Yogesh Bedi, Chief of Steel Recycling Business, Tata Steel in Gurgaon, India provides us with his insight into the world of organised steel recycling in India and the number of challenges the Indian steel recycling industry faces before it is on par with other countries. But there is a silver lining if actions to improve this industry in India can be done without delay.
Steel is a 100 percent recyclable material. It can be recycled over and over again without losing its properties. This makes it a perfect candidate for a circular economy.
Globally, there are two main steelmaking routes:
- The blast furnace route which uses iron ore and coal as the raw materials.
- The electric arc furnace route (EAF) which predominantly uses scrap as the input.
The EAF route is asset light, modular & scores high on sustainability.
Historically, as economies mature, production shifts towards the EAF route due to sustainability and environmental concerns. With economic development, the availability of scrap also increases, providing a sustained raw material for recycling. China is a recent example of this shift and it is significantly enhancing the EAF capacity and related scrap-processing facilities.
India is expected to follow a similar trend.
The Indian Scenario:
The Indian market for scrap is worth almost $ 10 Billion. The demand for scrap is ~30 MnTPA. Domestic generation is ~25 MnTPA and the balance of ~5 MnTPA is imported. The supply is likely to increase due to some impending Government policies, rapid urbanisation and economic activity.
The Indian scrap industry, however, is highly fragmented and unorganised. There is hardly any processing or value-addition of scrap. There is limited attention to safety and environmental concerns.
In more developed countries, scrap is a well-established industry with a robust ecosystem. There are well-laid out regulations, supporting infrastructure and formalised channel networks.
The Indian government has recognised this challenge and is actively considering putting in place a regulatory and supporting framework to address the same.
Given the current state of the scrap industry in India, there are a number of challenges that it faces.
The industry is highly fragmented and unorganised with long and complex supply chains. There are tens of thousands of small aggregators who collect scrap from various sources. They are not a part of the formal economy, and hence lack social security. The operations are manual and there is little concern towards safety and environmental issues.
Indian scrap is largely sold unprocessed and is of inconsistent quality. Processing of scrap can offer significant value to customers, through enhanced quality and productivity. Scrap processing includes steps like shredding, baling and shearing, amongst others.
There is a lack of requisite policy framework for the industry. For example, there are no guidelines related to scrapping of a vehicle and the dismantling procedure. This is under active consideration of the Government now and policies related to steel scrap collection & processing, end-of-life vehicle dismantling and resource efficiency are under formulation.
The specifications and standards for scrap are inadequate and need to be revised in line with global standards. Currently, the industry uses local nomenclature which varies by region.
Having discussed the challenges, I must also highlight the potential of organised steel recycling in India. Firstly, there is a significant potential for job creation and social upliftment. The steel recycling industry employs about one million people who are mostly in the informal segment. So, formalising the sector would impact the lives of this large pool. Then, there are significant benefits owing to sustainability. For example, there is a 50-60 per cent reduction in energy consumption, carbon emissions and resource utilisation. Steel recycling will be a critical lever in achieving the National Steel Vision of 300 million tonnes of steel production by 2030.
There are multiple enablers for establishing organised scrap processing capabilities in India in the face of the outlined challenges.
First and foremost, there is a need to have a good policy framework in the country which incentivises and nurtures organised steel recycling. A good first step might be according the industry status to scrap recycling.
Secondly, there needs to be a good ecosystem and support system comprising various stakeholders such as peddlers, aggregators, processors, dismantlers, logistics partners as well as the downstream end-consumers.
Land acquisition is currently a big hurdle in India. There is the need to simplify the process of acquiring land with adequate utilities. Steel recycling and steelmaking are power-intensive industries and, hence, the power costs need to be looked into. Also, there is the need to look at the policy of taxing obsolete scrap, given that it is already providing so many benefits.
There would be a significant need for capability and skill development as well.
Lastly, we need to do this quickly. So, to hasten the learning curve, one would need to leverage the knowledge and experience available globally and have collaborations in various fields.
If you would like to contact Yogesh, please email him at email@example.com