steel making, next steps

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 PRESENTED BY Mr.BIPIN BARAHATE, ASST MANAGER (Mech) on 12/04/2009

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PRESENTED BY

Mr.BIPIN BARAHATE, ASST MANAGER (Mech)

on 12/04/2009

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NMDC, a brief introduction

2007–20081996–1997

1992–1993

Disinvested 1.61%

to Financial

Institutions

1996–1997

Disinvested 0.01%

in favour of 

employees

1998 Conferred the Miniratna

status - Enabled the board of 

the company to exercise certaincapital expenditure powers

without reference to the GoI

Ranked the Best Performing PSU as per the

survey carried out by the Department of 

Public Enterprises (DPE) for the year 2007–

08 on the basis of overall performance on

financial and other parameters

2008 - Conferred the

Navaratna status -

board’s power to incur capital expenditure are

further enhanced

1992–1993 1998

NE

W

ER

AOFDISINVE

STMEN

T&D

IVERSIFI C

ATIO

N

Established on 15th November 1958 as a Government company as per the provisions of the

Companies Act

Developed from being a single product (lump ore) single customer company to a multi product

(lump ore, fines and calibrated lump ore), multi customer (>100) company over the years

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• Financial strength

• High net worth, zero debt, cash

reserves

Indian iron ore producer accounting for:

 – About 14% of India’s total production of iron ore *

 – About 1.7% of world iron ore production **

Significant growth and diversification plans

 – Expansion and value addition in

existing businesses

 – Diversifying into new minerals

Among the world’s least cost producers of 

high quality iron ore

 – 65%+ Fe content

Technological strength

 – Highly mechanised iron ore mines

 – Availability of technology and

infrastructure at existing projects

that can support further expansion

with minimal incremental investment

Highly experienced

management and workforce

Best performing PSU 2007-

08, Navaratna status

conferred in 2008

In house exploration

expertise and R&D

capability

 

* Source: http://ibm.gov.in/mineralproduction.html  

** Source: www.worldsteel.org, Tex Report

NMDC Highpoints

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When Does Diversification

Start to Make Sense? 

Strong competitiveposition, rapidmarket growth --Not  a good time todiversify

Weak competitiveposition, rapidmarket growth --Not  a good time todiversify

Strong competitiveposition, slowmarket growth --

Diversification istop priority  consideration

Weak competitiveposition, slowmarket growth --

Diversificationmeritsconsideration

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Strategies for Entering 

New Businesses

Acquire existing company

Start-up new business internally

Joint venture with another company

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ADVANTGES OF JOINT

VENTURES

COST

EFFECTIVE

NESS

TECHNICAL EXPERTISE

SKILLED MANPOWERCONFIDENCE OF

SHARE HOLDERS

GENERATION OF FUNDS

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NMDC Business Strategy

Core Business

Exploration, evaluation,mining, beneficiation

Core Strength

Mining at minimum cost,

eco friendly mining

Horizontal Integration

New JVs, collaborationthrough MOUs,

technological

advancements

Backward Integration

New exploration, prospecting,

assistance to state

Horizontal Integration

Overseas expansion,

new minerals, new leases in

India & abroad

Forward Integration

Value addition projects

steel, pellets,critical beneficiation

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NEW PROJECTS 

IRON ORE

• 11B in Bailadila

• Kumarswamy Mines

• Sasangada Iron Ore Deposit, Jharkhand

• Ghatkuri Mine, Jharkhand• Ramandurg, Karnataka

• Bailadila Deposit No.13, Chhattisgarh

• Bailadila Deposit No.4, Chhattisgarh

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COAL 

 Two Coal blocks at Shahpur east and West

STEEL PLANTS 

• 3 MT steel plant at Jagdalpur• 2MT steel plants at Bellary, Hosphet

PELLET PLANTS

• 1.2 Mt capacity at Donamalai• 2.0 Mt capacity at Bailadila

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CRUDE STEEL PRODUCTION 2008

SOURCE: STEEL STATISTICAL YEAR BOOK 2009

COUNTRY PRODUCTION (in mt)

Germany 45.83

Italy 30.59

Turkey 26.8

Ukraine 37.28

Russia 68.51

USA 91.35

Brazil 33.71

China 500.31

India 57.79Japan 118.73

S.Korea 53.62

Others 264.6

Total 1329.12

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CRUDE STEEL PRODUTION 2008

STEEL PRODUCTION

3%2%2%3%5%

7%

3%

38%

4%

9%

4%

20%

Germany

Italy

Turkey

Ukraine

Russia

USA

Brazil

China

India

Japan

S.Korea

Others

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 YEAR WISE PRODUCTION(IN mt) 

 YEAR INDIA USA CHINA

1999 24.3 94.27 124.26

2000 26.92 101.8 128.5

2001 29.29 90.1 157.63

2002 28.81 91.59 182.36

2003 31.78 93.68 222.33

2004 32.63 99.68 282.91

2005 45.78 94.89 353.24

2006 49.45 98.58 419.15

2007 53.47 98.1 489.28

2008 57.79 91.35 500.31

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GROWTH RATES

0

50

100

150

200

250300

350

400

450

500

550

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

 YEAR

   P   R   O   D   U   C

   T   I   O   N

INDIA

USA

CHINA

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• Approved by Government of India in September 2005

SteelProduction

Imports Exports Consumption

2004-05 38 2 4 36

2019-20 110 6 26 90

Major Emphasis:•Critical Input Raw Materials: Iron Ore and Coking Coal•Infrastructure facilities like Roads, Railways and Ports.

Focus: •Human Resources•Technology• Research and Development•Market outlook on prices of steel

•Environmental Concerns.

National Steel Policy-2005

Milion Tonnes

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Indian Potential for Steel

Huge Potential for Demand

•High GDP growth rate of 7%•1 billion population•Low per capita steel consumption of 33kg (World av. 181 kg

GrowthFactors for 

India

Abundant Iron Ore

Reserves 23 billion tones

Government Policy• Stable currency• Easing of regulations• Strong Banking &

judicial system

•Encouraging trade relations with ASEAN and

other countries• Infrastructure building

• Exploring new Energy resources

Human Resources

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Critical inputs for Steel Production

–Iron Ore

–Coking Coal

Projected Requirement of Critical inputs

Iron Ore Coking Coal Non CokingCoal

2019-20 190 70 26

2004-05 54 27 13

Raw Materials Requirement

New Additions through BF Route (60%),Electric Arc Furnace (33%), others (7%)

Million Tonnes

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SWOT ANALYSIS FOR NMDC STEELS

Strength

Weakness

Opportunity

Threats

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STRENGHTHS

Abundance of Iron ore

Largest pool of man power

Lower unit labour cost

Vast untrapped domestic market

Good market value of NMDC

Favourable socio political condition

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Item USA UK France Germany India

Energy 24.1 19.8 22.1 23.4 32.9

Iron ore 15.4 12.7 12.7 13.9 5.4

Fluxes & ferroalloys

5.9 7.6 7.6 6.8 8.5

Others 25.6 27.5 27.3 27.1 21.9  Total material 71.0 67.6 69.7 71.2 68.8

Labour 40.7 27.1 36.6 43.4 13.9

Misc taxes 1.9 1.9 4.1 2.4 6.6

Works cost 113.6 96.6 110.5 117.1 89.3

Depriciation andinterest

9.1 6.6 2.4 12.2 10.7

Total cost 122.7 103.2 122.9 129.0 100.0

Comparative cost of steel production, %

Source : IE (I) Journal-MM, vol 82,

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MISMATCH

0

1

2

3

4

5

6

1 2 3 4 5 6 7 8 9

year 

   i  m

  p  o  r   t   (  m   t   )

Series1

MISMATCH IN PRODUCTION AND

DEMAND

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WEAKNESS

Lack of Experience in Steel Industry

Huge capital investment

Lack of raw material like Coking coal,

Nickel and ferro molybdenumPoor quality of basic Infrastructure

Low labour productivity

High level of taxation

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• Proven Non Coking Coal Reserves (as on 1.1.2004) - 75.1 BT

• Constitutes 82% of the total coal reserves in India.

271.1 282.8299.1 311.1

331.8

100

1000

1999-2000 2000-01 2001-02 2002-03 2003-04

Non

coking

Coal

productio

n

• Quantitatively, no problem faced by Indian Steel Industry.• Qualitatively, require high grade of non-coking coal for 

sponge iron industry.

Non Coking Coal – Indian Scenario

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21.2

19.5

1818.4 18.3

11.8 11.410.7

11.8 11.1

10

15

20

25

1999-2000 2000-01 2001-02 2002-03 2003-04

Coking Coal declined from 33 MT (99-00) to 29.4 (03-04) Significant proportion of coking coal not suitable for metallurgical

purpose. Production of raw coking coal has fallen Washed coal availability would be much lower.

Metallurgical

Non-Metallurgical

Coking Coal – Indian Scenario

Coking

Coalproduction

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Item Unit India Brazil S.Korea Canada Usa Japan Germany

Product quality Index 41 52 61 68 60 93 93

Product design Index 34 57 49 58 70 81 71

On timedelivery

Index 30 36 59 62 63 93 88

After SalesService

Index 41 39 47 63 58 90 79

DistributionNetwork

Index 52 52 57 66 74 72 76

Labour Productivity

Index 6177 7729 9291 30034 44070 46671 38207

Training Index 36 37 47 40 48 79 69

ManagerialInitiative

Index 61 61 68 62 74 72 73

Expenses InR&D

% of GDP

.91 .38 1.63 1.32 2.66 2.85 2.79

InformationTech

Index 44 52 59 63 57 82 87

Major determinants of international competitiveness

Source: Steel and Metallurgy

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OPPORTUNITY

Option for absorption of newer andmodern technology

Can have limitation over workforce

Enormous scope for consumption of steelUnexplored rural market

Export market penetration

Option of choosing the products

THREATS

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THREATS

 Threats from competitors

Price sensitivity

Higher quality products from developed

nationsNon availability of capital from financial

institution for steel

Adverse social condition Threats of substitutes

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PRICE RATES

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STRATEGIES

SURVIVAL GROWTH  

SHORT TERM PLAN MEDIUM TERM PLAN MEDIUM TERM PLAN LONG TERM PLAN

SHORT TERM PLAN

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SHORT TERM PLAN

 To set the plant in

a) Least possible time

b) Least possible cost

 To set a modern automated plant

 To start the production activity systematically

Infrastructure development

Ensuring raw material availability

Generation and development of Human resources

MEDIUM TERM PLAN

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MEDIUM TERM PLAN

Expansion plans for full fledged productionReview of conditions and transforming activities

Emphasize on low production cost

Switching over from general to focusedmarketing

Emphasize on R & D activity

LONG TERM PLAN

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LONG TERM PLAN

Achieving the vision

Customer & Share holders satisfaction

Achieve excellence in Quality

Facilitates Excellent R&DEnvironmental friendly

Peripheral development

Planning to set up new plants

Plan for further diversifications

FINANCIAL STRATEGY

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FINANCIAL STRATEGY

Repayments of large borrowingManage the cost and time overruns

Ensuring future cost flows

Improve profitability

Develop a deep sense of costconsciousness

Reduction in plant inventory

Participation in influencing policy makers

BUSINESS STRATEGY

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BUSINESS STRATEGY

Systematic approach in setting plants

Focused on the domestic demand

Concentration on core competency

Long term agreement to ensure supply of 

raw materialStrategic partnership in non core business

Outsourcing of non core services

Servicing steels

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Requirement of coking coal 70 MT

Likely % available from imports 85%

Strategies envisaged Allotment of new coal blocks to steel industry

Joint Ventures and Equity participation abroad bysteel and coal companies.

Development and Adaption of technologies insynergy with natural resource base (non-cokingcoal).

Investment in beneficiation of coal.

2019-20

Coking Coal – Future Perspectives

OPERATIONAL STRATEGY

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OPERATIONAL STRATEGY

Following closed loop theory of planning, Action, Follow

up and review Active participation in erection and commissioning

activity

Ensuring safety in every aspect

Reduction in scarp, rework and extra labour

Reduction of WIP, inventory levels, material handling

Proper utilization of tools and equipment andoperational efficiency.

Reducing the amount of customer complaints

Minimize the wastages or utilization of waste

TECHNICAL STRATEGY

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TECHNICAL STRATEGY

Selection between proven technologiesand modern technology

Applying automation

Superior quality of finished products.

Increase in productionReduction in cost of production

Reduction in energy consumption

Reduction in environmental pollution

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Purdue Model for Control Hierarchy (5-Level Model)

NameDescription

Level 0 Sensor Level (Measuring Devices):Pressure, Temperature, Speed, Accelerometer, Force, Position, Shape, Thickness, ...

Level 1 Controller Level (Feed-back Closed Loop Control):

Speed Regulator, Tension Regulator, Sequence Control, Position Control, Temperatur Control, SCADA

Level 2 Machine Level (Set-up Models):Temperature model (e.g., EAF, LMF), Shape Control, Mill Set-Up Control, Coil TrackinRunout Table Cooling Control, ..

Level 3 Operation Unit Level:

Blast Furnace, Electric Arc Furnace, LMF, Caster, Reheating, Hot Mill, Cold Mill, AnneLine, Pickle Line, ...

Level 4 Plant Level MES, MRP:Scheduling, Material Flow, Manufacturing Execution System (MES)...

Level 5 Corporate Level CRM, TMS, ERP:Order Process, Enterprise Resource Planning (ERP)...

R & D STRATEGY

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R & D STRATEGY

Optimization of existing process technology

Maximizing quality of steel Development of high value steels

Reduction in specific consumption rates of rawmaterials

Improving physico chemical properties of RM

Improvement of BF productivity

 Technologies of preheat treatment of hot metal

Reduction of energy requirements

Making the plant pollution free

 Technology and knowledge transfer

HR AND CSR STRATEGY

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HR AND CSR STRATEGY

 Attracting candidates with experience orexpertise in erection and commissioning of steel plant

Organizing workshop for the workingemployee

Developing infrastructure around the area

Maintaining social harmony

Peripheral development

ENVIRONMENT STRATEGY

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ENVIRONMENT STRATEGY

Plantation around the steel plant

Recycling of water and water waste

Set target to reduce energy consumption

Recycling of byproducts

 Target to reduce air and water emissions andgeneration of hazardous waste

 Target to recycle, recovery and/or reuse of spent refactories

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