In a significant development, the government is diversifying sources of steel supply for infrastructure and road and highway projects by breaking with the established practice of buying steel exclusively from the primary producers thereby opening a window for the secondary steel sector in the country to participate in government tenders.
In response to the Ministry of Steel’s (MoS) letter issued on 12 Jan’21, the Ministry of Road Transport & Highways (MoRTH) has notified that “it has been decided to allow steel produced from ore/billets/pellet/melting of scrap” for government-funded road, flyover and highway projects.
“For plain and reinforced cement concrete (PCC and RCC) or pre-stressed concrete (PSC) works, the reinforcement/unmentioned steel… shall consist of mild steel (MS) Grade-I (conforming to IS:432) and High Strength Deformed Steel (HSD) conforming to IS:1786),” the MoRTH notification states.
The MoS letter had underlined certain discriminatory guidelines laid down by both the Central Public Works Department (CPWD) and MoRTH related to purchase of thermo mechanically treated (TMT) steel bars (IS:1786) for government projects. Earlier notifications issued by the CPWD and MoRTH stipulated that only BF-BOF, COREX-BOF and/or DRI-EAF producers who produced steel through the virgin iron ore route would be eligible to supply reinforcement bars.
MoRTH had mandated in Dec’20 that secondary steel producers would be eligible to supply rebars for roads and highways provided they were rolled from billets (IS:2830) produced “directly from iron ore and not from shredded scrap and sponge iron as basic feedstock”. Likewise, the CPWD had mandated in Dec’19 that EAF capacity of producers should at least be 100 MT or more for them to be eligible to participate in government procurement processes.
In its letter the Steel Ministry had clarified that routes of production have no bearing on the quality of steel produced. Moreover, use of scrap/DRI instead of iron ore does in no way affect quality provided the products manufactured conform to BIS standards that have been made mandatory for most steel products through successive Steel Quality Control Orders issued by the MoS.
The letter further highlighted that scrap, DRI usage should be encouraged as an eco-friendly alternative to sintering and coking integral to the BF-BOF route. Moreover, the MoS had already abolished the distinction between primary and secondary steel producers through an order issued in Aug’16. End-users in the infrastructure and construction sectors should get quality concerns addressed by insisting on BIS norms that specify all chemical and physical requirements for TMT bars much like other steel products, the letter had highlighted.
By dispensing with the criterion of the manufacturing route (specifically BF-BOF) for government procurement – a long-standing demand conveyed to the government through numerous representations made by manufacturers’ associations in the past – the MoRTH has paved the way for scores of induction furnace-based producers to supply steel for government infrastructure projects.
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