Jindal, Rio to develop new steel making tech

Naveen Jindal-controlled Jindal Steel and Power (JSPL) has joined hands with Australian mining behemoth Rio Tinto to reduce dependence on costly iron ore lumps and scarce coking coal for steel making.

According to a memorandum of understanding (MoU) signed between the two companies on Friday, JSPL and Rio Tinto will jointly develop the latter’s ‘HIsmelt’ steel making technology in India and make it commercially usable for steel plants globally.

The MoU also includes shifting of a steel plant to India, which is currently being built in Australia by Rio Tinto and its partners.

“It is a prototype plant which is currently being built using this technology. The complete plant will be relocated to India and
then JSPL will build it based on HIsmelt technology,” said Sushil Maroo, director - finance, JSPL.

According to a press statement issued by Rio Tinto, HIsmelt, short for high-intensity smelting, is the world’s first commercial direct smelting process for making iron straight from the ore. The technology smelts iron ore fines directly using non-coking coals, and offers significant economic and environmental benefits to the steel industry.

Explaining this, Maroo said a normal steel making process uses iron ore lumps mined from the earth’s crust which is then formed into pellets and injected into blast furnace.

In ‘HIsmelt’ technology, instead of iron ore lumps, fines, which otherwise lie unused on the mouth of the mines, are used.

“Indian companies currently do not have a technology which can optimally exploit these fines for steel making, as a result, most of the fines produced are exported currently,” he said, adding this technology thrives on thermal coal, which is abundant in India, unlike conventional process where coking coal is used, which is scarce and costly.

JSPL is currently one of the most efficient and highly integrated steel player with operating margins of currently 39% registered last fiscal.

While Maroo declined to comment on the financials and other specifics of the deal, he said a lot of work is still needed to be done on this technology before exploiting it commercially.

“We have just signed an MoU for bringing this technology to India. So far, nothing else has been finalised,” he said.

An analyst with a leading international brokerage said in the short term no major impact could be seen on the company.

“JSPL is very aggressive overseas and at any given time, the company is scouting for opportunities in 8 to 10 countries at a time. But all the developments have a long-term horizon and takes time to percolate down to the financials of the company,” he said.

Most of the major steel making companies in the country have tie-ups with foreign companies for specialised steel making technology, where Japan and Korea are leaders.