IN A bid to reduce its final cost of production, Essar Steel has increased the capacity of its hot briquetted iron plant at Hazira in Gujarat, to 2.2 million tonnes from the previous 1.76 mt. This has been done through de-bottlenecking and process re-engineering without any additional investment.

"If the de-bottlenecking exercise were to be valued, it would be just under $25 million (Rs 112 crore)," said Essar Steel director (operations) John C Parker.

The HBI plant produces metallics which are used as feed for the company's steel plant that makes hot-rolled coils. With the availability of HBI, the company no longer has to depend on scrap as an input. "The expansion in the HBI plant is in line with our plan to raise the steel making capacity to 2.4 mt from the present 2.2 mt," Parker said. The company has estimated that it has saved Rs 60 crore from this plant alone.

The steel industry has hit a slump with prices of the base grade HRC falling to below Rs 13,000 in the domestic market compared to Rs 17,000 last year. Export prices too have fallen to below $200 per tonne against $275 a year back.

Essar Steel is also contemplating selling the technology it developed in-house to make the third module of its hot direct reduced iron plant. While Mr Parker did not reveal the figure they were expecting, "it would be much less than the $40 million a Mexican company is offering for a similar plant", he said.

Mr. Parker said they were looking at saving expenses from logistics "which constitutes 15 per cent of our cost. To make 2.4 mt of steel annually, we have to move inward materials of about 4 mt and over 0.9 mt outward. So, any saving here will be substantial".

Essar Steel is planning to introduce articulated barges through which it would integrate operations that bring in raw materials and those used to export HRC. Moreover, it is also planning to shift its entire transhipment operations to Pipavav port. Previously, the company used the Bhavnagar port for bulk commodities, while Pipavav was for steel exports. The company is expected to sign an agreement with the Gujarat government.

Incidentally, the Essar Group's fleet of 13 mini bulk carriers operated by Essar Shipping are likely to be phased out soon, under this exercise.

On the current plight of the industry, Parker said though he was opposed to the concept of forming cartels, "domestic producers should join hands to counter the downturn". The government could do its bit "by relaxing import regulations and regulating the anti-dumping machinery", he said.

Essar Steel, which is the country's largest exporter of HRC, has set an export target of 0.9 mt for the current year. But given the closed US and EU markets, the company does not expect exports to pick up. Last year, the company had exported 6 lakh tonne of HRC. It has also set for itself a domestic sales target of 1.4 mt compared to 9.3 lakh tonnes last year.