The shift of iron and steel industries from raw material sources is due to transportation advancements and market considerations. For instance, Tata Steel in Jamshedpur and Bhilai Steel Plant in Chhattisgarh are strategically located near transportation hubs, optimizing logistical efficiency despite being distant from iron ore and coal mines.
UPSC Mains General Studies Paper – 1 Mains 2020
UPSC Mains Civil Services IAS Exam Question Paper – 2020
Tag: Distribution of key natural resources across the world.
Approach
- In Introduction, try to compare earlier and present situations of the iron and steel industry.
- In Body, give reason for shifting of Iron and Steel Industry and Give examples like market-based industries, the technology used in steel industry.
- In Conclusion, try to provide an insight of a futuristic idea talking about the factors that might decide the site for plants.
Answer
Iron and steel industry forms the base of all other industries; therefore it is called the basic industry. It is one of the most complex and capital intensive industries. At the early period of growth, the location of the iron and steel industry was entirely governed by the ratio of raw material assembling cost and distribution cost of finished product to the consumer. However, with the passage of time, the depletion of raw material, emergence of new technologies (like electric furnaces), and fuel-saving transportation, promoted the Iron and Steel industry to locate away from the raw material sources.
Reason for Shift of Iron and Steel Industries Away from the Source of Raw Material
- Market-based location: Market-based location is generally found in countries where coal and iron ore deposits are rare.
For example, Japan is deficient in both iron ore and coal and almost all raw materials are to be imported from overseas countries. This makes Japanese steel plants mostly market-based. The great ‘Tokyo-Yokohama’ and ‘Osaka – Kobe – Heemeji’ iron steel regions are market-based. - Labour: Availability of cheap labour is also important. Eg: Rourkhela plant, Orisa; Bhilai steel plant in Chhattisgarh, mostly in Chota Nagpur region.
- Transportation: The intermediate location of port like Vizag port because of which Vizag Steel Plant, Visakhapatnam gets distinct advantages in terms of the accessibility with raw materials, market and transportation.
- Technology: Open hearth system, electric smelters are now used as state of art and raw material is being replaced by clean energy. Example: Essar steels and tata steel switching over clean energy.
- The raw material-based industries: The raw material-based industries are now facing disadvantages because of depleting reserves of raw material.Apart from this, the drastic reduction of coal use and development of fuel economy also attracted industries to the areas where transport is cheaper.For example, a cheap water route or break of bulk location, where due to loading and unloading facilities, raw materials are available at a much cheaper rate.
- Developmental policies of government for backward regions: For example, Bhilai and Salem plants in India.
- Strategic reasons: After WWII, the USA and the USSR adopted a policy to not allow the concentration of the industry in one region. Thus, in the USA some plants were set up in the western region such as California and the USSR in the eastern side towards the Pacific coast.
Conclusion
Nowadays, the localization of steel plants, each of the three factors, i.e., coal, iron ore, and the market, have equal importance. The geographic coincidence of any two factors, however, determines the steel plant site. Iron & steel being basic industries provide raw materials for other industries, in order to avoid the spiraling effect and ensure fair trade, provide level playing field to domestic industry. The government has taken steps to make the Make in India initiative.
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