Trade Analytics
Metals and Mining

Metals & Mining Industry in India

Latest update: April, 2018

  • In 2016, India stood as the 3rd largest crude steel producer in the world, while the total crude steel production was 88 MT
  • India accounted for 5.89 per cent of the total steel production in the world in the year 2016
  • India is 3rd largest producer of crude steel in the Asia-Pacific region in 2015. Total finished steel production (alloy+ non-alloy) in India reached 83.01 million tonnes in FY171
  • In FY16E, offshore region accounted for 20.20 per cent share in India’s share of states in value of mineral production.

 

Notes: MMT- Million Metric Tonnes, E-Estimated, 1Data from April 2016 – Jan 2017
Source: DataMonitor, Ministry of Mines

Growth
  • In 2015, India had the 5th-largest coal proved reserves globally, of which 92.6 per cent was Anthracite and Bituminous while 7.4 per cent was Sub Bituminous and Lignite
  • In 2016, India contributed around 11 per cent of the world’s production of coal
  • Coal India Ltd (CIL), a Government of India enterprise, is the world’s largest coal company based on raw coal production and coal reserves

 

 

Source: BP Statistical Review of World Energy 2016, World Coal Production

Growth

 

Last Updated: April, 2018

Metals and Mining Sectoral Report | April, 2018

Introduction

India holds a fair advantage in cost of production and conversion costs in steel and alumina. Its strategic location enables convenient exports to develop as well as the fast-developing Asian markets.

India currently produces around 88 minerals which mainly include 50 non-metallic, 24 minor, 10 metallic, 4 fuel and 3 atomic minerals.

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

Market Size

India is the 3rd largest producer of coal. Coal production stood at 554.13 million tonnes in FY17 and 365.6 million tonnes in FY18 (up to November 2017). India has the 5th largest estimated coal reserves in the world, standing at 308.802 billion tonnes in FY16. In 2016, India contributed around 11 per cent of the world’s production of coal.

India ranks 4th in terms of iron ore production globally. In FY17 and April-January 2017-18, production of iron ore stood at 192 million tonnes and 126.056 million tonnes, respectively. India has around 8 per cent of world’s deposits of iron ore.

India has become the 3rd largest steel producer in FY17 with the production of finished steel at 83.01 million tonnes. India stood as the 3rd largest crude steel producer in 2016, while its production increased to 97.385 million tonnes in FY17 as compared to 90 million tonnes in FY16. Crude steel production from April to January 2017-18 stood at 84.4 million tonnes.

According to Ministry of Mines, India has the 7th largest bauxite reserves- around 2,908.85 million tonnes in FY17. Aluminium production stood at 1.7 million metric tonnes in FY17.

India has vast mineral potential with mining leases granted for longer durations of 20 to 30 years.

Coal-based power generation capacity in India, which currently stands at 192 GW is expected to reach 330-441 GW by 2040, according to Mr Gopal Singh, CMD, Coal India Limited.

Investments/ Developments

  • Cumulative FDI inflows into the mining sector between April 2000 and December 2017 stood at US$ 14.005 billion as per Department of Industrial Policy and Promotion (DIPP).
  • Vedanta Resources Plc is planning to invest around US$ 9 billion in India and create more than a million direct or indirect jobs in the country.
  • Metals and Minerals Trading Corporation of India (MMTC) Ltd is in talks with the National Mineral Development Corporation (NMDC) to sign a new five-year pact for exporting 2.6 million tonnes of iron to Japan and South Korean industries.
  • Under the Mines and Minerals (Development and Regulation) Act of 1957, FDI upto 100% under Automatic route is allowed for the mining and exploration of metal and non- metal ores including diamond, gold, silver and precious ores, while FDI upto 100% under Government route is allowed in for mining and mineral separation of titanium bearing minerals and its ores.
  • The Government of India is taking steps boost the country's domestic steel sector and raise its capacity to 300 million tonnes (MT) by 2030-31.

Government Initiatives

  • In February 2018, Government of India approved the methodology for auction of coal mines. Auction held under this methodology will be ascending forward auctions with the bid parameter being rupees paid to the state government per tonne of actual production. Also, there will be no restriction on sale or utilization of coal.
  • In August 2017, Ministry of Mines constituted a committee to revisit National Mineral Policy 2008 and announce a fresh and more effective, meaningful and implementable policy. Comments were invited from the general public and other entities concerned in January 2018.
  • 'Grahak Sadak Koyla Vitaran App' has been launched by Mr Piyush Goyal, Minister of Railways and Coal, which will benefit customers of Coal India Limited (CIL) lifting coal through road mode.
  • The Ministry of Environment, Forest and Climate Change (MoEFCC), Government of India, has eased the guidelines for mining of critical atomic minerals such as uranium or titanium in the Coastal Regulation Zone (CRZ) areas.
  • The reduction in local and inter-state tax rates after implementation of Goods and Services Tax (GST) is expected to result in savings of Rs 6,000 crore (US$ 937.77 million) for customers of Coal India which include NTPC, Korba State Power Houses of Gujarat, Rajasthan and Chhattisgarh and other State Electricity Boards along with private consumers like Adani, Lanco & Balco etc. while increased production in previous three years has saved the country Rs 25,900 crore (US$ 4.05 billion) in foreign exchange by reduction in imports.
  • Shri Piyush Goyal, the Union Minister of State for Power, Coal, New & Renewable Energy and Mines, launched the Mining Surveillance System (MSS) in New Delhi to establish a regime of responsive mineral administration by curbing instances of illegal mining activity though automatic remote sensing detection technology.
  • National Steel Policy has been established in 2017 with the mission to provide self- sufficiency in steel production by providing policy support and guidance to private manufacturers, MSME steel producers, CPSEs and encouraging capacity additions.
  • The Odisha government has been granting leases for longer durations of 20 to 30 years due to which India has seen a significant growth in minerals.
  • The Government also provides fiscal incentives to companies such as one-tenth of the expenditure on prospecting, extraction and production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income.
  • In captive mining for coal, companies are permitted to set up coal processing plants such as washeries that are for specified end uses, including the setting up of power plants, fertilizers and steel units.

Road Ahead

There is significant scope for new mining capacities in iron ore, bauxite and coal and considerable opportunities for future discoveries of sub- surface deposits. In February 2017, the country’s coal ministry allowed private companies to engage into mining activities for commercial purposes.

Infrastructure projects continue to provide lucrative business opportunities for steel, zinc and aluminium producers. India’s infrastructure sector is expected to grow at a CAGR of 35.65% over the period FY 2008-25.

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

Exchange Rate Used: INR 1 = US$ 0.015 as on March 1, 2018

References: Media Reports, Press Information Bureau (PIB), Union Budget 2017-18

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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