by Ajai Shukla
Business Standard: 01 Feb 2008
The Defence Materials Research Laboratory (DMRL) in Hyderabad heard with some interest the government’s announcement, on Wednesday, that the mining and production of titanium would be thrown open to industries entirely funded by Foreign Direct Investment (FDI). DMRL has developed the technology to extract pure titanium, an expensive metal, which is increasingly used in the manufacture of aerospace components. India has the world’s fifth-largest deposits of titanium ore, mainly ilmenite, which occurs naturally in the beach sands of southern India.
The DMRL (a Defence R&D Organisation, or DRDO, laboratory) develops “strategic” materials, which feed into India’s defence production. The production of titanium, as strong as steel but with just half the weight, is one of DMRL’s most important successes. Having developed the extraction technology, DMRL has transferred it to a state PSU, Kerala Minerals and Metals Limited (KMML). KMML is set to manufacture India’s entire requirement of 200-500 tons a year of titanium.
But India’s demand is miniscule, compared with the global market for titanium. Boeing, America’s largest aircraft manufacturer, constructs 15% by weight of all its aircraft from that metal. It’s newest airliner, the Boeing 787 Dreamliner, with its emphasis on lower weight, uses even more titanium. Boeing has recently signed a $4 billion deal with Russian company, VSMPO-AVISMA, for titanium forgings; the Russian government-controlled company already supplies 40% of Boeing’s titanium needs. It is an uncomfortable dependence for the US defence major; India provides an alternative source of titanium.
But the Indian worm seems likely to go to the Russian early bird, VSMPO-AVISMA. DMRL Director, Dr G Malakondaiah, explains that the titanium extraction technology developed by DMRL works well for small volumes, but the mass production needed to become a global supplier requires a different technology. VSMPO-AVISMA has that expertise; the company announced in Moscow last year that it will be setting up two titanium subsidiaries in India. It has signed a letter of intent with KMML to manufacture 10,000 tons of titanium per year; VSMPO-AVISMA will buy the entire output. The second subsidiary is likely to come up in partnership with another PSU, Mishra Dhatu Nigam (MIDHANI) in Andhra Pradesh, to manufacture 40,000 tons of titanium per year.
Russian defence minister, Sergei Ivanov, confirmed, during his visit to India last year, that the payment for the titanium exported from India is likely to be adjusted against India’s $1 billion debt on the rupee-rouble account.
Indian metals major, Tata Steel, has also moved into titanium production, though not the manufacture of metal. The Tatas intend to produce 60,000 tons per year of titanium dioxide, used in manufacturing paints. Despite having over 20% of the world’s known reserves of ilmenite, India imports 70,000 tons per year of titanium dioxide. But after signing an MoU with the Tamil Nadu government, for prospecting over 80 square kilometres in the state, the Tata project has run into trouble over land acquisition for the plant. 16,000 acres are needed in Tirunelveli and Tuticorin districts, but the project has been halted by litigation over its environmental impact.
Titanium is currently selling for about Rs 500 per kilogram, and global demand is rising. Besides the spate of orders placed on commercial aircraft manufacturers, the US defence industry is also facing a growing need for titanium. With the highest strength to density ratio of all metals, titanium is being used for armouring light vehicles like Humvees, to provide protection to troops from roadside bombs. The new government policy of allowing 100% FDI in the manufacturing of titanium will evoke an enthusiastic response.