Steel industries looking at slurry pipelines to cut transportation cost

After Essar Steel, JSPL, JSW plan slurry pipelines for their Odisha project

Worried over clogging of roads and spiralling cost of surface and rail transport of raw materials, steel industries in Odisha are now looking at hauling iron ore from mine heads to their plant sites in slurry form through pipelines.

The trend was started by Essar Steel, which has laid 253 km of slurry pipeline to connect its ore washery plant in Keonjhar district with its 6-million-tonne-per-annum pellet unit at Paradip.

Now, Jindal Steel and Power (JSPL), which runs a 6 million tonne steel plant at Angul and JSW, proposes to set up a 10 million tonne steel plant at Paradip on the land vacated by Posco plan to follow suit.

Like Essar, both the companies, owned by Jindal brothers, will be sourcing iron ore from mines located in Keojhar district, 250 to 280 km from their respective plant sites.

Apart from the hassles of road and rail transport, the transportation of iron ore through the slurry pipeline will be cost effective, points out a top official of JSPL.

"At present, it costs us Rs 2,000 per tonne to bring iron ore from Barbil (in Keojhar) to our plant by road and Rs 820 per tonne by rail. If we carry the ore in slurry form through the pipeline, the cost would come down significantly to Rs 400 per tonne- a saving of 80 per cent compared to the road transport cost and 51 per cent compared to the rail transport expense", he said.

JSPl would be investing about Rs 700 crore on the pipeline project.

In fact, soon after the launching of Essar Steel's slurring pipeline in 2014, a senior official of the company had said they would be saving about Rs 1,200 per tonne on the transportation of iron ore fines from the mines to the pellet plant.

"The cost of road transportation of minerals in Odisha is particularly high", says Vishal Agarwal, MD of Visa Steel. "The per tonne cost of coal transport by road from Talcher to our plant in Kalinganagar is same as getting coal from Australia to Paradip port by the ship", he said.

This is echoed by another industry leader, who attributed the cause to cartelisation of local transporters. Following appeals by user industries, the government has come out with approved rate of road transportation for different minerals at different locations, which is vindicated by the court.

But the official rates are not enforced as transporters' associations in mining areas are often backed by local political leaders who have a stake in the transport business.

In this backdrop, steel industries are looking at the slurry pipeline to overcome the problems of road and rail transport and to cut cost, says BS Pani, an industry analyst. But again, this is also fraught with hurdles of land acquisition and forest clearance where ever required for laying of pipeline, he added and pointed out the delay of few years in commissioning of Essar Steel's pipeline to drive the point.

Meanwhile, JSW has sought about 1000 acres of land from the Odisha government for the slurry pipeline project of its proposed steel plant in Odisha.