ArcelorMittal Nippon Steel (AM/NS) India has announced a Rs 60,000 crore Phase-I capital investment to position itself as the first steelmaker in the country ready to meet the government’s upcoming green steel taxonomy.
With plans to expand capacity, enhance scrap processing, and scale up renewable energy use, the company expects 70 percent of its output to qualify for the three-star rating under the new carbon emission intensity standards set by the government in December 2024, company officials said.
The National Institute of Secondary Steel Technology (NISST) will be the nodal agency for the verification of green steel produced by various steelmakers. According to standards set by the government for green steel, emissions intensity per tonne of finished steel has to be less than 2.2 tonne. Steel produced under the standard will be rated three, four, or five stars, with five stars being the greenest rated steel.
AM/NS India's management said in a media interaction that the approach will broadly include expanding its steel production capacity to around 15 million tonne per annum (MTPA) from the current 9 MTPA at its Hazira plant in Gujarat, as well as expanding its scrap production facilities and building three new ones in various parts of India. The company has a scrap production facility at Khopoli in Maharashtra.
Other than expanding production, the management added that the company will expand its play in the greener power supply, including the company's renewable hybrid energy project in Kurnool, Andhra Pradesh, as well as optimisation and efficiency measures in the steel production process. In all, AM/NS India has indicated a Phase-I capital expenditure of around Rs 60,000 crore.
Green push
Arvind Bodhankar, AM/NS India's chief sustainability officer, said that the strategic move will also allow the company to be ready for the government's substantial green steel procurement plans for various projects. In December, the government mandated that more than one-third of its future steel procurement will be in the form of green steel.
Currently, AM/NS produces around 60-65 percent of its steel through a gas-based direct-reduced iron (DRI) method. While the process produces lower carbon emissions compared to coal-based blast furnaces, the management added that it needs to invest in more measures for greener steel.
Bodhankar said that moving towards four- or five-star green steel requires measures such as lower hydrogen prices, and more investments towards technologies such as carbon capture, utilisation, and storage (CCUS).
The company is aiming to source scrap from its upcoming scrap processing units, but conceded that India still faces a scrap shortage.
"We have already developed our first scrap processing unit in Khopoli, and three others are under development. As the auto scrappage policy gains steam, more scrap will be generated, with India also importing scrap. The construction sector is also expected to contribute to scrap generation. As the per-capita consumption of steel increases, we expect more scrap to be generated," said Ranjan Dhar, director and vice-president, sales and marketing, AM/NS India.
According to and analysis by BigMint, domestic ferrous scrap production increased by 8 percent in FY25 to around 32 MT. However, a scrap shortfall of around 8.5 MT remained in FY25, necessitating imports. The analysis found that domestic scrap consumption may reach 60-65 MT by FY30, driven by the steel manufacturing segment.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!