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Helping India with its steel industry growth challenge

India is the place to be for ECT.

It's now the world's fastest-growing large economy.

India's ambition to grow its steel industry from 100 million tonnes to 300 million tonnes by 2030 is well known.

Can it achieve such an ambitious target?

There are challenges. We'll touch on those in a moment. Meanwhile, the below article from ARI Shipping News takes a look at what this growth in India's steel sector means for the dry bulk shipping market.

Naturally, iron ore and coking coal volumes and movements are of most interest, with coking coal imports seen as a significant driver of future seaborne freight due to India's virtually non-existent domestic coking coal supplies:

India’s coking coal demand is almost entirely met by imports, with quality and cost issues preventing domestic coking coal from being more widely used. Indian seaborne coking coal imports have grown by a CAGR of 7% since 2010 to reach 50mt in 2017

Iron ore is accurately described as an important but 'mixed bag':

India’s iron ore reserves are the 5th largest in the world after Australia, Brazil, Russia and China.

Readily available domestic iron ore is likely to prevent India’s imports from growing as firmly as those of China over the last decade, but iron ore imports are expected to continue to be a part of the picture, given that the country’s newest steel mills require high grade imported ore to maximise output.

Having built a relationship with India's leading iron ore miner, NLDC Limited, we've gained an appreciation for the underlying dynamics of India's iron ore and steel markets and of the policy planning at the political level.

The article is absolutely correct in highlighting the coking coal requirement to fulfil India's steel ambition. But what the article doesn't factor in is technology and innovation as potential disruptors of the coking coal equation.

Scratching below the surface of the article, we find a number of influential factors. For example, national security. Linked to national security are resource and energy security. There are also significant economic considerations.

Relying on other nations for a strategic resource such as coking coal has implications and risks that need to be managed and mitigated.

From an economic point of view, importing large volumes of anything will impact the balance of payments of the nation. A trade deficit negatively impacts GDP and can flow through to the exchange rate. Given the extremely high demand for coking coal to reach 300 million tonnes a year of steel output, those imports will weigh on India's economy. Any measures that lower the cost or otherwise displace the need for coking coal, even partially, will benefit the Indian economy.

From a national security point of view, securing access to strategic mineral and energy resources that support the economic objectives is essential.

Ministry of Steel Secretary Ms Aruna Sharma recently stated,

“We have to adopt a new technology to reduce use of coking coal in steel making as India and most of the Asian countries - minus China - do not have much coking coal reserves”.

And while India is the 5th largest iron ore miner in the world, their domestic mines produce soft ore, which generates large quantities of fine material (small particle size) which are unsuited to blast furnace operations without expensive processing and upgrading.

This is where Matmor comes in.

These two problems - limited domestic coking coal and soft iron ore - underpin the value of our Matmor solution.

For those unfamiliar with Matmor, it's the world’s first and only brown coal-based primary iron-making process capable of replacing metallurgical coal and high-grade lump iron ore via utilisation of abundant, lower-cost alternative raw materials.

Brown coal can’t be used in traditional metallurgical applications such as the blast furnace due to its high moisture and volatile matter content.

Matmor’s breakthrough lies in its ability to efficiently and cost-effectively remove the moisture (via our Coldry process) and harnesses the natural chemistry of brown coal via a unique process and furnace design built around a fundamentally different chemical pathway to that of a blast furnace.

The value proposition for Matmor is characterised by two distinct advantages:

  • Alternative raw material opportunity
  • Lower plant cost

The alternative raw material opportunity

There exists a vast ‘above ground ore body’ in the form of iron ore mine fines and slimes and industrial wastes such as mill-scale and nickel refinery tailings.

Current processes can’t utilise fines and wastes without expensive pre-processing.

Matmor liberates this resource in an efficient, cost-effective manner.

Matmor enables a lower-cost primary iron production pathway by leveraging two unique features:

  1. Decoupling iron making from coking coal: By utilising the rich organic chemistry within lignite, the Matmor process utilises a different chemical pathway to deliver a high-quality product without the need for high-quality coking coal, resulting in decreased raw material cost and diversified supply options.
  2. Exploiting the ‘above-ground ore body’: By harnessing the vast ‘above ground ore body’ that exists as mine tailings, fines and slimes and from industrial wastes such as mill-scale and nickel refinery tailings, Matmor is able to leverage sunk mining and processing costs by providing a value-added solution, converting a contingent liability into a revenue stream.

Tailings storage locks up significant swathes of valuable land. Matmor minimises waste, releasing land for productive use.

Lower Plant Cost

  • The Matmor plant, incorporating Coldry as its front-end raw material preparation stage, is up to 40% less capital intensive than an equivalent capacity Blast Furnace or Coal-based DRI plant.
  • Relatively low operating temperatures reduce the capital cost of the plant
  • Smaller equipment sizes, when compared to existing steel production processes, resulting in reduced land area requirements
  • Efficient reaction kinetics result in lower reductant requirements when compared to DRI technologies
  • Simple equipment design facilitates low maintenance requirements, high asset availability and long production lifetime
  • Simple process flow and high levels of process automation allow for low operational staffing requirements
  • Very low water consumption compared with other DRI technologies

But Matmor needs to be scaled up. And while we've diligently researched and developed the underlying chemical and physical principles of the process, industrial scale-up is inherently challenging, complicated and requires significant capital.

And that is exactly what our collaboration with NLC India Limited and NMDC Limited proposes: the scale-up from our test plant scale to an integrated Coldry-Matmor pilot-scale plant.

As mentioned in recent ASX announcements, we're progressing the finalisation of our Master Project Agreement and the required approvals ahead of signing, with 'financial close' targeted before 30 June.

Following the signing, the project will be India's largest-ever joint R&D agreement with an Australian company.

It will be a first for an Australian company, striking a deal with not one but two Indian government Public Sector Undertakings (PSUs).

Clearly, there is a lot of work ahead as we step through the plan to initially deliver a successful R&D outcome ahead of commercial rollout.

The project is divided into two phases:

  1. R&D phase: aims to deliver a pilot-scale demonstration with a capacity of two tonnes per hour of steel output (up from a test plant scale of ~40kg per hour)
  2. Commercial phase: following successful R&D, scale up to over 60 tonnes per hour (~500,000 tonnes per year) of steel product output, consisting of several modular Matmor furnaces.

Obviously, 500,000 tonnes per annum is not the end-game. It is the first significant commercial threshold. The proposed site at NLC could accommodate 3 million tonnes per annum. Then there are other sites nearby.

For context, Australia's steelmaking capacity is around 6 million tonnes per annum.

Seaborne coking coal movements will increase over the coming decades, as the below article suggests. There is no doubt that Australia will benefit from increased sales of coking coal to India over that time.

If we're successful, Australia will also benefit from the export of innovation, but in the context of India's ambitious 200 million tonne steel industry growth target, even a 3 million tonne Matmor plant would be a minor player, displacing less than 1% of the coking coal market in India.

From there, the scope of future Matmor expansion will be subject to the performance of the process in the context of prevailing market conditions and time.

Other logical deployment targets for Matmor include Indonesia, Europe and even Australia.

Indonesia has abundant lignite deposits and significant nickel-rich iron ore. Eastern Europe has lignite and mountains of millscale waste. Australia has ~90 million tonnes of iron-rich nickel tailings in Queensland that could be remediated via Matmor. These are all targets for future business and market development.

And with scale-up in India under our belt, financially solid partners in NLC and NMDC and a cost-effective manufacturing base in India, there's plenty of scope for global deployment.


India: A Rising Star In The Global Steel Industry?

15 March 2018 | ARI Shipping News

India is now the world's fastest-growing major economy, and its steel demand and output are growing rapidly as construction and manufacturing activity accelerate. How is this rapid growth affecting seaborne dry bulk trade, and what does it mean for the future? The impacts of growth in India's steel sector on seaborne coking coal and iron ore trade are worth investigating further…

SourceA Rising Star in Global Steel