Locating a sponge iron plant in Karnataka
A promoter plans a 0.5 million tonne per year sponge iron plant to supply rolling mills in Karnataka. Each tonne of sponge iron requires 1.5 t of iron ore, 0.9 t of non-coking coal and 0.1 t of dolomite, and the process loses about a quarter of the input weight. Three sites are offered.
Site P: 40 km from an iron-ore belt, 60 km from dolomite, 350 km from the nearest coal field, 15 km from a Tungabhadra canal, 12 km from a 220 kV substation and 330 km from the Bengaluru market.
Site R: 150 km from ore, 130 km from dolomite, 380 km from coal, 250 km from the market, on a national highway but without a rail siding.
Site Q: 25 km from a port that handles imported coal and scrap, 420 km from ore, 200 km from dolomite, and 360 km from the market, situated 200 m from the high-tide line.
The district around Site P has been under court-ordered restrictions on iron-ore mining, and its groundwater block is classified 'over-exploited'. Canal water is allocated to irrigation.
1. Calculate the material index and the total tonne-kilometres per tonne of product for each site, and rank the sites on assembly-and-delivery cost alone.
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Material index: weight of localised inputs ÷ weight of finished product. 1.5 + 0.9 + 0.1 = 2.5 t of input per tonne of sponge iron, so the material index is 2.5.
This is well above 1, so the plant is strongly weight-losing and raw-material oriented - consistent with the stated 25% weight loss. Weight-losing industries usually locate near the heaviest or most ubiquitous input; here that is ore (1.5 t) and coal (0.9 t), the two together being 96% of the input weight.
Tonne-kilometres per tonne of product (input weight × distance, plus 1 t of product × distance to market):
- Site P: ore 1.5 × 40 = 60; coal 0.9 × 350 = 315; dolomite 0.1 × 60 = 6; product 1 × 330 = 330. Total 711 t-km.
- Site R: ore 1.5 × 150 = 225; coal 0.9 × 380 = 342; dolomite 0.1 × 130 = 13; product 1 × 250 = 250. Total 830 t-km.
- Site Q: ore 1.5 × 420 = 630; coal 0.9 × 25 = 22.5; dolomite 0.1 × 200 = 20; product 1 × 360 = 360. Total 1,032.5 t-km.
Ranking on transport cost: P (711) best, R (830) second, Q (1,032.5) worst. P's advantage over R is 119 t-km per tonne, about 14% - real, but not overwhelming.
2. Given the mining restrictions and groundwater classification at Site P, recommend a site and justify the trade-offs you accept.
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Recommendation: Site P, but conditional on securing water and ore supply; otherwise R.
The case for P: it has the lowest assembly cost, is closest to the 1.5 t input (ore at 40 km), has dolomite at 60 km and a 220 kV line 12 km away. Power is a site-restricted utility for an electric process, so its proximity counts more than the tonne-km arithmetic shows.
The problems at P - and what they cost:
- Ore security. Court-ordered restrictions mean the nearby belt may not supply the plant. If ore must be railed 300 km from auctioned stock elsewhere, P's ore term rises from 60 to about 450 t-km and the ranking collapses. A long-term supply agreement is a precondition, not a detail.
- Water. A sponge iron plant needs cooling water, but the block is 'over-exploited' and canal water is committed to irrigation. Water must come from recycled process water or a dedicated source; if a new groundwater licence is refused, P is not viable.
- Environmental load. Adding a large airshed load to a district already affected by mining dust requires scrubbers, covered stockpiles and a rail siding rather than road haulage.
Why not Q: the port solves coal (imported, 25 km) but ore at 420 km and market at 360 km give it the highest transport cost, and a site 200 m from the high-tide line lies in a Coastal Regulation Zone where such a plant would face clearance constraints.
Why R as fallback: it balances coal and market distances and carries no acute resource conflict - the prudent choice if P's water and ore cannot be guaranteed.
3. Identify one change in infrastructure or policy that would reverse your ranking, and explain the mechanism.
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A dedicated rail siding at R, with unit-train coal rates.
R currently suffers because 0.9 t of coal travels 380 km by road and no siding exists. Coal is the single largest distance term in its cost (342 of its 830 t-km). A siding converts road haulage into bulk rail haulage, typically at a fraction of the per tonne-km cost, and also removes the transhipment loss. If the effective coal cost at R falls by roughly a third, its transport disadvantage of 119 t-km against P disappears, and R's other advantages - no mining restrictions, no over-exploited aquifer, and a shorter 250 km to the market - become decisive.
A slurry pipeline for ore into Q would work the same way, collapsing the 630 t-km ore term that makes Q uncompetitive.
Alternatively, a policy change: if the state mandates value addition near the mining district, or if the court restrictions at P are lifted and canal water is reallocated, P becomes unassailable.
The lesson is that the material index sets the direction of the pull, not the final answer: transport rates, utility availability and environmental regulation determine whether a weight-losing plant actually sits on the ore.