Metals & Mining Industry in India

India's coal reserves are the fourth largest in the world, In FY22 India's coal production stood at 777.31 MT, a 8.55% YoY.

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

* India’s crude steel production stood at 71.3 MT in FY23 (until October 2022).

* 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: Dec, 2022

Metals and Mining Industry Report

Nov, 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 FY22, the number of reporting mines in India were estimated at 1,425, of which reporting mines for metallic minerals were estimated at 525 and non-metallic minerals at 720.

Minerals are precious natural resources that serve as essential raw materials for fundamental industries, so the growth of the mining industry is essential for the overall industrial development of a nation. The vast resources of numerous metallic and non-metallic minerals that India is endowed with serve as a foundation for the expansion and advancement of the nation's mining industry. India is largely self-sufficient in metallic minerals including bauxite, chromites, iron ore, and lignite as well as mineral fuels like coal and lignite. The industry has the potential to significantly impact GDP growth, foreign exchange earnings, and give end-use industries like building, infrastructure, automotive, and electricity, among others, a competitive edge by obtaining essential raw materials at reasonable rates.

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

In FY 2021-22, coal production in India stood at 777.31 MT (provisional) with a growth of 8.55%. Coal production in India stood at 380.082 MT in FY 2022-23 (April-October 2022). In FY22, mineral production is estimated at Rs.190,392 crore (US$ 24.95 billion). 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 million tonnes (MT). In FY20, India had a total number of 878 steel plants producing crude steel. India’s crude steel production stood at 71.3 MT in FY23 (until October 2022). The steel production in India is projected to increase by 18% to reach 120 million tonnes (MT) by FY22. In Q3 FY22, 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 per annum in FY21 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.

Investments/ Developments

Some of the investments/ developments in the Metals & Mining sector in the recent past are as follows:

The index of mineral production of mining and quarrying sector for the month of September 2022 stood at 99.5.
Between April 2000-June 2022, FDI inflows in the metallurgical industry stood at US$ 17.07 billion, followed by the mining (US$ 3.40 billion), diamond & gold ornaments (US$ 1.21 billion) and coal production (US$ 27.73 million) industries.
GVA from mining and quarrying stood at US$ 43.3 billion in FY22, as per the advance estimates
In FY23, Vedanta's aluminium division will focus on backward integration and will put two of its mines in Odisha into production.
Iron and steel imports stood at US$ 1,991.41 million in October 2022.
In FY23 (until September 2022), the combined index of eight core industries stood at 142.8 driven by the production of coal, refinery products, fertilizers, steel, electricity and cement industries.
NMDC’s cumulative iron ore production (until May 2022) stood at 6.35 MT as compared to 5.91 MT (until May 2021)
As of October 31, 2022, India’s total installed electricity generation capacity stood at 408,714.84 MW.
In FY 2021-22, India’s iron and steel export was valued at US$ 17.62 billion. During FY16-22, India’s export of iron and steel grew at a CAGR of 17.15%.
In October 2022, iron ore exports stood at US$ 7.83 million.
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.
Vedanta Limited is planning a US$ 20 billion investment across its operations, including increase silver production and steel capacity.
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 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.

Government Initiatives

The Government of India has adopted few initiatives in the recent past, some of these are as follows:

In November 2022, the government removed export duties on steel and stainless steel to strengthen the nation's steel sector, and allow it to firmly establish its position in the global market.
The government plans to monetise assets worth Rs. 28,727 crore (US$ 3.68 billion) in the mining sector over FY 2022-25.
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, and 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 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 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.

The Government of India has also helped in the development of the metals and mining sector in India by launching key policy initiatives. The National Mineral Policy, which was approved by the government in February 2019, has ensured improved regulation and enforcement, more transparency, balanced social and economic growth, and sustainable mining techniques. The policy grants industry status to the mining activities and boost private sector funding.

Additionally, it aims to facilitate the merger and acquisition of mining companies, entice private sector involvement in exploration, and permit the transfer of mineral corridors created specifically for metals and mining leases. In the future, both increased domestic demand and exports are projected to play significant roles in driving the industry's expansion and its contribution to GDP growth in a post-covid environment.

References: Media Reports, Press Information Bureau (PIB), Union Budget 2020-21