Metals and Mining
India is the third largest producer of coal and fourth largest producer of iron ore.

Metals & Mining Industry in India

Latest update: September, 2018

Growth

Notes: CAGR - Compound Annual Growth Rate
Source: Ministry of Coal, Worldsteel.org, BP, Ernst and Young, Aranca Research

  • In FY18, India had 1,531 operative mines – excluding atomic, fuel and minor mineral mines.
  • During 2011-12 to 2016-17, value of ore and mineral imports into India witnessed a growth of 6.1 per cent
  • Imports of Iron Ore and Minerals increased at a CAGR of 6.1 per cent to US$ 21.36 billion in FY17 from US$ 15.89 billion in FY12. The figure stood at US$ 28.14 billion between April 2017 and February 2018.
  • Indian scientists have started exploring the seabed in the Indian Ocean for precious minerals including platinum, gold and silver, thereby marking India’s entry into deep sea exploration in the southern India ocean, where countries such as China, Korea and Germany are already present.
Growth

Notes: CAGR - Compound Annual Growth Rate, 1Up to February 2018, *CAGR is till FY17
Source: Make in India, Ministry of Mines, Aranca Research

Last Updated: September, 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 produces 95 minerals– 4 fuel-related minerals, 10 metallic minerals, 23 non-metallic minerals, 3 atomic minerals and 55 minor minerals (including building and other 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 676.51 million tonnes in FY18. India has the 5th largest estimated coal reserves in the world, standing at 308.802 billion tonnes in FY16.

India ranks 4th in terms of iron ore production globally. In FY18, production of iron ore stood at 210 million tonnes. India has around 8 per cent of world’s deposits of iron ore.

India stood as the third largest crude steel producer with output of 101.4 million tonnes in 2017. Crude steel production in the country rose to 102.34 million tonnes in FY18.

According to Ministry of Mines, India has the 7th largest bauxite reserves- around 2,908.85 million tonnes in FY17. Aluminium production stood at 1.60 million metric tonnes during Apr-Sept 2017 and is forecasted to grow to 3.33 million tonnes in FY20.

Investments/ Developments

  • Cumulative FDI inflows into the metals and mining sector between April 2000 and June 2018 stood at US$ 14.33 billion as per Department of Industrial Policy and Promotion (DIPP).
  • 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

  • FDI caps in the mining and exploration of metal and non-metal ores have been increased to 100 per cent under the automatic route.
  • In July 2018, Union Minister of Coal, Railways, Finance & Corporate Affairs launched a mobile application ‘Khan Prahari’ and Coal Mine Surveillance & Management System (CMSMS) developed by Central Mine Planning and Design Institute (CMPDI).

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.

Infrastructure projects continue to provide lucrative business opportunities for steel, zinc and aluminium producers. Aluminium production is forecasted to grow to 3.33 million metric tonnes by FY20.

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$ 0.0149 as of Q1 FY19

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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