Iron ore production to touch 185 MT in 2017-21

Iron ore production to touch 185 MT in 2017-21

The growing trend of iron ore sector represents a CAGR of 6.9% during 2017-2021.

The Dollar Business Bureau

Since the lifting of the mining ban in the three iron-ore rich states of India, Odisha, Karnataka and Goa, India's iron ore production has increased. It is estimated that by 2021 it could touch 185 million tonnes (MT).

According to a Fitch Group research company, India’s iron ore production quantity will touch 185 MT in 2021 from 136 MT this year.

It should be recollected that mining in all the three states was at its peak between 2000 and 2012, a time when iron-ore powder from Goa was shipped to meet the steel needs of Beijing Olympics in 2008 and India’s iron ore exports to other countries too flourished. It was also during this period that environmental, land-lease and labour regulations were flouted impudently. With the state governments deprived of their royalties, environmentalists petitioning every court on earth, the pollution levels of air, water and soil reaching alarming levels and law and order in all the three states running riot with the mining mafia controlling every inch of the land the Supreme Court finally put a ban on all the illegally operating mines that were feverishly churning out cheap iron ore to serve the world markets.

After a long hiatus, the mines resumed their activities, under strict conditions from the Supreme Court. By September 2016, iron ore handling more than doubled to 17.50 MT at India’s major ports. Since then the output has gradually but firmly increased.

BMI Research said that it forecasted the growing trend of this sector that represents a CAGR of 6.9% from 2017 to 2021.

The anticipated growth in the domestic iron ore output comes on the back of an average decline of 9.4% during 2012-2016. Earlier, the government had imposed mining ban on the country’s three biggest iron-ore generating states – Odisha, Goa and Karnataka. The ban, however, has now been lifted, thereby raising estimation of a possible sector growth.

The future production will further be bolstered by the elimination of export duty, as announced by Finance Minister Arun Jaitely in the 2017 Budget, for low-quality ores. The Mines & Minerals (Development & Regulation) (MMDR) Act is also expected to streamline licensing procedure and restart closed mines.

"Although the MMDR Act will support ore output growth, the royalties included in the Act will limit the sector's overall growth potential," the research said.

The government reduced export duties on iron ore lumps and fines less than 58% iron content to zero from 30% and 10%, respectively. The decision was targeted at enhancing shipments from Goa where iron ore mining ban was lifted by the Supreme Court in 2014.

Goa produces low-quality iron ore, with iron content less than 58%, and is shipped to China. Following the upliftment of ban, Goa is permitted to mine 20 MT of iron ore.

Vedanta recently said the upcoming few years are going to be probably the best few years for the Indian mining industry. It said the company’s Goa branch is buckled up to sustain exports growth amidst subdued demand and softening global prices.

The Dollar Business Bureau - Feb 16, 2017 12:00 IST