Rajesh Rai | Phuentsholing 

With 11 ferrosilicon industries in operation, three under construction, six new construction approved and 10 new applicants, Bhutan will have more ferrosilicon industries in the coming years.

While Pasakha Industrial Estate (PIE) doesn’t have space, the new plants will come up at Motanga Industrial Park (MIP) in Samdrupjongkhar and Jigmeling Industrial Park (JIP) in Sarpang.

From the 11 existing ferrosilicon industries, 10 are in Pasakha and one in Motanga. Of this, only one, Ugen Ferro Alloys is a Foreign Direct Investment (FDI).

Is it feasible?

Ferrosilicon is Bhutan’s top export commodity today. In 2021, Bhutan exported ferrosilicon worth Nu 15B, the highest so far. In 2020, Bhutan exported Nu 7B worth ferrosilicon, Nu 9B in 2019, Nu 13B in 2018, and Nu 9B in 2017.

In 2020, records show India imported the highest share of ferrosilicon from Bhutan- a 16.6 percent worth USD 101M. India also imported ferrosilicon from China, Indonesia and Malaysia.

Observers said the lucrative nature of business and the record price as high as Nu 280,000 per metric tonne (MT) in 2021 attracted investors.

While there are concerns if too many are venturing into the business, investors are positive.

The promoter of Chukha Ferro Alloys Private Limited (CFAPL) said the talk doing the rounds in the steel and ferro industries around the region is that if Bhutan cannot produce ferrosilicon or power-intensive products, no other country can produce it.

“Another issue is the Russia-Ukraine war, which will see demand for steel in the coming years coupled with post-pandemic plans of developing countries. The ferrosilicon industries will do well,” he said.

CFPL is a foreign direct investment (FDI) and its construction is ongoing at the moment in Motanga. It will take another 15 months before the plant starts production.

Meanwhile, Economic Affairs Minister Lyonpo Loknath Sharma said he discussed upcoming ferrosilicon industries and markets with India in his recent visit.

“They say it is promising as India is trying to enhance its steel production. They say their steel production is being enhanced and might increase by 300 times in another 10 to 15 years. So the market for ferrosilicon might be there.”

He, however, said the problem is with the raw materials such as coal and semi-coke as both are mostly imported from India and China.

“Also, our power tariff will progressively be increasing and the same rate as now may not be feasible,” Lyonpo Loknath Sharma said. “Also, if India does not reach what they are aiming at, then the market is closed.”

He said that they are advising all proponents to look into these factors properly. India, Nepal and others might also come with large alloys plants, he added.

Lyonpo Loknath Sharma said the government cannot distort and disturb where private investors want to put their money, but they need to do their homework properly rather than put it all into one sector.

He said investors might be thinking of bumper profits looking at the recent past during the Covid-19 pandemic.

“But this was because the whole shipping and value chain was disturbed so Bhutan got the opportunity to export to India.”

The economic affairs ministry also carried out a study on the global ferrosilicon industry in relation to Bhutan.

The report stated that with India’s current 120 million (M) MT production of crude steel, the consumption of ferrosilicon is projected at 600,000MT. India imports around 125,000MT of ferrosilicon from Bhutan and the rest from Malaysia, China, and other countries.