Kalyani Group aims to manufacture 250,000 tonnes of green steel in 2023-24: Amit Kalyani

In an interview with Moneycontrol Amit Kalyani said ndia has the potential to produce 2 million tonnes of green steel with the right amount of investment.

Kalyani also said that in order to create demand for green steel in India, the government should consider making it mandatory for manufacturing companies to use green steel.

He also said Bharat Forge was looking at ways to produce green steel by using green hydrogen at its manufacturing plants.

According to Bharat Forge's annual report for 2022, Saarloha Advanced Materials and Bharat Forge share the same promoter group. Bharat Forge had loaned around Rs 1,350 million to Saarloha Advanced Materials as of March 31, 2022.

Edited Excerpts:  

Q. How much green steel can the Kalyani group produce and what is the total investment made to set up this capacity? 

The 250,000 metric tonne capacity Saarloha plant in Pune is capable of producing green steel to its full capacity.

In the first year, we will aim to produce around 50,000 tonnes of green steel and will increase green steel manufacturing to 250,000 tonnes in 2023-24.

Saarloha Advanced Materials has invested Rs 400 crore in switching the facility to 100 percent renewable energy from solar and wind to power its electric arc furnaces.

We have invested totally in about 200 megawatts of renewable energy as a group. As a group, our plan is to increase our renewable energy generation to around 700 megawatts in the next two to three years.

At present, Saarloha supplies almost 70 percent of its green steel produce directly to Bharat Forge, which, in turn converts it into finished automotive components for export markets.

Q. How is Saarloha Advanced Materials manufacturing green steel? 

In its composition, the Ferresta-branded steel comprises of up to 70 percent scrap, which is melted over an electric arc. The power supply for the electric arc comes from renewable energy sources.

All of our group companies are focused on environmental sustainability and every group company has a vision that by 2025 will be 75% carbon neutral and by 2030 – we have to be 100%. Every year we will reduce our water usage and reduce our carbon footprint. Even today we recycle 99.7 percent of all the scrap that is generated in our plants.

KALYANI FeRRESTA PLUS has Net Zero GHG (greenhouse gas) emissions per tonne of crude steel whereas KALYANI FeRRESTA has very low GHG emission of <0.19 tCO2e per MT of crude steel.

Q. What is the demand that you see in the Indian market for green steel at the moment? 

So we are not focused so much on the Indian market. We are focused on the global market because we supply steel to Bharat Forge and many other companies that export. Those companies are going to buy green steel and export components made of them globally.

In terms of pricing of your green steel product, how competitive is your product when compared to global players?

There's nobody who's making green steel at scale or commercially at the moment to my knowledge. I think we are one of the first companies in the world, definitely in Asia, to commercially produce green steel.

If you compare the price of our green steel product with that of steel produced in an electric arc furnace, I think the differential will be around Rs 3,000 to Rs 4,000 per tonne depending on the grade.

Q. Which sectors have shown the most interest in adopting green steel till now? 

I would say Europe as a geography has been quite keen to use green steel.

Industries like oil and gas, power and energy, especially renewable energy, and other engineering industries like bearings, and aerospace have shown a lot of interest to use green steel.

More specifically the wind energy sector, and electric vehicle manufacturers have been early adopters of using green steel. We are already in talks with Indian companies that are subsidiaries of global companies to supply green steel.

Q. Are you looking to invest more in expanding your production of green steel? 

We are going to invest more in research and development, in order to explore more routes of manufacturing green steel.

Using hydrogen is another route. We will also pursue using hydrogen to manufacture green steel. We are also looking at using hydrogen as a reduction agent in producing steel.

We have also set up two electrolysers in our research and development facilities to manufacture green hydrogen. But I don't think today it's commercially viable to use green hydrogen to manufacture steel.

When it becomes more commercially viable to manufacture green hydrogen, we will look at converting our other plants to using green hydrogen.

Q. What is the total potential capacity to produce green steel in India and how much investment would be needed to realize that potential?  

Almost 50 percent of the steel produced in India is made by the electric arc or induction furnace methodology, and therefore, it is a low-hanging fruit and all of it can be easily converted into green steel by adoption of renewable energy by the steel industry.

I would say the potential capacity would probably be 2 to 3 million tonnes today. An investment of around $1.5 billion per million tonnne of steel will be needed to produce green steel in the country.

Q. What steps can the government take in order to increase the production of green steel in India? 

The government can look to create demand for green steel in the country by making it mandatory for manufacturers to use a percentage of green hydrogen.

We are in discussion with the government and are looking to them to create demand for green steel in India through policy intervention.

Q. What are your expectations from the government for the Budget of 2023-24?

I think, as a country, we are under-invested in infrastructure. I think infrastructure spending in India, when it's done efficiently, can create a huge stimulus for all the industrial sectors and lead to potential job creation.

In order to attract private investment into infrastructure, the government should look to reduce the risk for investors.