Metals & Mining Industry in India

India's coal reserves are the fourth largest in the world. Additionally the country is also the second largest coal importer in the world.

Advantage India

Demand
Growth

* Rise in infrastructure development is driving growth.

* Power and cement industries also aiding growth in the metals and mining sector.

* According to Directorate General of Commercial Intelligence & Statistics, in FY22 (until August 2021), iron ore exports reached US$ 2.23 billion, registering an increase of 21.8% YoY.

Attractive
Opportunities

* The steel production in India stood at 118 million tonnes (MT) in FY21.

* In July 2021, the Odisha government approved five key industrial projects worth Rs. 1.46 lakh crore (US$ 19.60 billion) that are expected to boost capacity of steel production by 27.5 million tonnes.

Policy
Support

* In Union Budget 2021, the government reduced customs duty to 7.5% on semis, flat and long products of non-alloy, alloy and stainless steels to provide relief to MSMEs.

* To boost recycling of copper in India, the government announced reduction of import duty on copper scrap from 5% to 2.5% in the Union Budget 2021.

Competitive
Advantage

* India holds a fair advantage in cost of production and conversion costs in steel and alumina.

* As of FY22, the number of reporting mines in India were estimated at 1,245, of which reporting mines for metallic minerals were estimated at 525 and non-metallic minerals at 720.

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Last updated: Apr, 2022

Metals and Mining Industry Report

Feb, 2022

Introduction

India holds a fair advantage in production and conversion costs in steel and alumina. Its strategic location enables export opportunities to develop as well as fast-developing Asian markets.

As of FY21, the number of reporting mines in India were estimated at 1,229, of which reporting mines for metallic minerals were estimated at 545 and non-metallic minerals at 684.

Rise in infrastructure development and automotive production are driving growth. Power and cement industries are also aiding growth for the sector. Demand for iron and steel is set to continue given the strong growth expectations for the residential and commercial building industry.

Market Size

Coal production in the country stood at 715.95 million tonnes (MT) in FY21. Between April 2021- October 2021, coal production in India stood at 379.597 million tonnes (MT).

India ranks fourth globally in terms of iron ore production. Production of iron ore in FY21 stood at 204.48 million tonnes. From April 2021-January 2022, iron ore production in India stood at 204 MT.

In FY20, India had a total number of 878 steel plants producing crude steel. In FY21, India’s crude steel production stood at 103.54 million tonnes. According to worldsteel, crude steel output in India registered a 46.9% YoY growth to reach 9.2 million tonnes in May 2021, as compared with 5.8 million tonnes of crude steel output registered in May 2020. The steel production in India is projected to increase by 18% to reach 120 million tonnes (MT) by FY22. India’s crude steel production stood at 102.49 million tonnes (MT) in FY21 and at 9.5 MT in September 2021.

In September 2021, production of hot metal, crude steel and saleable steel by SAIL stood at 1.55 MT, 1.44 MT and 1.46 MT, respectively.

Combined aluminium production (primary and secondary) in India stood at 4.1 MT in FY21, thereby becoming the 2nd largest in the world. Aluminium production stood at 3,285,186 tonnes between April 2020 and January 2021.

India is the world's second-largest coal producer as of 2021.

India is the world's second-largest crude steel producer, as of 2020, with an output of 99.6 MT.

Investments/ Developments

In November 2021, JSW Steel announced that the company registered a 6% YoY surge in crude steel production at 1.42 million tonnes in October 2021.
In November 2021, AMNS India announced that it is planning to manufacture specialty steel under the production-linked incentive (PLI) scheme.
In September 2021, National Mineral Development Corporation Ltd. (NMDC) R&D Centre collaborated with CSIR-IMMT (Institute of Minerals and Materials Technology) to pursue combined research projects on iron ore mining technologies.
Vedanta Limited is planning a US$ 20 billion investments across its operations, including increase silver production and steel capacity.
Epsilon Carbon, a coal tar derivatives company, has built India's first integrated carbon black complex in Bellary, Karnataka, with a Rs. 550-crore (US$ 74.02 million) investment.
In July 2021, India shipped its first coal export to Rampal Power Plant in Bangladesh, giving a boost to the country’s coal exports.
According to official data, in the first quarter of FY22, iron ore exports reached US$ 1.7 billion, registering an increase of 168% YoY.
In July 2021, Power Mech Projects Ltd. secured a contract worth Rs. 9,294 crore (US$ 1.25 billion) from Central Coalfields Ltd. (CCL) to build and operate a mine.
In July 2021, Coal India Ltd. (CIL) signed a contract with Iz-Kartex, (a Russia-based shovel manufacturing firm) to purchase 11 Russian rope shovels worth ~Rs. 1,462 crore (US$ 196.30 million).
In June 2021, Mukand announced to expand its production and sales of stainless steel to 1.5 lakh tonnes per annum from 1 lakh tonnes at Thane (Mumbai) unit, which is expected to boost its turnover by ~Rs. 7,000 crore (US$ 939.88 million) per annum.
In June 2021, Mr. T.V. Narendran, the CII President and Managing Director of Tata Steel, stated that steel firms have firmed up plans to invest ~Rs. 60,000 crore (US$ 8 billion) over the next three years in this sector.
In May 2021, Vedanta Ltd. announced its plan to invest Rs. 10,000 crore (US$ 1.34 billion) in setting up an aluminium park in Odisha to facilitate companies that use metal to set up their manufacturing units in the facility.
In May 2021, ArcelorMittal Nippon Steel (AMNS) signed a contract with Total (a France-based energy company) for supply of up to 500,000 tons of liquefied natural gas (LNG) per year until 2026.
In April 2021, Coal India Ltd. (CIL) announced the incorporation of two wholly owned subsidiaries —CIL Solar PV Ltd and CIL Navikarniya Urja Ltd.
In March 2021, Coal India Ltd. (CIL) approved 32 new coal mining projects, of which 24 are expansion of the existing projects and the remaining are greenfield. Estimated cost of the project is Rs. 47,000 crore (US$ 6.47 billion).
In 2021, state-owned NMDC aims to utilise 97% production capacity to manufacture 35 MT of iron ore. In FY21 (until January 2021), NMDC’s iron ore production stood MT.
In February 2021, ArcelorMittal-Nippon Steel India, in agreement with the Odisha government, has planned to set up an integrated steel plant (with 12 MT capacity) in the state’s Kendrapada district for Rs. 50,000 crore (US$ 6.89 billion)
In February 2021, two new iron ore mines were inaugurated in Odisha, with a production capacity of 15 lakh tonnes per month and ~275 million tonnes of consolidated iron ore reserves. These mines will bring in ~Rs. 5000 crore (US$ 679.28 million) in annual revenue for the state and employment opportunities for locals.
In February 2021, CIL signed a contract with Belaz, a Belarus-based mining equipment manufacturer, for procurement of dumpers with an investment amount worth Rs. 2,900 crore (US$ 393.98 million).
In February 2021, CIL also announced plans to invest Rs. 1.43 lakh crore (US$ 19.43 billion) in 20 sir projects, including solar, thermal and aluminium projects.

Government Initiatives

The Ministry of Mines of the Government of India has signed MoUs with different nations.
The Ministry of Mines notified the Mineral Conservation and Development (Amendment) Rules in November 2021 to provide rules regarding conservation of minerals, systematic and scientific mining, development of minerals in the country for environment protection.
Steel Authority of India Ltd. (SAIL) and Central Public Sector Enterprises (CPSEs), under the Ministry of Steel, supplied 48,200 tonnes of steel for the Purvanchal Expressway, which was inaugurated by Prime Minister Narendra Modi on November 16, 2021.
As part of unlocking India’s vast mineral potential by exploration this year, the Ministry of Mines has handed over 152 mineral block reports to different state governments until November 2021. Also, 52 potential G-4 mineral blocks approved by the Geological Survey of India (GSI) have been handed over to 15 state governments.
In September 2021, India and Australia participated in a joint working group (JWG) meeting on ‘coal and mines’ to strengthen bilateral collaboration in the coal sector.
In September 2021, Union Cabinet approved the memorandum of understanding between the Geological Survey of India (GSI) and the Joint Stock Company Rosgeologia, Russia, in the area of geosciences.
In July 2021, the Odisha government approved five key industrial projects worth Rs. 1.46 lakh crore (US$ 19.60 billion) that are expected to boost capacity of steel production by 27.5 million tonnes.
In June 2021, the Union Cabinet, chaired by the Prime Minister Mr. Narendra Modi approved the memorandum of understanding (MoU) to be signed between the Ministry of Mines and the Secretariat of Mining Policy of the Ministry of Productive Development of the Argentine Republic. The MoU will provide an institutional mechanism for cooperation in the field of mineral resources.
In June 2021, Energy Efficiency Services Ltd (EESL) signed a memorandum of understanding (MoU) with MECON Ltd. to support energy efficiency in steel, mining industry.
In April 2021, the directorate general of foreign trade (DGFT) notified that the import policy for copper and aluminium is amended from “free” to “free with compulsory registration” under the non-ferrous metal import monitoring system (NFMIMS). The policy is effective from April 12, 2021.
To increase availability of iron ore in India, the government took several initiatives, such as ‘Mining and Mineral Policy’ reforms, to ramp up production and maximum capacity utilisation by government mining companies. For example, SAIL, with the approval to sell 25% fresh fines and 70 MT dumps and tailings, accelerated sale of iron ore.
In Union Budget 2021, the government reduced customs duty to 7.5% on semis, flat and long products of non-alloy, alloy and stainless steels to provide relief to MSMEs.
To boost recycling of copper in India, the government announced reduction of import duty on copper scrap from 5% to 2.5% in the Union Budget 2021.
The National Steel Policy aims to boost per capita steel consumption to 160 kgs by 2030-31. The government has a fixed objective of increasing rural consumption of steel from the current 19.6 kgs per capita to 38 kgs per capita by 2030-31.

Road Ahead

There is a significant scope for new mining capacities in iron ore, bauxite and coal and considerable opportunities for future discoveries of sub-surface deposits.

Infrastructure projects continue to provide lucrative business opportunities for steel, zinc, and aluminium producers.

Iron and steel make up a core component for the real estate sector. Demand for these metals is set to continue given strong growth expectations for the residential and commercial building industry.