India’s iron ore production rises to all-time high of over 250 mnt in FY’22

• Odisha output rises nearly 30% on the year
• State-owned miners witness sharp increase in volumes
• Captive producers ramp up output on growing demand from steelmaking

India’s iron ore production touched its highest level till date of over 250 million tonnes (mnt) in FY’22 – a sharp increase of 23% compared with 204 mnt in FY’21, as per data maintained with SteelMint.

Production rose on higher output from India’s top iron ore producing state of Odisha as well as marginally higher output from the other key states.

Total output had slumped 17% y-o-y in FY’21 due to loss in production following the transfer of mining leases after the mineral auctions in Odisha and the COVID-19 outbreak disturbing logistics and supply chains.

Higher Odisha production

Odisha’s iron ore output rose by nearly 30% to over 138 mnt from around 107 mnt in FY’21. Odisha’s share in India’s iron ore production stood at around 55% in FY’22.

Although a couple of key merchant leases in the state expired in the year gone by, a majority of mines auctioned in 2020 resumed full-fledged operations, boosting overall production. Additional volumes are expected from the state in the coming months with initiation of production from the brownfield iron ore blocks auctioned in 2021.

Karnataka emerged as the second-highest iron ore producing state of India, with production climbing 18% y-o-y to over 40 mnt from around 34 mnt in FY’21. This was mainly due to higher production from the country’s top iron ore miner NMDC, which saw its 7 mnt/year Donimalai mine receiving the renewal to restart operations upon payment of additional premium to the state government.

Although production in Chhattisgarh remained stable by and large at around 40 mnt compared with 37 mnt in FY’21, Jharkhand witnessed a sharp increase of 21% in its iron ore output that reached more than 25 mnt vis-à-vis 20 mnt in the preceding fiscal.

This was largely due to higher production at the captive mines of steel producers in the state, while the Jharkhand government is still working out the modalities of auctioning more iron ore mines in the state.

Leading miners

State-owned merchant miners NMDC and OMC saw their output inching up in FY’22. While NMDC’s production increased modestly by 23% y-o-y to over 42 mnt from around 34 mnt in the preceding fiscal, OMC witnessed a sharp 100% jump in production, thanks to the addition of high-producing auctioned mines in its kitty.

OMC produced 27 mnt of iron ore in FY’22 compared with just 13.06 mnt in FY’21. The state PSU miner has chalked up plans to increase iron ore capacity in the coming time.

On the other hand, NMDC targets to raise production to over 70 mnt by 2025 mainly by gaining access to new deposits adjacent to its existing operations in Chhattisgarh.

Apart from the merchant miners, the captive iron ore producers raised their output in FY’22 in response to growing demand from higher crude steel production.

PSU steelmaker SAIL achieved iron ore production of over 34 mnt from its mines in Odisha, Jharkhand and Chhattisgarh, which is higher by 13% compared with 30 mnt in FY’21.

JSW Steel raised production sharply by 34% y-o-y to over 30 mnt from 23 mnt in the previous fiscal by ramping up operations from the four mines it won at auctions in Odisha in 2020.

Steel major AM/NS India started operations at the over 7 mnt/year Sagasahi block in Odisha in the recently-concluded fiscal. It also operates the Thakurani mine in Odisha.

Tata Steel, on the other hand, saw volumes rising by around 5% y-o-y to 30 mnt from around 28 mnt in FY’21. The company is planning to augment captive production from the current level of 30 mnt per annum to 48 mnt by FY’25 by working on greenfield mines won at auctions in Odisha as well as leveraging newly acquired resources after the acquisition of NINL.

Outlook

Going forward, capacity expansion plans of major merchant miners as well as steel majors are expected to boost iron ore production further.

India’s crude steel production touched the 120 mnt mark in FY’22 and domestic iron ore production has to rise in tandem to meet the growing needs of the steel industry.