Thanks to anticipated capacity enhancements by both private and state-owned miners, India’s iron ore production is projected to increase to 245-255 mn t in FY’22 from around 205 mn t in FY’21, SteelMint data reveals.
Growth in Odisha production
Output from India’s leading iron ore producing state, Odisha, is anticipated to rise to 137.8 mn t in 2021-2022, from 108 mn t in FY’21. Odisha’s production had touched 145 mn t in FY’20 on increased output by miners ahead of impending expiry of leases in Mar’20.
However, SteelMint calculations don’t factor in likely additional production that could result from operationalisation of leases towards the latter half of the year following the latest round of auctions of iron ore blocks by the state government.
Production is estimated to inch up due mainly to a projected 85% growth in output by state-run PSU miner Odisha Mining Corporation (OMC) to 24.5 mn t in this fiscal as against 13.26 mn t in FY’21. OMC’s Daitari iron ore mine has received necessary government approval to increase its EC limit from 3 mn t to 6 mn t/year. Earlier, OMC had sought approval for expanding the capacity of its Jilling-Langalota mine in Odisha’s Keonjhar district from 6.28 mn t to 10 mn t/year.
The leading merchant miner has plans to increase the capacity of the Guali iron ore mine to 30 mn t/year. Both Jilling and Guali were added to OMC’s kitty in 2020 following months of non-production after the Odisha auctions. SteelMint has reported that OMC’s Kurmitar Pahar iron ore mine has been granted permission for EC expansion from 2.4 mn t to 6 mn t/ year. OMC has also placed a proposal for increasing the production capacity of the Gandhamrdan A iron ore block from 0.35 mn t to 2.5 mn t/year.
Moreover, OMC’s Khandbandh, Banspani, Mahaparbat and Dubna-Sakradihi mines are expected to commence production this fiscal with expected combined output being pegged at 0.6 mn t.
Steel majors to augment iron ore output
OMC apart, AM/NS India is projected to add another 2.08 mn t of iron ore from its 7.16 mn t/year Gorumahisani-Sagasahi block, which is slated to commence production from Aug’21. The steel major’s FY’22 production is likely to stand at around 5.59 mn t, up from 4.12 mn t in FY’21, taking into reckoning production from the company’s Thakurani block.
Tata Steel and state-owned SAIL are expected to record iron ore output at 27.36 mn t and 14.46 mn t respectively in FY’22. Higher production is expected to result from Tata Steel’s efforts to increase the capacity of the Joda East iron ore mine from 12 mn t to 19.5 mn t. SAIL, on the other hand, is gearing up to enhance production from the Barsua-Kalta-Taldih mines to 16 mn t from about 8 mn t.
Steel behemoth JSW Steel, too, is expected to enhance its total iron ore yield by 22% from 16.67 mn t in the preceding fiscal on plans to augment capacity. However, steep premiums and “legacy issues” could force the company to surrender the Jajang and Gonua mines to the state government, as per an exclusive SteelMint report. While Jajang produced 7.19 mn t in FY’21, Gonua churned out 0.77 mn t.
Increased volumes from merchant miners
Major merchant producer Serajuddin & Co. is expected to produce around 9.8 mn t this fiscal as against just 3.65 mn t in FY’21 from its 15.5 mn t/year Balda iron ore block. Serajuddin’s production slipped sharply in FY’21 on account of delayed resumption of operations post auctions. As per latest reports, the miner has moved Orissa High Court challenging the state government’s minimum dispatch rule, as per MDPA. The matter is sub judice at present.
Another leading merchant iron ore producer, Rungta Mines, is projected to churn out 10.7 mn t in FY’22 compared to a little under 10 mn t in 2020-2021 due to an increase in the EC limit of the Sanindpur mine, which also takes into consideration the production of 1.5 mn t of dump fines.
Other states to boost production
India’s other iron ore-rich states are anticipated to enhance production in FY’22, with production from Chhattisgarh expected to reach 42 mn t from 37.21 mn t in FY’21. The expected increase will be due to a) the rise in capacity of Jayaswal Neco’s Chhotedongar iron ore mine by 2.5 mn t; and b) the addition of another 2.5 mn t from India’s leading miner, NMDC’s 7 mn t/year Deposit 11B in the Bailadila hill ranges of the state.
Likewise, Karnataka’s iron ore output is projected to grow to 40 mn t from around 34 mn t in FY’21. This is due to resumption in operations at NMDC’s 7 mn t Donimalai mine. The rest could come from a surge in production by JSW Steel’s category ‘C’ captive mines in the state.
Mineral-rich Jharkhand is estimated to produce 25 mn t as against 20.88 mn t in FY’21. While the integrated steel producers such as Tata Steel and SAIL have a major share in Jharkhand’s output, the average iron ore production from the eastern state is usually in the range of 25-27 mn t. Like Odisha, the Jharkhand government is also conducting iron ore auctions in the state, which holds up the possibility of increased supplies in the coming days.
India’s iron ore production had fallen by more than 15% in FY’21 compared with 245 mn t in FY’20 due to the adverse impact of the pandemic and delayed resumption of production at the auctioned leases after the Odisha auctions last year.
Prices as on 8:45 IST, 26 Jul. d-o-d changes indicated against closing price of 23 July
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