Why Coal-Based DRI Is Running Hard in 2026
Coal-based direct-reduced iron (DRI), or sponge iron, is the feedstock backbone of India's secondary steel sector, and in 2026 it is enjoying a strong run. The dominant Indian route is the solid-state SL/RN-type rotary kiln, in which lump iron ore or pellets are reduced by non-coking coal at roughly 950 to 1050 degrees Celsius without melting, yielding metallised sponge iron rather than the gas-based HBI made overseas. With domestic sponge iron trading at a meaningful discount to imported shredded scrap, many secondary mills in the east and centre of the country have tilted their melt mix heavily toward DRI rather than scrap, and the sector, clustered in Chhattisgarh, Odisha, Jharkhand, West Bengal and Karnataka, is adding capacity through brownfield kiln strings even as the country weighs how to decarbonise this coal-intensive route over the longer term. India runs tens of millions of tonnes of coal-based DRI capacity, and the favourable economics in 2026 mean kilns are run for longer between shutdowns and char and dolo-char circuits are pushed.
That "running hard" backdrop is precisely what should concern a risk manager. A coal-based sponge-iron plant, and the integrated induction-furnace melting shop that usually sits alongside it, is a high-temperature, high-energy process risk where the dominant losses are mechanical, thermal and electrical rather than the everyday warehouse fire that drives many other industries. When kilns are run hard to capture favourable margins and the planned cooling-and-relining shutdown is deferred, accretion (ring) build-up, refractory wear and machinery breakdown all tend to accelerate, and the severity of hot-metal and self-heating incidents rises with them.
What follows works through the kiln, char, dust, hot-product and melting-shop hazards of an integrated coal-based DRI and steel plant in turn, and the cover a buyer and broker should engineer against each, set against a 2026 in which the sector is running flat out on favourable economics.
The Hazard Map: Kiln Accretion, Char, Hot Fines and the Melting Shop
The loss potential of a coal-based DRI plant clusters in five areas, each with hazards specific to the solid-state coal-reduction route.
The rotary kiln and its accretions
The heart of the plant is the inclined, slowly rotating, refractory-lined kiln, fed with iron ore, non-coking coal and dolomite (as a sulphur scavenger) and reduced under a counter-current of process gas. The signature kiln problem is accretion, hard ring-like deposits of fused ash, char and iron that build on the refractory, choke the cross-section, disturb the burden movement and can force a shutdown to chisel them out. Left unchecked, severe accretion and the resulting hot spots drive refractory loss, shell deformation, ovality and even shell cracking. Add support-roller, thrust-roller, girth-gear and kiln-drive failures, and the failure modes are numerous. The kiln is a single, critical, long-lead-time asset, so its loss stops the whole reduction string.
Hot DRI fines and self-heating
Sponge iron leaving the rotary cooler is highly metallised and pyrophoric: freshly reduced metallic iron, especially the fines, re-oxidises exothermically on contact with air or moisture and can self-heat and reignite in stockpiles, bins, transfer chutes and product silos. This is a self-heating and spontaneous-combustion exposure distinct from ordinary external-cause fire, and hot-DRI spillage from the cooler and conveyor fires are recurrent loss sources. Adequate cooling before storage, inert handling of fines and tight moisture control are the defences.
Char, coal dust and carbon monoxide
The process produces char (partially burnt coal) and dolo-char that are collected, screened and often sold or burnt; the coal-handling, char and dust circuits generate combustible carbon dust that carries fire and, in confined conveying, deflagration potential. The reduction reaction also generates large volumes of carbon monoxide, which is toxic and flammable, vented and burnt in the after-burning chamber, so CO build-up and flue-gas excursions are a standing hazard around the kiln hood and gas-cleaning train.
Waste-heat-recovery boiler and gas cleaning
Many modern strings route the hot kiln off-gas through an after-burning chamber and a waste-heat-recovery boiler (WHRB) to raise steam for captive power. The WHRB, its dust-laden flue path, the gas-conditioning tower and the electrostatic precipitator or bag filter add a boiler explosion, fouling and breakdown exposure, and a WHRB or precipitator outage can throttle the whole string.
Induction-furnace melting shop
Most integrated plants charge the hot or cold sponge iron, along with scrap, into coreless induction furnaces to cast billets. Induction furnaces carry a serious molten-metal/water steam explosion exposure: contact between the melt and water (from a cooling-coil leak, a leaking furnace, or a wet or sealed charge) flashes to steam and ejects molten metal violently, among the most destructive single events in secondary steel. The furnaces, water-cooled panels, capacitor banks, converters and furnace transformers are also high-value machinery breakdown and electrical-fire exposures.
The severity comes from single-string dependency and long re-fabrication times for the kiln shell, girth gear and furnace bodies. The realistic worst case is a kiln, WHRB or furnace failure, or a molten-metal steam explosion, that takes a single-string plant down for the many months needed to rebuild bespoke equipment, a moderate-to-large material-damage loss but a very large downtime loss.
Engineering the Programme Around the Kiln and the Melting Shop
Because the dominant losses are mechanical and thermal, a sponge-iron programme should be engineered around the kiln, the WHRB and the furnaces first, with fire cover supporting it rather than leading.
Machinery breakdown and the WHRB. The machinery breakdown section is the core cover, responding to sudden and accidental failure of the kiln drive train (girth gear, pinion, support and thrust rollers), the rotary cooler, the induction furnaces, capacitor banks, furnace transformers, ID and FD fans, compressors and electrical plant, the failures that actually befall a hard-run DRI string. Where a waste-heat-recovery boiler and pressure vessels are present, boiler explosion cover is needed and certification under the boiler regulations must be current.
Material damage. A reinstatement-value fire policy covers the kiln house, melting shop, buildings, plant, stock (iron ore, non-coking coal, dolomite, char, sponge iron, billets) and utilities against fire, explosion and special perils, including the flood and storm relevant to the eastern mineral belt. Set sums insured on a reinstatement value basis so a loss funds a current-cost rebuild of the kiln shell and furnace bodies, and keep them adequate so the average clause does not bite. Stock cover should track the swings in ore, coal and finished billet values, with particular care on pyrophoric sponge-iron and DRI-fines storage.
Downtime cover. This is where the money is. A kiln accretion-and-relining event, a WHRB failure or a furnace breakout can stop a single-string plant for many months. The business interruption section needs an indemnity period matched to the realistic rebuild of the kiln shell, girth gear or furnace (frequently 12 to 24 months for bespoke items), the gross-profit sum insured properly computed, and a machinery loss-of-profits extension so breakdown-driven downtime, the most likely cause at a DRI plant, is insured on the same footing as fire-driven downtime. For multi-string plants the structure should reflect partial-loss scenarios where one of several kilns is down while the others run.
Liability. Add public liability (including the statutory Public Liability Insurance Act cover that hazardous coal, CO and dust handling brings in), employers liability/workers' compensation for a hot, molten-metal workplace with real burn and bodily-injury exposure, and product liability on billets supplied. Marine cargo and transit cover should run over inbound ore and coal and outbound billets.
What the Risk Engineer Wants on the Kiln, and How Sarvada Helps
Underwriters price a coal-based DRI plant on the integrity of the kiln string, the discipline of the relining and accretion-management programme, and the control of self-heating and molten-metal hazards. A buyer able to evidence the following will get materially better engineering and downtime terms; one who cannot should expect heavy loadings or restricted machinery cover.
Kiln-string integrity
- Accretion-monitoring and removal practice, shell-temperature scanning, kiln-ovality and shell-deformation measurement, and condition records for the girth gear, support and thrust rollers, pinion and drive.
- A documented refractory-management and relining schedule, with the relining cycle treated as planned maintenance rather than relied on as insured loss.
- A spares and lead-time analysis for the kiln shell, girth gear, rollers and furnace bodies, which directly sets the realistic downtime indemnity period.
Melting-shop and molten-metal safety
- Strict dry-charge discipline and water-management controls on the induction furnaces to prevent molten-metal/water steam explosions, with cooling-coil leak detection, panel-leak monitoring and a documented furnace-breakout procedure.
- Maintenance and electrical-protection records for furnaces, capacitor banks, converters, transformers and distribution.
Self-heating, char, dust and CO
- Hot-DRI cooling, inert handling and storage controls on sponge iron and fines to prevent self-heating and reignition in bins, silos and stockpiles.
- Coal, char and dolo-char dust control and housekeeping to limit fire and conveying-deflagration exposure.
- Carbon-monoxide detection around the kiln hood and gas train, after-burning-chamber controls, fire-water capacity and emergency response.
Values and continuity
- Reinstatement valuations and a PML/COPE study built on the worst-case single-string scenario (a kiln-shell or girth-gear failure, a WHRB loss or a furnace steam explosion).
- A defensible downtime gross-profit and indemnity-period calculation pinned to kiln-shell, girth-gear and furnace-body re-fabrication lead times.
Where this turns hard in practice is reading how each insurer drafts the machinery-breakdown perils and the wear-and-tear line around refractory and accretion, the molten-metal and pyrophoric-stock terms, the machinery-loss-of-profits indemnity period, and the warranties they attach, all of which decide what a steel maker recovers after a kiln or furnace loss. Sarvada puts insurer wordings side by side so a broker or risk manager can read the kiln-refractory, molten-metal and rebuild-period clauses against each other, and argue a sponge-iron account on the terms that decide a claim instead of on headline premium. Secondary-steel and sponge-iron operators placing or renewing a kiln-and-melting-shop programme, and their brokers, can Request Access to put that wording-level comparison to work on heavy-process accounts.