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India’s Future Energy Business Plan — Shop the World for More Coal

BOKARO, India — The men who work at Bokaro Steel City (there are few women) behave as though they are in the Wild West. Some are slick and charming with their words. They stand in air filled with fine coal dust that gets into every crevice of the skin and upper respiratory system, while saying that the dust filters are 99.9 percent efficient.

Others, such as the gun-toting security guards, are silent and watchful. They need to be, in order to cope with the pressures that are unique to Jharkhand, India’s richest coal state. The state is among the most corrupt in the country. It is the richest in mineral wealth, and faces a home-grown communist threat called Naxalism. It has a thriving coal mafia, and millions of dollars get traded between politicians leveraging the future of the residents to gain control over the fuel.

Bokaro is an insignificant player in these politics, for all it does is use the coal to make steel. The steel city rises in majestic order above the chaos of Jharkhand. It is immense, occupying 70 square miles including an airstrip, 186 miles of locomotive tracks and a 320-megawatt coal-burning thermal power plant. All this was built in the 1960s, when India was leaning toward socialism and Jharkhand was still mostly forest. It was India’s first steel plant, built with the help of the Soviets.

“This is where hell can be seen on earth,” said David Mony, general manager of operations for Bokaro, referring to the steel-making process.

Navin Srivastava, one of Mony’s subordinates (or “boys,” as he called them), placed his eye against a tiny peephole that serves as a window into the 2,500-degree-Fahrenheit steel kiln filled with blue-hot gas. Black chunks of hard coke imported from Australia are added from the top. Orange-hot liquid steel accompanied by sparks pours out into molds at the bottom.

The ‘boys’ from ‘hell’ take over the globe’s steel business

Despite significant technological advances since the Iron Age, there are few materials on Earth that can replace coal in the steel-making process. There are two varieties of the fuel: metallurgical or coking coal, used in manufacturing, and thermal or steam coal, used in thermal power plants. India is a major importer of coke, and in recent times, supply shortages of thermal coal have been seen, as well. If the gaps get any larger, experts say India could become the largest importer of coal in the world by 2020.

Together with power generation, manufacturing helps make India the fourth-largest emitter of greenhouse gases. Steel and cement, in turn, are driving the construction of buildings, highways and other new infrastructure in developing nations. Even as steel demand from the West fell with the economic recession, developing countries picked up their own production, according to the World Steel Association.

In India, the metal is linked to development in the energy, transport and housing sectors. State-owned Steel Authority of India Ltd., which runs Bokaro, is planning to double its hot metal production in two years, and more steelmakers are moving to the mineral-rich belt of India that includes coal-rich Jharkhand and Orissa.

India’s only source of coke comes from the fields of Jharia, 30 miles away from Bokaro, but the coal extracted here accounts for only a fraction of the needs of steelmakers. The steel plants have adapted by importing coal. The fuel travels a long distance to make it to this remote corner of India. While state-owned Coal India Ltd. supplies 95 percent of cooler-burning steam coal used to generate electricity in thermal power plants, India is a net importer of coke, according to the company’s chairman, Partha Bhattacharyya.

“We can only meet 25 percent of India’s metallurgical coal needs,” he said.

Bokaro brings in 80 percent of its coke from Australia and New Zealand, explained Mony. For the rest, the operators have shopped the world in recent years, according to the World Steel Association. India imports from South Africa and Indonesia, among others. Indonesia, which is the top exporter, also sells to China, Japan, Korea and Taiwan.

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