The mineral’s demand is likely to increase driven by expanded electrification and overall economic growth in India. Being the third largest energy consuming country in the world, there is always increased demand for power and electricity in the country, and hence the surge in demand for coal. Demand for steel is likely to grow by ~10% as the government’s augmented focus on infrastructural development continues with increased construction of roads, railways, airports, etc. By becoming Aatmanirbhar in producing speciality steel, India will move up the steel value chain and come at par with advanced steel making countries like Korea and Japan.
Production level of important minerals in December 2023 were: Coal 929 lakh tonnes, Lignite 40 lakh tonnes, Petroleum (crude) 25 lakh tonnes, Iron ore 255 lakh tonnes, Limestone 372 lakh tonnes, Natural gas (utilized) 3078 million cu. m., Bauxite 2,429 thousand tonnes, Chromite 235 thousand tonnes, Copper conc. 11 thousand tonnes, Lead conc. 35 thousand tonnes, Manganese ore 319 thousand tonnes, Zinc conc. 148 thousand tonnes, Phosphorite 117 thousand tonnes, Magnesite 16 thousand tonnes and Gold 122 kg.
Important minerals showing positive growth during December 2023 over December 2022 include Magnesite (83.7%), Lead Conc. (16.5%), Lignite (14.6%), Copper Conc. (13.7%), Limestone (12.5%), Coal (10.8%), Zinc Conc. (7.8%), Bauxite (6.6%), Natural gas (U) (6.6%), Manganese Ore (4.0%) and Iron Ore (1.3%).
The index of mineral production of the mining and quarrying sector for the month of December 2023 at 139.4, was 5.1% higher compared to the level in the month of December 2022.
India's overall coal production has seen a quantum jump to 893.08 MT in FY23 as compared to 728.72 MT in FY19 with a growth of about 22.6%.
In April-January FY24, coal production stood at 784.11 MT, registering a growth of 12.18% from the same period last year. Coal production from captive mines increased by 27.06% y-o-y in FY24 (April- February). India is the world's second-largest coal producer as of 2023.
India's iron ore production is estimated to stand at 257.85 MT in FY23, while it stood at 253.97 MT in FY22 - a sharp increase of 23% compared with 205.04 MT in FY21. India's iron ore production stood at 202.64 MT during April-December 2023.
In 2022-23, exports of iron ore stood at US$ 1.75 billion as compared to US$ 3.18 billion in 2021-22.
India is a global force in steel production and the second largest crude steel producer in the world.
In FY23, production of crude steel at 125.32 million tonnes (MT), finished steel at 121.29 MT and consumption of finished steel at 119.17 MT has exceeded their respective levels achieved over the corresponding period of not only COVID affected last two years but also pre COVID years as well. In April-January FY24, the production of crude steel stood at 118.37 MT and that of finished steel was 113.85 MT.
India has the second largest production capacity of aluminium in the world of about 4.2 million tonnes per annum (MTPA).
The production of aluminium was 4.07 MT in FY23.
ICRA has estimated the domestic aluminium demand growth to remain healthy at around 9% in the next two fiscal years, given the Government’s thrust on infrastructure development.
In FY23, mineral production is estimated at Rs. 1,18,246 crore (US$ 14.37 billion).
Aluminium production in India stood at 3.47 MT between April-January FY24. The world production of primary Aluminium during the same period was about 59.562 MT. The share of India in the world primary Aluminium production was around 5.8% during this period.
Between April 2000-December 2023, FDI inflows in the metallurgical industry stood at US$ 17.46 billion, followed by the mining (US$ 3.50 billion), diamond & gold ornaments (US$ 1.27 billion), and coal production (US$ 27.73 million) industries.
Enactment of Mines and Minerals (Development and Regulation) Amendment Act, 2021 enabled captive mines owners (other than atomic minerals) to sell up to 50% of their annual mineral (including coal) production in the open market.
Import duty on Anthracite/Pulverized Coal Injection (PCI) coal, Coke, and Semi-coke and Ferro-Nickel were reduced to zero. Export duty on Iron ores/ concentrates and iron ore pellets was raised to 50% and 45% respectively. In addition, 15% export duty was imposed on pig iron and several steel products.
In FY24 (until January 2024), the combined index of eight core industries stood at 156.0 driven by the production of coal, refinery products, fertilizers, steel, electricity, and cement industries.
Imports of steel increased by 34.8% to 6.7 million tonnes in 10 months of FY24 from 5.0 million tonnes over the same period in FY23.
Overall coal imports during April-September declined by 8.95% to 124.53 MT in FY 24, over 135.68 MT in FY23.
India’s aluminium exports were reported at US$ 5.90 billion during April-January FY24.
Extensive growth in electric vehicles, renewables, modern infrastructure, energy efficient consumer goods and greater dependence on strategic sectors such as aerospace defence, will drive Aluminium consumption to grow at a CAGR of more than 10%.
Production of steel in India could go up to 500 million tonnes by 2050, nearly four times the current output, as New Delhi seeks to undergird its evident growth ambitions with rapid capacity expansion for the primary infrastructure alloy, a senior executive at mining major BHP said.
As per data from the Ministry of Statistics and Programme Implementation (MOSPI), India's mining GDP increased from Rs. 76,877 crore (US$ 9.25 billion) in the third quarter of FY23 to Rs. 82,680 crore (US$ 9.95 billion) in the third quarter of FY24.
In March 2024, Karnataka and Rajasthan initiated the auction of Exploration Licences (EL) for critical and deep-seated minerals, marking the first such auction in India. Under the amended Mines and Minerals (Development and Regulation) Act, 1957, introduced by the MMDR Amendment Act, 2023, 29 critical minerals are eligible for exploration and mining concessions.
In February 2024, the Union Cabinet approved the amendment to the Mines and Minerals (Development and Regulation) Act,1957 specifying royalty rates for 12 critical minerals, thus completing the rationalization process for all 24 strategic minerals. This move aims to streamline the mining sector and auction processes, aligning with recent amendments to the MMDR Amendment Act, 2023.
In January 2024, India and Argentina signed an agreement to undertake the exploration and development of five lithium blocks, enhancing India's efforts in sourcing lithium. Khanij Bidesh India Limited (KABIL) has obtained exploration and exclusivity right for these five blocks.
In December 2023, the Ministry of Mines proposed capping performance security and upfront amounts for mining critical minerals to attract more bidders. Currently based on a percentage of the Value of Estimated Resources (VER), the move aims to reduce barriers to participation in auctions and expedite the process for mining leases.
In October 2023, the Union Cabinet approved the amendment of the Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957, specifying royalty rates for three critical minerals: Lithium, Niobium, and Rare Earth Elements (REEs) paving the way for the auctioning of blocks for these minerals, as outlined in the MMDR Amendment Act, 2023.
On August 3, 2023, the Rajya Sabha passed the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023 which seeks to make amendments to the Offshore Areas Mineral (Development and Regulation) Act, 2002 (‘OAMDR Act’). The Bill was passed by Lok Sabha on August 1, 2023.
In July 2023, the Union Cabinet approved amendments to the Mines and Minerals (Development and Regulation) Act-1957 to allow the mining of lithium and other minerals.
In February 2023, Tata Steel and Central Building Research Institute (CBRI), a constituent of the Council of Scientific and Industrial Research (CSIR), signed an MoU to collaborate on research, academic growth, and sustainable solutions in mining.
In September 2022, exports of mica, coal & other ores and minerals including processed minerals stood at US$ 426.32 million exhibiting growth of 7.31% as compared to September 2021.
In October 2022, Welspun Metallics Limited has forayed into Steel manufacturing as a part of the company’s overall business growth and diversification strategy by launching a state-of-the-art Greenfield manufacturing facility in Anjar, Gujarat.
In February 2023, JSW Group announced to build a steel plant in Andhra Pradesh's YSR Kadapa district with an investment of Rs. 8,800 crore (US$ 1 billion).
In 2021, an Indian state committee recommended the expansion of Vedanta Ltd.’s Lanjigarh Alumina refinery from 1 million tonnes to 6 million tonnes, an investment that would cost the company Rs. 6,483 crore (US$ 993 million).
In July 2022, Hindalco Industries Limited has signed an MoU with Phinergy and IOC Phinergy Private Limited (IOP) on R&D and pilot production of aluminium plates for Aluminium-Air batteries, and recycling of aluminium, after usage in these batteries.
In August 2022, Tata Steel signed a MoU with the Government of Punjab for setting up a 0.75 MTPA long products steel plant with a scrap-based electric arc furnace.
In October 2022, Coal India Limited (CIL) signed a MoU with Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL), for setting up 1,190 MW solar power project.
Innovative mineral exploration activities using state-of-the-art technology by Geological Survey of India (GSI), stepped up efforts by Khanij Bidesh India Limited (KABIL) to source strategic minerals from countries like Australia, Argentina, and Chile.
Three Indian state-run companies, National Aluminium Co Ltd, Hindustan Copper Ltd and Mineral Exploration Corp formed a joint venture to buy mining assets overseas that have minerals such as lithium and cobalt, which are used in the manufacture of batteries for electric vehicles.
Government has taken various steps to increase production and availability of iron ore, which inter-alia include Mining and Mineral Policy reforms to ensure enhanced production, early auction & operationalization of expired mines, ease of doing business, seamless transfer of all valid rights & approvals, incentivizing for starting of mining operation & dispatch, transfer of mining leases, allowing captive mines to sell up to 50% of the minerals produced, enhancing exploration activities, etc.
India will be the "stand-out growth market" for aluminium consumption in the coming years as it pursues construction projects to resolve an infrastructure deficit, which sees usage more than tripling to 9.5 million tonnes by 2030 from 2.6 million tonnes in 2021.
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 1,319, of which reporting mines for metallic minerals were estimated at 545 and non-metallic minerals at 775.
India holds a fair advantage in the 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.
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 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$ 12.88 billion in FY23P. In the same period, production of non-metallic minerals increased from US$ 1.16 billion in FY18 to US$ 1.48 billion in FY23P.
In 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 2021-22 (until December 2021), iron ore exports stood at US$ 2.47 billion, compared with US$ 4.9 billion in 2020-21.
The government plans to monetise assets worth Rs. 28,727 crore (US$ 3.68 billion) in the mining sector over 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.
