The steel foundation

The steel industry contributes around 2 per cent to India’s GDP (gross domestic product) and will act as a foundation for the country to meet its ambition to double its GDP and per capita income to USD 6.69 trillion and USD 4,418, respectively, by 2030. The National Steel Policy, 2017, aims to provide this foundation by increasing India’s steel production capacity from 122 million tonnes (MT) in 2015 to 300 MT by 2030. The urgency to address global excess capacity and cut carbon emissions is driving a shift in how industries operate. The steel industry, which accounts for approximately 8 per cent of global emissions, is no exception.

As India adds new steel production capacity in the coming years to meet growing domestic demand, it is uniquely positioned to embrace sustainable steel production. Aligning with global sustainability goals will offer dual advantages: reducing environmental impact while boosting economic viability.

The role of the circular economy and the use of ferrous scrap offer a pathway to emission reductions while supporting economically viable steel production practices. Every tonne of scrap used in steel production saves 1.1 tonnes of iron ore, 630 kg of coking coal and 55 kg of limestone. It reduces water usage by 40 per cent and greenhouse gas emissions by 58 per cent. Energy savings are also notable, with a reduction from 14 megajoules (MJ) per kg in traditional methods to less than 11 MJ per kg via the electric-arc or induction furnace routes.

Considering the positive impacts of steel scrap, India rolled out the Steel Scrap Recycling Policy in 2019. It is built on the premise that scrap steel, once viewed as waste, is a resource that can reduce the industry’s environmental footprint.

Before the economic reforms of 1991, India’s steel consumption was as low as 17 MT per annum, compared to 125 MT in 2023. Given that the average lifecycle of steel products is 46 years (though with significant variability, depending on the steel product), much of the ferrous material is yet to reach its end-of-life for scrap usage. Hence, India faces a challenge in securing steel scrap supply. This also led to import of around 10.47 MT of ferrous scrap in 2023. This represents a significant increase from 6.84 million tonnes in 2022, reflecting the growing demand for steel scrap in the country’s production processes.

To address this scarcity, the policy aims to elevate domestic scrap supplies for India to become completely self-sufficient by 2030. Furthermore, it aims to integrate the informal recycling industry and improve scrap availability through organised collection. This includes establishing organised scrapping centres that adhere to strict environmental standards. These centres connect smaller scrap aggregators to major processing facilities, thereby optimising the scrap supply chain for quality and efficiency.

The integration of new green steelmaking technologies, such as hydrogen-based and direct reduced iron processes, is also projected to rise by 48 per cent from 2025 and account for 77 per cent of total steel production by 2050. In line with this projection, the first green stainless steel hydrogen plant was inaugurated in March 2024. This will reduce carbon emissions by 2,700 tonnes per annum and 54,000 tonnes of carbon dioxide emissions over the next two decades. These technologies consume less energy and use ferrous scrap intensively, reducing reliance on iron ore. They align with global environmental objectives and would pave the way for a greener steel industry in India.

Internationally, global collaboration will help reduce carbon emissions, accelerate the circular economy and set a precedent in sustainable steel production.

However, due to the varying stages of development among nations, the availability of steel scrap is not uniformly distributed globally. Hence, international trade of steel scrap becomes vital for developing economies. For India, progressing towards a sustainable steel industry depends on enhancing international trade relations for scrap and other essential raw materials. To navigate the challenges, facilitating the import of scrap under environmentally compliant conditions should become a high priority.

Easing global export restrictions can provide India with more consistent access to quality scrap, reducing dependency on domestic supplies, which are not sufficient to meet the growing demand. Furthermore, international cooperation can facilitate the sharing of best practices in scrap collection, separation, and distribution. Collaborative efforts can also help India shape global policies that align with its sustainability objectives in the sector.

Addressing these barriers through diplomatic channels, international organisations and trade agreements is crucial. By actively participating in global discussions on ways to promote balanced steel markets, steel trade, raw materials and environmental policies, such as within the Organisation for Economic Cooperation and Development (OECD) Steel Committee, India can better position itself in sustainable steel production and participate in discussions on international standards. Additionally, the country can explore bilateral trade agreements to access larger scrap markets and advanced recycling technologies. Moreover, such cooperation could accelerate the global steel industry’s progress towards more balanced and sustainable growth.

India is demonstrating progress in its journey towards sustainable steel production, marked by advancements in technology and domestic policies. By implementing its steel scrap recycling policy, India aims to increase domestic scrap availability and reduce its dependence on imports. However, as the world moves towards stricter environmental regulations, India needs proactive diplomatic and trade strategies, as well as innovative technologies, to remain competitive. India’s steel industry vision should be clear: to sustainably meet its industrial needs while championing the cause of global environmental sustainability and resource efficiency in the steel sector. DTE

Views expressed are personal