Rise in infrastructure development and automotive production are driving growth in the metals and mining sector in India. India has a vast mineral potential with mining leases granted for a longer duration of 50 years. 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. India holds a fair advantage in cost of production and conversion cost of steel and alumina.
The metals & mining sector has seen some developments, investments and support from the Government in the recent past.
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.
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.
Coal production in India stood at 380.082 MT in FY 2022-23 (April-October 2022). India’s crude steel production stood at 120 MT in FY22.
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.
In FY20, India had a total number of 878 steel plants producing crude steel.
Between April 2021 and February 2022, exports of mica, coal and other ores & minerals, including processed minerals, stood at US$ 2.90 billion.
Production of metallic minerals in the country increased from US$ 6.96 billion in FY18 to US$ 9.1 billion in FY22E. In the same period, production of non-metallic minerals increased from US$ 1.16 billion in FY18 to US$ 1.22 billion in FY22E.
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 FY 2021-22 (until December 2021), iron ore exports stood at US$ 2.47 billion, compared with US$ 4.9 billion in FY 2020-21.
The government plans to monetise assets worth Rs. 28,727 crore (US$ 3.68 billion) in the mining sector over FY 2022-25.
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.
The steel production in India is projected to increase by 18% to reach 120 million tonnes (MT) by FY22.
India is the world's second-largest coal producer as of 2021.
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 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 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 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.
Government of India has allowed 100% 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.
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 future outlook of the metals & mining sector looks on track with pandemic easing out.
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. There is a sizable potential for new mining operations in the iron ore, bauxite, and coal, as well as considerable potential opportunities for subsurface deposit discoveries in the near future. Steel, zinc, and aluminium producers continue to benefit from attractive commercial prospects spurred by infrastructure initiatives. Iron and steel make up a core component for the real estate sector. Given the industry's projected rapid expansion in the residential and commercial building sectors, demand for these metals is expected to remain high.