Mohit Pawnday Head Commercial

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1 Mohit Pawnday Head Commercial Synergy in Energy M I N I N G P O W E R F E R R O-A L L O Y S S T E E L 2016 Asian Pacific Ferro-Alloys & Steel International Conference Venue:- Hanoi Sofitel Plaza, Hanoi, Vietnam Date:- February 25 th to 28 th 2016 FUTURE OF FERRO ALLOYS IN INDIA

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3 CRUDE STEEL DYNAMICS

4 Global crude steel output 2015 Annual Steel Production (In Million Ton) Global Crude Steel production has come down by 2.85% in 2015 YOY basis

5 Global Steel demand outlook Source: worldsteel The global Steel demand grew at 2% in 2014 & expected to grow further 2% in 2015 at 1594 MT.

6 Asia In global Steel Consumption Long distance to match World Avg. Source:

7 Indian Crude steel Production & Major Producers Indian Crude steel production in 000 mt India has overtaken the US to became the 3 rd largest steel producer in the world Source: IMnI, IFAPA, JPC The Pace of Steel production is to be expedited and it was about 7.9% in FY Top 5 Players Capacity share - Ind

8 Indian Steel Demand Drivers Demand Drivers Others World Average per capita steel Consumption is 225 Kg that of India is 57Kg. In case of Stainless Steel World average is 6 Kg that of India is 1.9 KG only. Pipes Infrastructure Automobile With the new Govt. in place & the thrust on Make in India, we will see the following sectors growing up very fast. Construction- 100 Smart cities & Swach Bharat Abhiyan Infrastructure highways & road connectivity, Freight corridors, new ports. Ultra Mega Projects Transportation & high speed bullet trains. Major Institutions like IMF & S&P have projected growth rate for India from 7 to 10% in 15-16

9 FERRO CHROME

10 India HC Ferro Chrome Capacity Major Producers FY FY 20 (e) IMFA 240,000 MT 275,000 MT Balasore 218,000 MT 250,000 MT VISA Steel 180,000 MT 250,000 MT FACOR 130,000 MT 130,000 MT JSL 130,000 MT 130,000 MT TATA Steel 100,000 MT 150,000 MT Others 238,000 MT 238,000 MT Grand Total 1,236,000 MT 1,423,000 MT

11 Global Ferro Chrome Industry India is 4th Largest Producer

12 Global Ferro Chrome Industry India is 3rdLargest Exporter

13 India s Ferrochrome Production V/s Export Ferrochrome production in India stabilized at around 1 MT per year since About 50% domestic consumption with the rest being exported. In 2014 Fe Cr decreased(est.): 0.82 MT down 15.8 % from 2013

14 Inferences Production cuts in China is likely to happen due to slowdown in Chinese steel demand & they are withdrawing from power intensive units. Increase in Power Tariffs in South Africa will moderate the production. Chrome ore production is likely to normalize with mining permit issue in Odisha being resolved. In light of above points Ferro Chrome output is likely to increase with normalcy in Prices

15 MANGANESE ALLOYS Silico Manganese Ferro Manganese

16 Indian Mn Alloys Production (YOY)

17 Indian Mn Alloys Installed Capacity v/s Utilization (in 000 Mt)

18 India s Export of Mn Alloys (SiMn and FeMn)

19 India s % Export of SiMn Country Wise

20 India s % Export of FeMn Country Wise

21 Mn Alloys growth is directly liked with Crude steel Growth

22 Constraints in Export of MN Alloys from India 1. Huge Capacity coming up in Malaysia. 2. Projected large projects our of which Sakura, 3. Uncertain but disruptive impact of Malaysian Production due to cheap power superior global alliance and superior Financing tool available.

23 Indian Manganese Alloys Industry s Big Opportunity INDIA. VIZAG turns to be major production hub do to competitive power and enhanced port infrastructure. Low labor cost: The labor cost is still cheaper than that in other competing countries like China, Japan, Norway, Georgia and Europe. Skilled Technical Manpower: In India skilled manpower is also cheaper than other countries. China retreating from export market : China is moving away from high intensity energy products. Already 20% export duty on Ferro Alloys is there.

24 Mn Alloys Capacity Vizag VIZAG SARDA group has also set up a new ferroalloy plant in VIZAG name Sarda Metals & Alloys Limited (SMAL).

25 Positive Factor for Indian Mn Alloys Exporters The on going Russian-Ukraine Tension. Reduced Power Tariff in and around Vizag, Per Unit of Power to cost 5 cent/unit which will make a difference in SiMn production cost of USD 90/Mt. Negation of threat of Silico Manganese import into Europe due to favourable Antidumping investigation. Indian Rupee Depreciation of 5-7% over the last six months. Favourable Government Policies with regards to Incentives and Financing of Imports.

26 Domestics Factors Driving Mn Alloys Production Make in India Government expected to lead to enhance Steel Demand by 50% over the next five year. Curb on dumping of Steel leading to sustained demand & production of Steel in India. WSA has projected Indian steel demand to grow by 6.2% in 2015 and by 7.3% in 2016 as compared to global steel use growth of 0.5% and 1.4% respectively. Chinese steel use is projected to decline in both these years by 0.5%. Per capita finished steel consumption in 2014 is estimated at 217 kg for world and 510 kg for China by WSA.

27 Ferro Silicon

28 Ferro Silicon dynamics in India The consumption of Ferro Silicon in India is around Mt to Mt per Month (annually 100,000 to 150,000 Mt). Major supply is met from Bhutan (8000 Mt), imports from Malaysia and some quantities from Vietnam. With current reduction of power cost by Rs. 1.5 in Andhra Pradesh it is expected manufacturing in Andhra Pradesh will competitive. The production cost will be appx INR 55000/Mt (USD 785/Mt keeping 1 USD = INR 70) Ex-Plant. We assume that delivered cost for FeSi will be around INR to 60000/mt over the next 6-8 months. Malaysian Alloy enjoying 0% import duty will have to be offered between USD /Mt CIF India and Vietnam Alloy will have to offered at 730 to 740/Mt CIF India.

29 SARDA METALS AND ALLOYS LIMTED

30 SARDA METALS & ALLOYS LTD (SMAL) Sarda Metals & Alloys Limited (SMAL), our new State of Art Plant is a Fully Owned Subsidiary of Sarda Energy & Minerals Limited located in Kantakapalli, Vizianagaram, Andhra Pradesh, India. (Only 35 km from the Vizag Port) The plant is equipped with 2x33 MVA Submerged Arc Furnaces (India's First 33 MVA Furnace) backed by captive Thermal Power Plant of 80MW capacity with a single PF Boiler of 81% efficiency and Turbo Generator supplied by Siemens. The critical equipment is from Tenova, South Africa and Transformers from Tamini, Italy. Total Manganese Alloys Production Capacity is TPA (High Carbon Silico Manganese Tons and High Carbon Ferro Manganese Tons per annum ).

31 What makes SMAL different from others What makes it different from other ferro-alloys plants is that it is highly automated, it has state of art of Furnace automation of unique with facilities for Metal and Slag collection in Ladles and Slag pots with a view to minimization of wastage. Metal is casted in Pig Casting Machine, which results in clean metal without inclusion of slag. Slag is poured in Slag Granulation Pit and it helps in easy disposal of slag. IMS System is also being implemented. The Plant is ideally located at Kantakapalli APIIC Industrial Park in Kothavalasa Mandal, Vizianagaram, Andhra Pradesh, which is only 35 kilometers from Visakhapatnam Sea Port which is the Port of Import and Export.

32 Facilities at SMAL Ferro Alloys Manufacturing Facility Furnaces : 2 x 33 MVA submerged arc furnaces Critical Equipment from Tenova (South Africa) Transformers from Tamini(Italy) Best Furnace Automation in India Captive Power Plant 80MW Captive Thermal Power Plant of 80MW capacity with single PF Boiler & Single Turbo Generator from Siemens Boiler Type Pulverized Fuel Power Supply APTRANSCO & IEX Exchange Boiler Efficiency 81 % Methods of Production Raw material mix is smelted in a Semi Closed Submerged Arc Furnaces at a Temperature of around 1700 Degree Celsius in the Reaction Zone Raw Materials Manganese ores from South Africa & Australia Coal from South Africa Coke & Fluxes from India Always 45 Days Inventory stock is Maintained Metal & Slag Handling Metal & Slag collection in Ladles & Slag potsminimization the wastage. Metal is casted in Pig Casting Machine- Results in clean metal without inclusion of slag. Slag is poured in Slag Granulation Pit- helps in easy disposal of slag IMS System IMS System being implemented & Certification awaited after production resumes

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