Industrial Location & Growth

Lecture 10 Industrial Regions and Iron & Steel Industry

Ambrish Dhaka

MA Course, 2018 Economic and Political Geography of South Asia

IS 529 N

Share of Manufacturing in Asia

Manufacturing a weak spot Many economists believe that skipping the secondary sector is the main reason as to why Indian economy has not developed as fast as other economies of the world.

Regional Distribution of GDP

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2,00,000

4,00,000

6,00,000

8,00,000

10,00,000

12,00,000

14,00,000

16,00,000

18,00,000

20,00,000

Gujarat Karnataka

Maharashtra Tamil Nadu

Uttar Pradesh West Bengal

GDP of States

Industrial Complex The concept of industrial complex was put forth in 1959 by Isard against the comparative study of cost approach and input output analysis. In regional planning the concept of growth-pole or growth-centre is synonymous to industrial complex as it also serves the surrounding in the same pattern. Boudeville defined development pole as industrial centre which create wealth and market for their satellite areas. Soviet Geographer Kolosovasky and his follower’s concept of industrial territorial complexes equivalent to growth poles have been successfully implemented in five year plans of U..S.S.R. Hansen also supported the concept of propulsive industries. He quotes that ‘an industrial complex will be heavily concentrated in or around the growth point itself and other supporting industries dispersed over the zone of influence are induced by that complex’. Later Perroux and Boudeville laid down the existence of propulsive industry in the development of growth pole. Source: Geography of Industrial Complex by By R. C Singh

Definition of industrial complex ‘a set of activities occurring at a given location and belonging to a group (subsystem) of activities which are subject to important production, marketing or other interrelations’. the industrial complex can be defined as a set of industrial activities belonging to a system or sub-system occurring at a location, generating related industrial complexities should be called as industrial complex, the input and the output data with their linkages and processes are also included in it. The Bhilai Steel Plant has its own organisation system from collection of raw materials up to the distribution and marketing of its own manufactured goods. It generates a good number of other industries and activities depending for their raw material to the plant. So, the steel plant and the associated industries in Bhilai from the industrial complex of Bhilai.

Concept of Industrial Estate

The concept of industrial estate is emerged in 1896 in Britain. In India, first of all it was laid down at Gujarat in 1955. The United Nations defined it as, “A planned clustering of industrial enterprises offering standard factory buildings erected in advance of demand and variety of services and facilities to the occupants”. industrial estate means a group of factories which are established in a planned way with infra-structural facilities like water, electricity, fuel, bank, transport, post offices, other necessary things, buildings and technical guidance.

Vertical Linkage

● Vertical linkage arises when a raw material undergoes a series of successive industrial processes, each of which constitutes an industry in itself, until a number of finally manufactured articles are produced. Iron and steel is the best example of this type of linkage.

Horizontal Linkage

● It happens when a number of different industrial units produce goods which then are finally assembled as a parts of a single larger product, for example, automobile industry. This type of linkage is known as lateral or convergent also. It provide benefits to external economies in buying, manufacturing, selling and research. This type is adopted to eliminate competition and to acquire monopoly in production and marketing.

Diagonal Linkage

● Diagonal linkage occurs when items are manufactured which are then used in a number of different industries whether vertically or horizontally linked. It is also known as service-integration processes. For instances, washers, nuts, bolts are widely used in manufactured products, while tools of different kinds wide usage in industry.

Technological Linkage

● It takes place when a single manufactured product is widely used for a range of industries as raw materials, for example, steel is used in several other industries as tinplate, implements, etc. Likewise steel wire may be manufactured into nails, screws, chains, electrical fuses and cables etc.

Classification of Industrial Complexes Soviet Geographer Kolosovasky has elaborated eight types of complexes on the basis of specialized raw materials and power resources. These are :

1. Pyrometallurgical cycles of ferrous metal: It includes extraction of coal and iron ore.

2. Pyrometallurgical cycles of non-ferrous metals.

3. Petroleum and gas-chemical cycles.

4. Group of hydro-power industry cycle.

5. Cycles of consumer industries.

6. Wood-Energy production cycle.

7. Agro-processing cycles.

8. Irrigation-Agricultural industry cycles.

Economic Specialisation and Industrial Complex

On the basis of integrated economic development and the specialization at national level, Moseley presented seven complexes.

1. Fuel energy chemical complex

2. Metallurgical and machine building complex

3. Agriculture complex

4. A transport economic complex

5. Construction complex

6. Forest-Industry complex

7. Fishing-Industry complex

In Indian context, Chaudhuri, has classified it into five groups on the basis of specialised products and raw materials : (1) iron and steel complex, (2) fuel-energy complex, (3) petro-chemical complex, (4) heavy engineering complex, and (5) miscellaneous complex, Such type of complexes have emerged in India. But, this classification is further to be modified by adding complexes like forest and fishing, transport-communication, and agriculture complex etc.

SECONDARY ECONOMIC ACTIVITIES

Classification of Industries Manufacturing has been changing fast with the rise of human technological achievement. It has, therefore, become very complex at present, compared to what it was a hundred years back. Manufacturing now varies from making very simple household industrial goods like a teapot, to very complex modem goods like computers. There may be several types of industries on the basis, for example, of size or the nature of the products. These types of industry are listed hereunder. 1. Heavy industry: This type of industry uses huge raw materials and supports a number of subsidiary industries. Iron and steel industry, ship-building industry, railway engine-building industry, etc. are included in this type of industry. 2. Light industry: This type of industry uses relatively less raw materials and produces mainly consumer goods. Light industry includes textile industry, sugar industry, electronic industry etc.

Source: Geography, Economic And Regional by Phani Deka

Nature of Products

Industries are also classified on the basis of the nature of products as under: 1. Basic industry: Basic industries produce raw materials for other industries. The iron and steel industry is a basic industry, because its products are used to manufacture other products, like machines. The machines are again used to produce other things. 2. Consumer goods industry: These industries produce goods for final consumption. The food processing industries, tea and coffee industries, radio and television making industries fall in this category.

Based on Capital

Now-a-days, in India, industries are classified on the basis of the capital investment on plant and machineries. 1. Large industry — 10 crores or more. 2. Medium industry — between 1 to 10 crores. 3. Small industry — between 25 lakhs to 1 crore. 4. Tiny industry — below 25 lakhs. 5. Cottage industry — very small investment without employing hired labour.

Type of raw materials

The industries are classified into: (1) agro-based industry, like sugar, cotton, jute, tea industries; (2) forest-based industry, like paper, plywood, rayon industries (3) chemical industry, like heavy chemical, petro-chemical and derived chemical industries; (4) ferrous industry, like iron and steel, machine and tools industries, and (5) non-ferrous industry, like copper, aluminium industries.

IRON AND STEEL INDUSTRY

Iron and steel industry assumes great significance, as it provides bases for many other industries. It is, therefore, called the basic industry. Most of the industries like automobile, ship-building, locomotive and machine building are very closely linked with iron and steel industry. The machines used by the factories, the railway lines, the pipelines and many more essential tools and goods are made of iron and steel. The manufacturing activities of modem iron and steel industries are performed in a number of phases: (i) transportation of iron ore, coal and limestone to blast furnaces, (ii) refinement of iron ore to obtain pig iron, (iii) further purification to obtain steel, (iv) shaping of steel in rolling mills.

Locational factors

An iron and steel industry needs a number of raw materials. These include iron ore, coal, limestone, dolomite, manganese and some alloy metals. Among these, coal and iron ore are the major raw materials. Roughly two tons of coal and a ton of iron ore are required to produce half a ton of steel. Therefore, nearness to coal and iron ore is an important factor in the location of iron and steel industry. Precisely, the following four factors are of particular consideration for establishing an iron and steel plant: (i) Sufficient supply of quality iron ore (ii) Sufficient supply of good heating and coking coal (iii) Regular supply of water (iv) Proximity to large market for iron and steel products, and (v) Access to huge capital and skilled labour.

Iron and Steel industry in India India has a long history of making iron and steel. The famous iron pillar at Delhi, the iron beam of the Konarak Temple of Orissa and many others still bear the testimony of it. The manufacturing of steel through modem technology is quite recent. The establishment of an iron and steel industry at Sakchi (Present Jamshedpur) in 1907 by J.N. Tata opened the history of modem steel manufacturing in India. In 1950-51, India produced 1.7 million tons of pig iron and one million tons of steel. The present production of iron and steel in the country is as shown in the following table. Stale Steel (m. Tons) Pig iron (m. tons) Bihar 4.22 0.34 MP 2.54 0.29 Orissa 1.16 0.07 W B 1.27 0.30 India 9.19 1.00

History The modern Indian ore and steel industry was founded by Jam-shetji Tata. His works at Jamshedpur, about midway between the Singhbhum ore and the Jharia coal, were begun in 1911, and have since remained the largest unit in India. The cost of assembling raw materials is low and labour is relatively cheap. Steel output in recent years has been about one million tons, but the plant is currently being extended and its capacity increased to two millions. A second centre of iron and steel production is on the Raniganj coal-field in the Damodar valley. A blast-furnace works was built here long before the end of the nineteenth century, but the area became important only with the construction of the Burnpur integrated works between the two World Wars.

Steel Industry According to World Steel Association, the global steel demand is estimated to have touched 1537 MT in 2014. The past growth in steel has largely been at the backdrop of the heightened economic activity in the emerging economies, particularly China, whose demand remains a pivotal factor driving the global steel industry. The steel industry in India has also witnessed a rapid rise in production over the past few years at the backdrop of enhancement of capacity. This has resulted in India becoming the fourth largest producer of crude steel (after China, Japan, and USA) and the largest producer of sponge iron in the world. However, the industry witnessed a sharp decline in capacity utilisation to77percent in 2013-14 from a high of 91 per cent in 2010-11, primarily due to shortage of iron ore.

Million Tonnes

Iron-Steel Industry in India India: The prospects for the iron and steel industry in India are incomparably better than in any other among the underdeveloped countries. Reserves of ore are large and of good quality. These are distributed over the Deccan plateau, but the largest reserves and the biggest production are in the Singhbhum-Mayur-bhanj ore-fields of the Chota Nagpur region. On the other hand, coal reserves—especially of coking coal—are not proportionate. The most abundant resources are in the Jharia coal-field, which lies about a hundred miles to the north of the Chota Nagpur iron-ore belt. Unless inferior qualities of coal can be used, the future expansion of the Indian iron and steel industry may be seriously restricted by a shortage of fuel. Source The Geography of Iron and Steel (Routledge Library Editions: Economic Geography) by Allan M. Williams

Sponge Iron

India has emerged as the largest producer of sponge iron in 2002, the other important countries being Venezuela, Iran and Mexico. In 2003, the sane trend was maintained. Another significant fact concerning the two segments, i.e. coal based units and gas based units, the former has taken the lead and is presently the main contributor in the continuing enhancement of sponge iron production in India. Three gas based units were set up with high expectations in the west coast by Essar Steel, Vikram Ispat and Nippon Dendro Ispat, producing 2.5 million tonnes a year. However, there was no growth because of the problem of gas availability. On the other hand, the coal based units had a modest start but have been growing steadily.

●“The sponge iron industry is already confronted with the problem of linkage and price of iron ore. The price of iron ore has shot up to an exorbitantly high level in a short span of a year or so. This has caused an adverse impact on the existing units and it is also impairing the proposed expansion. In this respect, it. may be important to state that the recoverable reserves of good quality iron ore in India are large.

●According to published data the reserves of high (+65 % Fe) medium grade (62-65% Fe) and low grade (-62% Fe) iron ore in India are of the order of 1279 million tonnes, 4194 million tonnes and 2763 million tonnes respectively and are distributed geographically in eastern, central, southern and western parts of the country. Therefore, there should not have been such rise in price in such a short period.

Problem in Industry

●Though coal based sponge iron industry in India is on an expansion, the procurement of non-coking coal of required quality is proving to be increasingly difficult. India has large reserves of non-coking coal in various parts of the country. However, non-coking coals of desired quality for use by sponge iron industry are not so extensively available. Also the pricing mechanism of coal is not devoid of monopolistic tendencies.

●Therefore, it is of extreme importance that mining of noncoking coal may be deregulated and private sector participation may be encouraged more. Relatively bigger size sponge iron units can also have backward integration in the coal mining. The small sized sponge iron units may also form small groups amongst themselves and try to acquire coal mines and run these mines through joint participation.

Non-Coking Coal

●“Federation of Indian Mineral Industries reported high-grade Iron Ore (Sponge Grade) resources at 769 million tonnes out of which 559 million tonnes is proved. Similarly resources of fines were assessed at 329.5 million tonnes out of which 288 million tonnes was reported to be proved. In addition to the same, 130.5 million tonnes of blue dust is estimated with 94 million tonnes proved.

●As envisaged by 2011-12, sponge iron grade iron ore production demand will be 13.5 million tonnes per year. The lumpy high-grade ore at this rate can sustain for 60 years, production. If steps are taken to use the high-grade fines with beneficiation and agglomeration, the resources of 1099 million tonnes will last for more than 80 years. However, the resources of lower confidence level (probable and possible) indicated that 249 million tonnes can be confirmed by further exploration.

IRON ORE & COAL- AVAILABILITY

●The iron ore mining in various sectors can be streamlined and to achieve a production level of 100 million tonnes per year may not be difficult as assessed by a reputed consultant for realistic targets as follows:-

●Out of the above the high grade (65 +) reserves are in the order of 1148 million tonnes, the medium grade ( + 62) are 4194 million tonnes.

●The high grade ores are concentrated in Bailadila-Baspani-Badajamda areas.

●Export of high grade ores both lump and fines should be stopped and joint venture export commitments can be modified in the export of value added products beginning with sponge iron.

●The captive and public sector mines producing high grade ores for steel plants should get the ores converted to sponge iron for the respective steel plants for use in their charge mix.

Ore Concentrations

Major Deposits

Some of the deposits in questions are: Rowghat -740 million tonnes, Bailadilall B -10, Ramandurg -213 million tonnes, Kumarswami -181 million tonnes, Thimmapagundi -55 million tonnes In Orissa the high-grade reserves have been assessed by State Department to be 2425 million tonnes, out of which leased deposits are: For captive mines of TISCO (Joda, Khandbandh, Katamati) —345 million tonnes. Non-captive lease areas of OMC, OMDC and private mines (Kliandadbar, Khandbandh, Gaqndhmadhan, Jailling, Jajing, Jaribahal, Thakurani and Other small leases)—837 million tonnes. Virgin areas (Malangtoli, Mankadanacha, Patraposi, Badamgarh Mithurda, Basanda, Diringburu)—1243 million tonnes. Leasehold areas in Orissa covers 40,000 hectares in 135 leases, out of which 31 are non-working. The production of this area is 10.02 million tonnes per year, which can be increased substantially to meet the sponge iron industry’s demand- 4 million tonnes.

World Steel Layout Much has changed in 50 years – back in 1967, the world produced just less than 500 million tonnes of steel. In 2016, the world produced just over 1,600 million tonnes. Most of the growth came from new industrialising nations – Brazil, China, India, Iran and Mexico.

Source: www.worldsteel.org

Major Producers

China Leading Production and Consumption