The Union Budget of FY22-23 has set ambitious target towards sustained economic growth and influence on the world stage. The budget has identified government sector and infrastructure sector investments as two of its key cornerstones for the way forward.
Key announcements for the Infrastructure & Mining Sector in the budget were:
* PM Gati-shakti National Master Plan for seamless multi-modal connectivity, and logistics efficiency
* Expressways to be augmented to facilitate faster movement of people and goods
* National Highways network to be expanded by 25,000 km
* Establishment of Four multi-modal logistics park
* 100 new cargo terminals to be developed in three years
* 35% increase in capital expenditure
Role of Explosives
Infrastructure is a key pillar in India’s growth story. Infrastructure development depends heavily on minerals and rocks like limestone for cement, iron ore for steel manufacturing and coal for power supply. These all minerals and stones can only be obtained efficiently through mining, which depends on commercial explosives.
Technical Ammonium Nitrate (TAN) is the principal ingredient of most commercial explosives. It is an “oxidiser” which contains approximately 60% oxygen and, therefore, supports combustion. TAN is not an explosive by itself but is turned into one when mixed with fuel and sensitizer. These commercial explosives, when used with other blasting agents like detonators and boosters, are rapidly converted into gases at high temperature and pressure in a confined state in the rock, leading to breaking of the rock/mineral.
Market Situation for TAN
In India, currently there are 4 manufacturers of TAN with a total production capacity of approximately 0.94 Million MT.
Smartchem Technologies Limited (STL), a wholly owned subsidiary of Deepak Fertilizers and Petrochemicals Corporation Limited (DFPCL), is the leading manufacturer, producing TAN in the Solid prills and the Melt form.
Other manufacturers i.e., Rashtriya Chemicals and Fertilizers (RCF) Limited, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) Limited and National Fertilizers Limited (NFL) produce TAN in the Melt form. Almost entire TAN production capacity of the Country is located in Western India. Roughly 20% of the TAN demand in the country is currently met through Imports.
The biggest challenge for the TAN industry is constrained availability and increasing prices of Ammonia gas, which is the major raw material in the production of TAN.
Geopolitical uncertainties in last couple of years have further compounded the challenges. Some of the Industry players are also in the early stages of evaluating options such as Green Ammonia or Green Hydrogen as a feedstock etc in their bid for sustainable development.
Usage Pattern
Explosives Manufacturers use TAN to produce Emulsion explosives (liquid oxidizer solution surrounded by a continuous fuel phase) which is used for blasting in Mining/Quarrying operations. Some end-users/consumers also use TAN by themselves to produce ANFO explosives (Ammonium Nitrate mixed with Fuel Oil) for blasting in their mining/quarrying operations.
Roughly 63% of TAN demand comes from Coal segment. Coal India Limited, the largest coal producer in India aims to produce 1 Billion MT(1) of coal in FY24, which is highly aspirational when compared with the current level of ~600 Million MT coal production in FY 21(2). Commercial coal mining, blocks allocated by Govt through tenders, is set to further increase the demand for explosives adding to the requirement for TAN in the country.
Non-Coal mining for minerals such as Limestone/Iron/Copper/Zinc etc constitutes ~9% of the demand for TAN. Demand for Limestone (which is the primary raw material for cement production) is also projected to increase by 80 Million MT vide capacity addition in the next 3 years(3). Infrastructure segment constitutes ~28% of the demand for TAN.
Self-reliance on the cards
In view of the growing demand for TAN driven by growth in the Infrastructure & Mining sectors of the Indian economy, Smartchem Technologies Limited is setting up a new TAN plant in Gopalpur Odisha, which will meet the growing demand in the Eastern part of the Country. Smartchem Technologies Limited is also working on brownfield capacity enhancement of its existing facilities in the West through de-bottlenecking in its existing plants. Other existing TAN producers are also evaluating TAN capacity enhancements.
All these TAN capacity additions will help India become self-reliant for its TAN needs and underpin Indian Government’s AtmaNirbhar Bharat vision.
Conclusion
With the growing population of the country, there is a growing need to increase the infrastructure to support the population like housing, electricity, roads etc. India’s aspiration to become ‘Manufacturing hub for the world’ will further boost the demand for power and infrastructure. Domestic TAN will continue to play a vital role in supporting India’s economic growth in the decades to come.
