Lead processing to see organised takeover

Stringent pollution norms to hit unorganised producers; with demand booming, organised firms step in.

India’s secondary lead industry is likely to witness a big change in the next few years due to stringent environment guidelines framed by state pollution control boards (SPCBs). Organised sector companies are set to get a majority of the smelters in the unorganised sector.

The country’s total annual lead demand on Tuesday is 600,000 tonnes. Hindustan Zinc, the only producer of the primary metal, produces around 70,000 tonnes. The rest is met through a combination of secondary producers and imports. Of the secondary producers’ contribution of 320,000 tonnes, about 250-300 unorganised sector players, mainly smaller ones in remote cities, contribute around 170,000 tonnes. These producers only randomly consider installing pollution control equipment.

About 30-40 companies in the organised sector have, however, installed all the mandatory equipment for controlling discharge of noxious gases while processing of lead through secondary sources. These players contribute 150,000 tonnes of output annually.

The remaining third, or 200,000 tonnes, of India’s lead demand is met through imports. Lead demand in the country is growing at 12 per cent annually due to rapid growth in infrastructure, as against the global average of six per cent.

This is spurring investment in the organised sector. For instance, Jaipur-based Gravita India plans to raise capacity from the existing 35,400 tonnes to 121,125 tonnes by 2013-14, at an investment of Rs 100 crore. For the current financial year, it plans to invest Rs 40 crore to expand production capacity to 79,125 tonnes.

SPCBs in the industrialised states have come out with stringent regulations for processing of secondary lead from battery scrap. All plants in this sector are required to install pollution control equipment before seeking clearance from the SPCB. Since small and unorganised sector players do not have financial capability to do so, they will not get their license renewed, said an official from an SPCB. This will benefit companies like Gravita, said M C Mehta, president of the company.

Gravita has recently acquired controlling rights in KM Udyog, Jammu, a lead re-melting unit with annual production capacity of 7,200 tonnes. Production activity is set to commence by the end of this month. The unit will derive advantage of benefits for its operations and sale of products by way of exemption from excise duty, income tax, etc, due to the special benefits granted by the state there.

The company also proposes to set up manufacturing units in Australia , Belarus, Chile and Mexico. These manufacturing units will be primarily involved in manufacture of remelted lead ingots. The company has also finalised a joint venture in South Africa and plans to set up one in Saudi Arabia.

Scrap lead batteries, which feed secondary lead smelters, are adequately available in India due to the automobile sector boom. A battery in the auto sector is mandatorily replaced in four years for better efficiency and hence the availability of lead acid batteries will not be a problem for capacity expansion, said Mehta.

Also, the industry is bound to gain from the rise in prices of 13.75 per cent to $2,351 a tonne on the London Metal Exchange in the past one year.