Demand growth in steel consumption will form the basis of the new national steel policy, a draft of which is expected to be ready in another six months.
PK Misra, Union steel secretary, at an interactive organised by the Merchants? Chamber of Commerce, said steel demand was expected to touch 193 million tonne by 2020, and accordingly a new steel policy was being framed to address the issues that were confronting investments to add capacities.
The new national steel policy being worked out to replace the 2005 policy would broadly dwell on issues such as capacity addition, constraints in supply of raw materials, required legal framework for setting up projects, required infrastructure for steel industry?s growth, the technological route that has to be adopted for setting up steel mills, type of research and development that a steel producer should undertake and the product mix a steel plant should have, Misra said.
But he signalled uncertainties in terms of adding capacities through 10 mt utra mega steel projects, the idea which the steel ministry floated in 2009 on the lines of ultra mega power projects.
Misra said an ultra mega steel project would need 5000-6000 acres, besides huge requirement of water, which is running scarce.
The ministry of environment and forest also have some genuine concerns and in the current scenario no concessions could be given for availing natural resources with mineral blocks having to be allotted via the bidding route.
?Natural resources should find price discovery,? Misra said, adding that in such conditions feasibility of ultra mega steel project were in question.
However, the inter-ministerial group, headed by Misra himself, is currently taking views of different ministries and after it comes out with a draft proposal it would call for the views of industry too. But aggressive capacity addition would certainly be required since steel demand in India is picking up by 11%. It would reach 13% in 2011 and 14% in 2012, Misra said quoting World Steel Association report.
Bulk of the demand would come from the infrastructure sector since the government has already decided to double the plan out lay at $ 1 trillion for infrastructure in the 12th Five-Year Plan period starting April 2012, he added.
He said the national steel policy of 2005 was framed for a 15-year period, but the demand projection was at 120 mt by 2020. This demand would surpass by another 73 mt by then with the 120 mt demand coming up by 2014. So, a new steel policy has to be framed keeping with the time and ?shorter the period taken, better the projections?, he said.
However, the ministry was considering 2025 as the period for demand projection and it has projected 267 mt of steel demand by then. This would require 430 mt of iron ore supply per annum to the domestic steel makers and the issue of raw material supply has to be addressed accordingly in the new steel policy, Misra said.
?The steel ministry wants unabated exports of iron ore to be checked. But the ministry of commerce wants a graduated approach over a period of ten years to bring about the check since a lot of livelihood depends on iron ore exports,? Misra said.
He said though reserves of iron ore in India were currently estimated to be 25 billion tonne, the ministry of mines felt that it would go up in the course of exploration.