Update on Sesa's Pig Iron and Coke

By - P.F.X.D’Lima , Director Group Resources, Sesa Goa Ltd.

Sesa Goa is better known the world over for its core iron ore business for almost 50 years now. Its experiment in diversification into Pig Iron and Metallurgical Coke is a comparatively recent experiment intended to provide its Indian shareholders the opportunity for growth into higher levels in the steel chain. Unfortunately, due to a squeeze on the profits of the steel related products those businesses have not yet yielded the desired results. However, those businesses have now been brought up to higher efficiencies and is expected to yield better results in the future.
The first experience was that of Pig Iron. In 1990 almost all locally produced pig iron was in the integrated steel plants and therefore of “basic” quality suitable for steel making. The foundries in India had to add significant quantities of ferroalloys to the basic hot metal to make good castings. With the liberalisation of licencing for pig iron in 1988 Sesa was the first Company to set up a mini blast furnace using the Brazilian mini blast furnace technology from KORF TECHNOLOGIA SIDERURGICA to produce foundry grade pig iron in 1992. The product caught on fast in the foundry market and commanded a premium price over the locally available pig iron with the market price settling around that of imported Brazilian pig iron with import duty and transport. The idea caught on fast and today there are 26 mini blast furnaces installed all over the country.
Sesa’s management realised that metallurgical coke was a key component in the structure of hot metal costs. With the commissioning of the second blast furnace in 1994 and the formation of a separate company SESA INDUSTRIES for the manufacture of pig iron the SESA GROUP also started another Company SESA KEMBLA COKE CO. LTD. as a joint venture with Kembla Goa Holdings using the proven non-polluting, non-recovery technology from Kembla Coal & Coke Pty. Ltd of Australia.
Unfortunately the ovens failed in their design and technology. However, their shareholders SESA was able to construct successive prototypes with substantially modified designs and has now rebuilt all 84 ovens to the new design. A patent application for the new design has been filed. Meanwhile the technology which is most successful in terms of superior coke quality and much lower levels of emission than those of its competitors has now been licenced to ENRON ENGINEERING & CONSTRUCTION COMPANY LTD. of the USA and to TOYO ENGINEERING CORPORATION of Japan on a worldwide exclusive basis.
Most of the mini blast furnaces in the country import metallurgical coke, mainly from China. The import duty of this coke has recently been reduced from 15% to 5% and blast furnaces are exempted from antidumping duty. Whereas these measures will give immediate relief to the cost structure of the indigenous pig iron industry it will make it more dependant on the import of coke from China and the vagaries of the world coke market which is principally dependant on Chinese coke exports. In the long term these steps would retard the development of the coke production in the country, though the SESA ENERGY RECOVERY COKE TECHNOLOGY would still be attractive, particularly with the high prices of electrical energy in India.
The coke ovens of SESA KEMBLA are performing satisfactorily. With the supply of coke of superior quality and better sizing the mini blast furnaces have also improved in performance both in terms of productivity (close to 2 for foundry grade pig iron using lumpy ore) and in terms of coke rates. The proposed power plant to be set up on a BOO basis using coke oven waste gas and surplus B.F. gas is expected to provide reliable electrical supply to both units and the sales of power to third parties will improve the economies of both businesses.
With that SESA will have a mini integrated facility with the production of iron ore, met. Coke and hot metal under the management of the SESA GROUP. Undoubtedly that would be a turning point for the SESA pig iron and coke businesses which will hopefully achieve their originally intended objective.