Coastal shipping could save steel firms ?6,500 cr annually

The Centre’s port-led development programme Sagarmala can help domestic steel sector save up to ?6,500 crore annually by using coastal shipping route for transportation of goods and raw materials.

Traditionally, steel plants in India are set up near the raw material source, with almost 85 per cent of the capacity following this pattern, a government report on the Sagarmala project said.

However, a robust coastal shipping network not only offers logistics cost saving, but also flexibility in sourcing raw material as well as better linkages with global markets, it reasoned.

The study analysed models of setting up large coastal clusters globally, including those of Pohang in South Korea for steel and Port Said in Egypt for fertilisers.

It estimates that if steel plants of around 40 million tonnes per annum (mtpa) capacity are set up along the coast, it will help save an average ?800-1,000 per tonne on logistics costs.

“In the case of steel, for example, savings are driven by no inland logistics for coking coal, reduction in steel transportation through coastal shipping and use of new technology (slurry pipelines) for transporting iron ore from mine to coast,” the report added.

“The total cost saving from these capacities is estimated at ?5,500-6,500 crore per annum.”

The report identified 40 mtpa capacity for setting up cement plants across the country along the coasts that will help firms save up to ?1,000 a tonne on logistics.

For steel clusters, the report identified Odisha, North Andhra Pradesh, North Tamil Nadu and Maharashtra. Coastal steel capacity can also come up close to demand centres such as Chennai/Ennore, which will receive iron-ore/pellets through coastal shipping.

In the case of cement, it identified central Andhra Pradesh and southern Gujarat clusters based on the mapping of limestone reserves.

Sagarmala is an ambitious project for port-led economic development of India’s coastline.

The programme was launched last year to utilise India’s 7,500-km long coastline, 14,500 km of potentially navigable waterways and strategic locations on key international maritime trade routes.

Source: Press Trust of India