India’s iron ore production is expected to recover from the 2020 low of a little over 205 million tonnes (mn t) to around 245 mn t in 2021, with production from the different states in the country slated to reach around 20 mn t in Dec’21, as per SteelMint estimates.
Total production in Dec is projected to rise month-on-month, thereby taking the country’s overall output in CY’21 higher by nearly 20% compared to CY’20. However, production decreased by 2% on the month to 18.97 mn t in Nov from 19.37 mn t in Oct.
On a year-on-year basis, production fell marginally – a little over 2% — from 19.55 mn t in Nov’20.
Iron ore output till Nov in CY’21 stands at 225.27 mn t, as per SteelMint data. Production in CY’20 edged lower because of the impact of the transfer of mining leases in Odisha after the auctions in 2020 and also due to the Covid-19 disruption that rocked the economy in H1CY’20.
Odisha output grows
State-wise production data shows that output from Odisha stood at 10.08 mn t in Nov compared to 9.9 mn t in Oct – higher by just 1.6% m-o-m. SteelMint reported earlier that production from Odisha had risen significantly by more than 30% on the month in Oct compared to 7.41 mn t in Sept.
India’s top iron ore producing state recorded total production of 127.41 mn t in Jan-Nov’21, which has already exceeded the 112.11 mn t of iron ore production recorded in CY’20.
Major integrated steel producers JSW Steel, Tata Steel and SAIL recorded iron ore output of 2.2 mn t, 1.29 mn t, 1.22 mn t, respectively, from their Odisha mines in Nov.
Notably, state-owned merchant miner Odisha Mining Corporation (OMC) increased production to 2.1 mn t from 1.8 mn t in Oct.
Production from Chhattisgarh, Karnataka and Jharkhand stand at 36 mn t, 34 mn t and 21 mn t, respectively, in the Jan-Nov’21 period –significantly higher y-o-y.
In Nov, production from Chhattisgarh increased by 6% y-o-y, while Jharkhand witnessed a rise of over 9% in production vis-à-vis Nov’20.
Short-term outlook
Senior officials of the Odisha government informed SteelMint earlier that iron ore production from the state in FY’22 is expected to be around 145 mn t. The state is on track to achieving that target. Production from Odisha in the current fiscal is expected to be considerably higher than 107 mn t recorded in FY’21, as production from the auctioned mines fell by over 60%, y-o-y, last fiscal.
In fact, Odisha’s iron ore output had been recorded at around 145 mn t in FY’20. After the initial disruption caused by the auctions in 2020, it is expected that Odisha production would recover to those levels in FY’22.
Steel producer AM/NS India started operations at the 7.16 mn t per annum Ghoraburhani-Sagasahi iron ore block in Odisha around Sept’21. The company aims to produce 2 mn t of ore from the mine in this calendar year. Therefore, production is set to go higher in Odisha.
Steel major JSPL has started operations at the brownfield Kasia iron ore mine that it won at the second phase of the Odisha mineral block auctions this year. The mine has an annual capacity of around 6 mn t.
In addition, the Odisha High Court has asked lessees to liquidate inventory lying at the auctioned mines, which adds up to around 11 mn t. However, SteelMint assesses that only 2 mn t of this inventory has found its way to the market till now.
Therefore, supplies are on the rise, although the Odisha government has ruled out the listing of iron ore blocks in the upcoming rounds of auctions in the state.
Capacity build-up
In the mid to long term, supplies will rise off the back of rapid expansions in capacity by the leading miners. JSW Steel has applied to expand capacity of the Nuagaon mine in Odisha from 5.62 mn t per annum to 7.99 mn t. JSW has plans to ultimately raise production to 20 mn t/year from the mine.
- Steel heavyweights to boost output: JSW subsidiary Bhushan Power and Steel Limited (BPSL) has applied for EC for the greenfield Netrabandha Pahar iron ore block with a peak production capacity of 2 mn t per annum.
On the other hand, Tata Steel Ltd has sought approval for expanding run of mine (ROM) iron ore production capacity of its captive Noamundi mine in Jharkhand from 10 mn t to 19 mn t/year. Likewise, SAIL has plans to expand the Barsua-Taldih-Kalta mines from 8.05 mn t to 16 mn t per year of ROM iron ore production.
- Merchant miners raising capacity: The Ministry of Environment, Forest and Climate Change has accorded approval for enhancing EC limit of OMC’s Daitari iron ore mine from 3 mn t to 6 mn t per annum.
OMC has also sought approval for expanding the capacity of the Jilling Langalota mine from 6.28 mn t to 10 mn t per annum and the Guali mine to 30 mn t per annum from 5.7 mn t at present. The Kurmitar Pahar iron ore mine has been granted permission for EC expansion from 2.4 mn t to 6 mn t per 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 per annum.
As a result, OMC’s expanded iron ore capacity will stand at 34.24 mn t per annum. Likewise, the country’s top miner NMDC has a production guidance of 44 mn t in FY’22. The PSU miner expects to scale up production to 70 mn t by 2025.
Increasing supplies in the coming years are necessary to sustain continually rising domestic steelmaking capacity, which currently stands just under 150 mn t.
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