India: Odisha iron ore production picking up pace; minimal shortfall expected in FY’23

• Odisha output inching up slowly after export duty jolt
• Minor shortfall in dispatches expected
• Overwhelming response at pre-bid stage for Goa auction

As part of ENGAGE 3.0, SteelMint caught up with Dr. Suresh Shanbhogue (Director, Department of Mines & Geology, Govt. of Goa); and Dr U.C. Jena (Additional Director of Mines, Govt. of Odisha) on the domestic iron ore outlook for H2FY’23.

Below are key takeaways from the enlightening discussion with the two experts:

• Although it was initially assumed that iron ore production would drop by around 20 mnt this fiscal from Odisha, production has picked up of late.
• There is a trail of just 3 mnt in iron ore production at this time of the year, which was 83 mnt last year and stands at 80 mnt this year.
• Dispatches of iron ore at this time of the year in the last fiscal was around 78 mnt, which has fallen by 6-odd mnt to around 72 mnt this year.
• Therefore, the initial forecast of production loss of around 20 mnt this fiscal from Odisha no longer stands, as production and dispatches have picked up really fast owing to increased production from the iron ore mines bagged by the integrated steel players.
• So, the production guidance stands roughly at around 140 mnt, similar to last year.
• Owing to largely bearish market conditions, the four mineral blocks (three iron ore and one manganese) that the Odisha government had announced would be put up for auctions in May has been annulled.
• Virgin blocks that had been put to auction will start operations like those of Tata Steel, Kashvi etc. that will come up within a couple of years

Auction scenario in Goa

• 24 mining companies participated in the pre-bid meeting for the upcoming Goa iron ore mines auctions.
• Response from the industry has been very encouraging: integrated steel players participated in the pre-bid stage as well as miners from within the state.
• Given the huge number of queries raised in the pre-bid stage, the Goa government has slightly delayed the timeline for answering those queries, although the auction date for the first tranche remains unchanged as of now. 21 December is the window for auctioning of the four mineral blocks.
• The blocks to be auctioned are Monte-de-Sirigao with resources at over 9 mnt; Sirigao-Mayem (23 mnt); the Kalay block at over 20 mnt; and Bicholim mineral block at around 85 mnt.
• The second Notice Inviting Tender (NIT) for auctions is most likely to be only for the expired leases, due to which operationalisation of those blocks could be a lot quicker.