26/06/03
Coal gasification push in Indian steel faces hurdles
Coal gasification push in Indian steel faces hurdles
Mumbai, 3 June (Argus) — Coal gasification may help Indian steelmakers reduce
dependence on imported fuels, but its commercial viability depends on how
effectively the industry addresses cost, coal quality and technological
constraints, industry experts said. The process has seen increased traction in
recent months as India looks to reduce dependence on imported natural gas,
ammonia and other products following the US-Iran war that disrupted trade flows
from the Mideast Gulf. The Indian government in May approved a 375bn rupee
($3.9bn) incentive package to accelerate coal gasification projects, under which
financial support of up to 20pc of plant and machinery costs will be provided.
Coal gasification converts coal to synthesis gas, or syngas, which in turn can
be used to produce fuels and chemicals domestically. Scaling up the process
would enable India to use its abundant domestic coal reserves — estimated at
about 401bn t — to secure energy supply for major industries. There are
different pathways to use syngas in the steel sector, one of which is the
production of direct-reduced iron (DRI) — a key feedstock for steelmaking.
Indian producer Jindal Steel's nearly 2mn t/yr Angul facility, which was
commissioned in 2014, is the first commercial plant globally to use coal
gasification-derived syngas for DRI production and is the only such plant
operating at a commercial scale in India. The company also started using syngas
at its steel galvanizing and colour coating units earlier this year to offset
natural gas and propane shortages. Over time, coal gasification is expected to
reduce reliance on imported metallurgical coal by enabling syngas-based DRI
production, thereby lowering dependence on coke-intensive blast furnaces.
However, industry participants told Argus that fully substituting metallurgical
coal remains challenging. Jindal has also introduced syngas into its blast
furnace — something which will help the company cut down on the use of
pulverized coal injection (PCI), Jindal Steel's sustainability and
decarbonization head Naveen Ahlawat said at a coal ministry roadshow on 28 May.
"We have a very strong view that it will reduce our PCI consumption by 20-30pc
as we move forward," Ahlawat said. Big investments, slow progress But coal
gasification projects require hefty upfront capital investments and significant
water consumption. Additionally, Indian domestic coal has 30-45pc ash content,
making it less suitable for gasification using imported technologies. This
underscores the need to set up coal washeries and to scale up indigenous
technologies better tailored to domestic coal. Government documents show other
gasification projects are yet to take off, with Talcher Fertilizers' plant in
eastern India's Odisha state facing delays in construction. The plant plans to
use coal gasification to produce 1.27mn t/yr of urea. "We need to develop a
business model for coal gasification, by aligning plant location, detailed
feedstock assessment, gasification technology, and downstream product mix,"
gasification and decarbonisation expert Gaurav Verma told Argus. A technically
and commercially viable model can then serve as a "template" for accelerating
gasification projects while reducing development risks, Verma added. The green
steel question The emissions intensity of DRI produced in coal-based rotary
kilns and syngas-based DRI is very similar, the steel ministry noted in its
green steel roadmap. Lowering the emissions intensity of coal gasification-based
DRI will require carbon capture and storage units (CCUS) for CO₂ generated
during the process, increasing costs for steelmakers. For projects which have a
CCUS component, companies can approach the ministry of power for additional
support under the CCUS scheme announced in the latest union budget , secretary
of the coal ministry, Vikram Dev Dutt, said during the roadshow. Still, industry
experts believe that coal gasification does not indicate a detour from steel
decarbonization but serves as a stepping stone to advanced technologies such as
green hydrogen, which are currently at a nascent stage. "Coal gasification is a
transitional industrial strategy for resource-rich economies like India, where
steel demand is growing rapidly while dependence on imported coking coal and LNG
remains structurally high," mining and steel sector expert Hridaya Mohan said.
"The objective is not to delay decarbonisation, but to create a practical bridge
between today's resource realities and tomorrow's low-carbon steelmaking
technologies," Mohan added. By Amruta Khandekar Send comments and request more
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