India set for record iron-ore production
The country’s economic growth drives demand for steel
New Delhi — India is on track to hit a nine-year high in iron-ore production as independent miners extract more of the steel-making raw material before their leases expire in 2020.
The country is set to produce as much as 210Mt in the financial year to March 31, RK Sharma, secretary-general at the Federation of Indian Mineral Industries, said in New Delhi. That would make it the highest output since 2009-2010, when it produced 219Mt.
Iron-ore output is set to cross 200Mt for the second year running as the country’s economic growth drives demand for steel and producers rush to expand plants. Independent miners, or those without their own mills and who sell their output in the market, are also ramping up production ahead of a 2020 deadline to hand their mines back to the government for reauctioning under India’s new mining policy.
“We are still analysing what will happen after 2020,” Sharma said.
India embraced competitive auctions in 2015 as the best long-term approach to clamp down on corruption after bruising scandals over discretionary or free allotments of mines. The Indian Bureau of Mines has compiled a list of 288 iron ore, bauxite, limestone and manganese mines, the permits of which expire in March 2020, and the government has asked states to start auctions for these by July 1 2019.
Global companies including Fortescue Metals Group Ltd. are keeping an eye on India’s growing potential as a rising consumer of the mineral. Lack of adequate logistics has meant that steel mills in India, set to emerge as the biggest producer of the metal after China, have increasingly been relying on overseas supplies of the raw material.
Imports in the eight months to November more than doubled to 10Mt from a year earlier, surpassing the 8.7Mt bought in 2017-2018, said the nation’s trade ministry. That is just shy of the record 12Mt shipped in 2014-2015.
India could be a “big story” for steel and iron ore this year with the rise in imports in 2018 being the start of a long-term structural trend rather than a one-off blip, Wood Mackenzie said on January 16. By 2030, the country could ship in more than 100Mt a year of the ore and could double annual imports in the next decade, it said in October.
The import figures are too small to be a cause of concern and the rise was due mainly to one company, mines secretary Anil Mukim said last week. India’s biggest steel mill JSW Steel. imported some iron ore for its Karnataka plant in the past few months after access to supplies from NMDC’s Donimalai mine was curtailed.
“It’s a shame if we say that we are importing iron ore. It’s like selling ice to the Eskimos,” said Dilip Oommen, MD at Essar Steel India, who estimates India’s iron-ore requirement at 500Mt if steel-making capacity is enhanced to 300Mt by 2030. “There is no reason why we should not produce that domestically.”
©2019 Bloomberg L.P.