What does India’s strengthening steel market and declining imports mean for ferroalloy producers?
It is important to distinguish between carbon steel and stainless steel. Safeguard measures have been applied to carbon steel, while ferrochrome is supplied to stainless steel producers.
At present, IMFA has an installed production capacity of about 384,000 metric tons of ferrochrome per year. We are predominantly export-oriented, with more than 90% of output exported and about 10% supplied domestically.
Over the next three years, our aim is to move toward a 60:40 export-domestic mix. Exports would still be account for the larger share, but a much more significant tonnage would go into the domestic market. India’s stainless steel consumption is still low, at around 3.5 kg per capita, perhaps a little higher, and I see room for growth.
How is IMFA’s capacity base changing?
We are executing a 100,000 mt/year greenfield project at Kalinganagar. We have also completed an acquisition of Tata Steel’s Kalinganagar ferrochrome asset nearby. That unit has 100,000 mt/year of operating capacity and a partially built furnace that can add another 50,000 mt/year once completed.
The acquired unit has four operating furnaces and production has started in all four. Once the greenfield project and acquired capacity are fully in place and the partially built furnace is completed, our total installed capacity would move beyond 500,000 mt/year.
What does the Kalinganagar expansion mean for raw material security and costs?
The key point is our integrated business model. Even as ferrochrome output increases, we are not looking to buy any ore from outside. We will raise captive ore output to meet our in-house requirements.
We were raising about 500,000-600,000 mt/year of ore. In phases, we plan to take that to about 1.2 million mt/year over the next three to four years, which supports the doubling of smelting capacity.
Kalinganagar is logistically advantageous with its proximity to chrome ore mines, ports and stainless steel customers. Taking the greenfield project and acquired unit together, Kalinganagar will become a 250,000 mt/year ferrochrome location.
We are also indicating expected output of about 400,000 mt in fiscal year 2026-27 (April-March) and 475,000-500,000 mt in FY 2027-28. The base price for the acquisition was Rupees 6.10 billion (about $64 million) plus GST and net working capital, and as I recall, the final consideration was a little over Rupees 7 billion.
How are you planning for energy security given that it is a major cost for ferrochrome?
Energy accounts for about 35% of ferrochrome production cost, so reliable and competitively priced power is critical.
We have about 205 MW of captive power generation, including around 200 MW coal-based and about 4.55 MWp solar.
We have also executed a 29-year power purchase agreement with EG Urja Strot under the captive consumer structure, securing a contracted demand of 65 MW of hybrid renewable power for our ferrochrome operations. The underlying hybrid renewable energy project has a total installed capacity comprising solar capacity of 81.4 MW, wind capacity of 102.6 MW and battery energy storage system capacity of 25 MWh, of which IMFA will draw 65 MW as a captive consumer. The indicative timeline for completion of the project is June 2027.
With the signing of this agreement, IMFA’s contracted renewable energy supply portfolio stands at 135 MW. We had previously announced 70 MWp hybrid renewable energy sourcing arrangement with JSW Energy, expected to commence in Q2 FY 2026-27. Together, it marks a significant step in IMFA’s transition to cleaner and more sustainable energy sources.
Has the Middle East situation affected operations or costs?
We have not been significantly impacted. Freight rates have risen and that adds somewhat to export costs. But our major raw materials are either captive, such as chrome ore, or sourced in ways that do not depend on affected routes such as the Strait of Hormuz.
Industrial LPG is a very small part of our production process. During this temporary phase, we have switched back to alternate fuels, which we had used earlier, so there has been no material operational impact.
What is the most practical decarbonization path for ferrochrome?
For me, the low-hanging fruit is renewable energy. It is practical, easily implementable and available at grid parity or better, so it does not require viability gap funding.
Beyond that, carbon remains a significant input because ferrochrome smelting uses metallurgical coke. Research is taking place globally and some producers are talking about green ferrochrome. We will need to look at ways to reduce the carbon footprint further.
In our greenfield project, we are installing closed furnaces and will use furnace off-gas to generate electricity. Over time, technologies such as carbon capture and storage may also become relevant.