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Indian Metals and Mining Industry Analysis

September, 2019

Rise in infrastructure development and automotive production are driving growth in the metals and mining sector in India. India has vast mineral potential with mining leases granted for longer durations of 20 to 30 years. India produces 95 minerals– 4 fuel-related minerals, 10 metallic minerals, 23 non-metallic minerals, 3 atomic minerals and 55 minor minerals (including building and other minerals). India is expected to overtake Australia and the United States in early 2020 to take the position of the world’s second-largest coal producer.

Mineral production in India grew at a CAGR of 5.72 per cent between 2013-14 and 2017-18E to reach US$ 17.62 billion in 2017-18. Production of iron ore in FY19 (up to December) is 149.53 million tonnes.

India holds a fair advantage in cost of production and conversion costs in steel and alumina. The country is the 3rd largest steel producer with production of 101.4 million tonnes of crude steel in 2017. Crude Steel and Finished Steel production during 2017-18 was 103.13 million tonnes and 104.98 million tonnes respectively. Crude steel production in the country increased 3.33 per cent year-on-year to 106.56 MMT in 2018-19. Finished steel production in India stood at 34.156 MMT between April-July 2019. India is the largest producer of sheet mica in the world and has the 7th largest bauxite reserves at around 2,908.85 million tonnes in FY17. Iron ore production in the country increased from 129.32 million tonnes in FY15 to 200.96 million tonnes in FY18 and reached to 130.54 million tonnes in FY 19 (up to November). It is forecasted to grow at the rate of 5 per cent in FY19. India’s iron and steel import during between April-August 2019 stood at US$ 4.20 billion.

Production of metallic minerals and non-metallic minerals in India FY19* respectively US$ 6.65 billion and US$ 0.97 billion.

The index of mineral production was 114.4 in December 2018 as against 110.6 in the previous month showing an increase of 3.4 per cent in the overall mineral production.

Mining group under the Index of Industrial Production (IIP) stood at 106.6 in June 2019, showing a growth of 3 per cent in Apr-June 2019

National Mineral Policy 2019 launched for transparency, better regulation and enforcement, balanced social and economic growth into the sector.

The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in the mining sector and exploration of metal and non-metal ores under the automatic route, which will propel growth in the sector. Power and cement industries also aiding growth in the metals and mining sector. Demand for iron and steel is set to grow, given the strong growth expectations for the residential and commercial building industry. By March 2019, 105 mineral blocks are expected to be auctioned. As of May 2019, 64 mineral blocks have been auctioned.

*- Till December 2018

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