IBEF印度金属与采矿业分析英文20181042页1mb

Summary of India's Metals and Mining Sector

Core Content

India's metals and mining sector is a significant contributor to the country's economy, characterized by substantial production, strong growth potential, and favorable policy support. The sector includes a wide range of minerals, with coal, iron ore, and aluminium being the most prominent. India is the third-largest coal producer, fourth-largest iron ore producer, and third-largest steel producer globally. The sector has seen steady growth in production and consumption, driven by domestic demand, infrastructure development, and the automotive industry.

Main Points

Production and Consumption

• Coal Production: India produced 688.8 million tonnes in FY18, with a CAGR of 4.19% between FY08 and FY18. In Apr-Aug 2018, production reached 264.86 million tonnes.
• Iron Ore Production: India produced 210.47 million tonnes in FY18, with a forecasted growth of 5% in FY19. The country is the fourth-largest producer, with over 85% of reserves being high-grade.
• Aluminium Production: India's aluminium production reached 0.65 million tonnes in April-July 2018, with a CAGR of 12.5% during the same period. The country holds the 7th largest bauxite reserves and is the 4th largest aluminium producer globally.

Steel Production

• India's crude steel production increased by 4.5% to 102.34 million tonnes in FY18, making it the third-largest producer in the world. The Ministry of Steel aims to increase production to 300 million tonnes by 2030-31.
• Steel demand is expected to grow at 5.5% in 2018 and 6.0% in 2019, reaching 92.0 and 97.5 million tonnes respectively.

Domestic Demand

• The domestic demand for steel and aluminium is rising due to growth in the construction, automotive, and power sectors.
• India has turned into a net importer of iron and steel due to increased domestic consumption, despite strong production growth.

Key Information

Policy Support

• The MMDR Bill (2011) and the Mines and Minerals (Development and Regulation) Amendment Act (2015) have improved the legislative environment for investment and technology.
• FDI up to 100% is allowed under the Automatic Route for non-fuel and non-atomic minerals, including exploration and processing.
• The government has relaxed customs duties and introduced measures like the National Mineral Fund and District Mineral Foundation to support the sector.

Growth Drivers

• Infrastructure Development: India is expected to require US$ 4.5 trillion for infrastructure by 2040, providing significant opportunities for steel, zinc, and aluminium producers.
• Power and Automotive Sectors: The power sector is a major consumer of coal, with coal-based power generation expected to grow at a CAGR of 6.5% from FY18 to FY23. The automotive industry is also a key driver of steel demand.
• Technological Advancements: Companies are focusing on cost optimization and technology integration, such as the use of GPS/GPRS tracking systems and mobile applications for mine surveillance.

Opportunities

• New Mining Capacities: There is significant potential for new mining capacities in iron ore, bauxite, and coal, with India holding large reserves in these sectors.
• PPP Opportunities: The government is opening up opportunities for domestic and foreign firms through public-private partnerships.
• International Expansion: Indian mining companies are expanding overseas to secure long-term mineral supplies, particularly in coal and iron ore.

Industry Associations and Useful Information

• Industry Associations: The sector is supported by various associations that help in promoting investment and technology.
• Useful Information: The sector's growth is supported by data from sources such as the World Steel Association, Ministry of Mines, and other research firms.

Notable Trends

• Captive Mining: Companies are permitted to set up coal washeries for specified end uses, including power plants.
• Longer Mining Leases: Mining leases are now granted for 20 to 30 years, enhancing investment confidence.
• Shift to Underground Mining: Due to challenges in surface mining, there is a growing focus on underground mining technology.
• Strategic Alliances: Companies are forming alliances with global and domestic players to improve operational performance and reduce costs.

Conclusion

India's metals and mining sector is poised for continued growth, driven by infrastructure development, rising domestic demand, and favorable policy frameworks. The sector benefits from a diverse range of minerals, substantial reserves, and increasing investments, both domestic and foreign. With the government promoting open bidding, technology integration, and skill development, the future of the sector looks promising.