring more scrap supply into the organized sector.

The Indian scrap sector has not grown significantly over recent years, although it has seen greater formalization. “The pie is the same size, but there is a shift from the unorganized to the organized sector,” Zain Nathani, managing director of Nathani Group, said at the event.

Vehicle scrapping

One method through which India seeks to enlarge the overall pie is the vehicle scrappage policy, which was launched by Prime Minister Narendra Modi in 2021 and came into effect last year.

It requires passenger vehicles older than 20 years and commercial vehicles older than 15 years to pass a “fitness and emissions test” to retain their road registration. If they cannot, they are recommended to be scrapped.

The policy is “gaining traction,” according to Surinder Kumar Gupta, chairman of MSTC, an Indian government-run agency. The country currently has around six existing, active registered vehicle scrapping facilities (RVSFs) run by firms such as Mahindra.

In the coming years, three more such facilities will come online, he added, which could generate around 6 million tpy of scrap.

Imports to jump

A rise in scrap imports is another necessary development for the Indian steel sector. In five to six years’ time, India could be the world’s largest steel scrap importer, according to Sanjay Mehta, MRAI president.

Imports should be around 8-9 million tonnes in the current financial year and 11-12 million tonnes in the next one, he added.

But availability of imported steel scrap was becoming ever more uncertain for Indian buyers. The question “where will all this scrap come from” is often posed by both sellers and consumers.

“Moving toward more electric-arc furnace-based [steel] production, other countries may put protectionist duties on scrap [movements],” a UK-based scrap trader said.

The EU’s revised Waste Shipment Regulation was likely to choke-off the supply of lower-grade scrap to Indian buyers in the next three years.

Moreover, scrap bans were also in place in the key exporter countries of South Africa and the United Arab Emirates, which were already causing headaches to Indian importers and mills.

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