Largest steel plant in the country not closing, DHI Chairman

… however, no definite timeline to restart the steel plant

In a rumour that has been recently surfacing over the closure of the largest steel plant in the country and North Eastern region of India, Druk Metallurgy Limited (DML), the rumours have been put to rest.

Yet to start operations, the steel plant is reeling under the side-effect of the COVID-19 pandemic for it has been closed due to the impact of the pandemic. 

The steel plant halted operations on March 23, 2020, after about 150 expatriate workers left following the COVID-19 situation.

Druk Metallurgy Limited (DML) is a joint venture foreign direct investment of Druk Holding and Investments Ltd. (DHI) and the Goenka Family, Guwahati, India with a shareholding of 40 per cent and 60 per cent respectively.

Dilip Kumar Goenka is the principal partner of KD Iron and Steel, Assam, India. 

There are various rumours linking it to the closure of DML. 

One rumour is linked to expatriate workers leaving the country following the COVID-19 situation. 

Many had left during the peaking season of the COVID-19 pandemic, which led to halting operations. 

Subsequently, after the workers left and the plant was left non-operational, technical experts say it takes time to restart the blast furnace of a steel plant. 

Blast furnaces are large reactors used for smelting iron ore into liquid steel at temperatures ranging from 900-1300˚ Celsius and so need to run continuously. Once a blast furnace is shut down, it is both expensive and time-consuming to restart it, taking 15-20 days to stabilize operations based on the design and size.

Meanwhile, the steel plant also explored the possibility to train human resources, however, this plan did not materialize.

According to the National Environment Commission’s Environmental Standards, factories need to install a gas cleaning plant (GCP) to control pollution from fugitive emissions. 

Some of the steel plants confirmed it takes time to procure the equipment and also the human resource, and expertise for the installation work.

Additionally, one other reason includes the requirement for the provision of the industrial air filter system. The steel plant had no air filter system in place. 

Many also claim DHI had some issues regarding shareholding, and also the principal partner had shown irregularity of payments. 

Referring to the impact of the COVID-19 pandemic, the Chairman of DHI, Dasho Ugen Chewang said it is the impact of the pandemic.

However, the Chairman said that it is not possible to give a clear-cut timeline for the possible restart of the steel plant.

DML is an export-oriented unit targeting the market in the northeast region of India. 

DML is an integrated steel plant with a state-of-art steel melting facility based on Induction Furnace (IF) Technology, Continuous Casting Machine (CCM), hot charging to the rolling mill stands, together with the necessary automation and automatic materials handling systems including advanced environmental pollution control equipment. 

In the near future, the company is also expecting to produce rolled steel.

It is one of the largest steel manufacturing plants in Bhutan and the North-Eastern region of India. DML is located at Motonga Industrial Park in Samdrup Jongkhar. 

Other than earning Indian Rupees from exports of steel, the company was also expected to employ about 165 human resources in the first phase and 219 in the second phase.

The total cost of the project is Nu 1.3 billion with an installed capacity headed for 200,000 million tonne per annum (MTPA) billets in Phase I, and 200,000 MTPA TMT Bars in Phase II.

In 2018-2019, DML contributed Nu 11.03 million in Sales Tax, and according to DHI’s Annual Report (2020), DML’s market cap was Nu 180 million.

The factory operated for about three to four months after the construction, and it has been put on hold for about two years in Phase II, however, it produced 4,000 MT of billets.

Other steel plants operating in the country are, Bhutan Rolling Mills Limited, Bhutan Steel, Lhaki Steel and Rolling Mills and Druk Iron and Steel, all operating as a single entity.

Meanwhile, Bhutan Concast Private Limited operation is put on hold for importing foreign workers illegally in 2020.

Some private companies are proposing to institute steel plants in Gelephu, Sarpang.