Ferroalloys fight FTA; Metal recycling the way ahead

Ferroalloys are one of the most important additives in the production of steel and the industry has come a long way despite many challenges and glitches. The Indian ferroalloys industry accounts for nearly 10% of the world’s ferroalloy production with a capacity of 5.15 million tonne. Moreover, India is amongst the 10 largest producers of ferroalloys in the world with fifth largest chrome ore reserves at about 100 million tonne and sixth largest manganese ore reserves of about estimated 176 million tonne. 

Now, coming to the current market scenario, the Indian ferroalloys industry is certainly on a growth trajectory. However, the stiff competition primarily from Malaysia and Thailand is a cause of concern for the Indian producers. Many of the ferroalloys industry leaders have expressed their apprehension to MMR on the current free trade agreement with Malaysia which has given a free hand to the latter for dumping their government subsidized ferroalloys in India. 

However, as per our observation, the problem is not India giving free and easy access to foreign companies but the inability of the government in containing the flow of products to India which are made out of their government’s subsidy on power tariff. It is a known fact that, foreign producers especially from South East Asia are getting power at an extremely cheaper rate, whereas the Indian ferroalloy producers are paying an additional 50%. The other plight of the ferroalloy producers is the growing manganese ore price which has been monopolized by the state-owned MOIL. 

Moreover, manganese being a highly concentrated ore, the manganese producers increase prices with no bars and at the same time, the ferroalloy players have great limitation to increase the prices of ferroalloys. Industry experts opine that the highly fragmented nature of Indian ferroalloys sector with no solid consolidation in production has really made the industry vulnerable in terms of control over the pricing. But the Indian ferroalloys industry has grown from strength to strength with their ability to perform under pressure and delivering quality products. 

Now, coming to the metal recycling sector, the Indian metal recycling industry was challenged by key interlocking crises of minimal existence of a metal scrap recycling ecosystem and lack of any domestic laws and legislation that assist and apply to the industry. Moreover, no concerted effort has ever been made to utilize tonne of non-segregated scrap thrown away everyday by industry. However, the steel ministry has recently come up with some proposals which can really facelift the entire metal recycling environment in the country. 

The steel ministry has proposed to set up steel plants with scrap as the raw material in various parts of northern and western India. If this government effort to recycle waste products for productive purposes gets executed, then it would save 65% of iron ore, which is currently the main raw material for steel production. Even though, these are baby steps for a sustainable metal recycling ecosystem but from a business perspective, metal recycling in India offers ‘a huge untapped potential.