MV Kamath
The eighth International Conference on Steel and Steel-making raw materials concluded in New Delhi on the February 2013. Several questions were raised at the conference such as: What is the current iron ore situation in major iron-ore producing states in the world? What are the key challenges facing the global steel industry today? How long will it be before local steelmakers are forced to import ore from abroad? When will iron ore get depleted and what would be the consequences?
In a message to the Conference, Sajjan Jindal, chairman and Managing Director JSW Steel said the demand for steel, a primary player in the progress of any nation’s economy, has grown exponentially. India has emerged as the fourth largest steel producer in the world that should make the soul of Jamsedji Tata happy. If proposed expansion plans are implemented, India may even emerge as the second largest crude steel producer in the world. All that is very fine, but has anybody any idea about the availability of iron ore in the decades to come? When will the time come for iron ore to be depleted world-wide? And then, what will happen? Here are some facts: Presently China produces 900 million metric tones (mmt), Australia 420 mmt, Brazil 370 mmt, India 260 mmt followed by Russia 100 mmt and eleven other countries.
According to Geoscience Australia, the continent has about 24 gigatonnes or 24 billion tones of iron ore and this is being used up at the rate of 324 million tones per annum. One official has been quoted as saying that “if you extrapolate that out, then its pretty easy to see that within 30 to 50 years the high-quality ore in Pilbara will be mined out”. Much the same thing can be said of all countries with iron ore reserves. Once exploited, the ore supply will vanish.
However, according to Thomas Price, Vice President of the US-based steel company Kaisar Steel, there are untold millions of ore in the Pilbara deposits. He is reported to have said: “I think this is one of the most massive ore bodies in the world. It is just staggering. It’s like trying to calculate how much air there is.” How long will iron ore supply, even from such productive a deposit as Pilbara, last? What will happen if ore supply is exhausted? Currently ore is dug “on surface”.
According to one expert “if the industry can find currently untapped rich deposits below the surface, that could dramatically extend the life of a country’s iron ore reserves.” But that is just guessing. The problem essentially is one of sustainability. According to Sam Walsh, Chief Executive, Iron Ore, one of the most frequent questions he is asked is: “What happens when the ore runs out?” his answer is twofold: One, new reserves may be discovered – not unlikely when billions are spent annually on exploration. Two, known, but hitherto inaccessible reserves might be exploited, thanks to advances in technology. But this is more a reflection of hope than an acceptance of reality.
In the 1960s the world was already massively over-populated with a population of around 3.5 billion. It added a little less than another billion in each of the subsequent three decades. A United Nation estimate puts the world’s population currently around 7 billion. The argument is that the 8th billion will take significantly longer than the 7th and the 9th much longer – possibly not until 2050. On some projection, a population of 10 billion will never be reached, considering that as people get wealthier, they are better nourished, better housed, getting better medical care and enabled to live hugely better lives. And from this is derived the hope that under such circumstances fertility rates will plummet. That is pure speculation. A world with some ten billion economically better-off people will demand more cars, more two wheelers and more of everything of which steel is part, like better housing. What seems more plausible is that our industrialists do not want to face the unpalatable fact that the world over, we are over-exploiting our iron ore reserves and refuse to face the consequences. The time may come, sooner than later when one by one our steel factories will close down. And this suggests that India, if it wants to keep its steel production going, should not allow export of even an ounce of iron ore. This has been going on for some time with our politicians not realising that they are selling their motherland down the river.
Iron ore is the country’s most precious mineral heritage. China has 2,700 steel mills; of these many are below one million ton capacity and are loss-making and due to be closed down soon. India’s steel industry, however, according to Anjani K Agarwal, partner of Ernst & Young Pvt Ltd, is set to become a powerhouse. This is pure and simple self-delusion. The manufacture of cars world over has crossed the one billion mark in 2010, 24 years after reaching 500 million in 1986. Prior to that the vehicle population doubled roughly every 10 years from 1950 to 1970, when it first reached the 250 million unit threshold. In the United States alone 250,272,812 ‘highway’ registered vehicles were counted in 2010, (25.02 crore). As of now China is the producer of the largest number of cars (14,485,326) of 24 per cent of world production. The ratios for other countries are: Japan (11.9 per cent), Germany (9.7 per cent), South Korea (7.0 per cent) and India (5 per cent) with production of 3,08,332 cars. The United States follows India with production of 2,966,133 cars (4.9 per cent). The question is: How long will this fabulous production last? In addition to cars, every developed nation of any standing also manufactures trucks, buses and other transport vehicles. The very thought is frightening. One authority is on record as saying that production will start tapering off in some fifty years if not earlier. By then some hard decision will need to be taken in regard to priority. Production of what should be curtailed: cars, trucks, trains, planes, ships, boats? Will it be necessary to stop building high-rise apartment houses? We may be witnessing the end of a civilisation as we now know. Travel will get restricted; we may get back to the bullock cart or horse-driven cart age. who knows, the world may indeed come to an end. Without printing presses there will be no newspapers, no books, no libraries. A world without iron will not just be a worth living. This is a matter for another International Conference on Steel to ponder upon. Ducking the issue will only hasten the end of mankind.
And may it be remembered, it is the GenNext that will be the first to get hurt. It is for this generation now to give thought to the future at a international level.
