India’s iron ore production rises 20% to over 246 mnt in 2021

• Odisha output jumps 23% y-o-y
• NMDC logs 30% growth in production
• Merchant volumes shrink post 2020 auctions

India’s iron ore production increased sharply by around 20% year-on-year in 2021 to 246.3 million tonnes (mnt). Production in 2020 had fallen to around 206 mnt, SteelMint data shows.

Production rose on higher output from India’s top iron ore producing state of Odisha, not to forget incremental volumes being added from the other key states.

Total output had slumped in 2020 due to loss in production following the transfer of mining leases after the mineral auctions in Odisha and the Covid-19 outbreak in Q1CY’20 disturbing logistics and supply chains. However, production recovered from Q4 onwards.

In fact, compared to the last five years, production peaked in 2021, surpassing 235 mnt in 2019, as per data maintained with SteelMint.

Odisha output rises

The impressive production figure in 2021 was possible due to a 24% surge in output from Odisha. Production from Odisha was recorded at nearly 138 mnt compared to a little over 110 mnt in 2020.

Odisha’s share in the country’s overall iron ore production stands at 56%.

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.

• JSW Steel emerged as the leading miner from Odisha with total production of 28 mnt in CY’21 compared with just 9.4 mnt in the preceding year.
• Steel major AM/NS India increased its iron ore in Odisha and started new operations in 2021. Production by the company increased a whopping 350% to 7.2 mnt from 1.6 mnt in CY’20.
• State-owned Odisha Mining Corporation (OMC) raised production sharply by 65% y-o-y to 20.24 mnt from 12.25 mnt in 2020. Notably, the allocation of auctioned, yet non-operational, mines to OMC contributed to raising the miner’s overall production.

Merchant miners in Odisha saw their production volumes shrink, with bar on despatches for overproduction, failure to fulfill MDPA targets and production-related complications at the auctioned leases as well as expiry of leases, in some cases, being the key reasons.

Steelmakers SAIL and Tata Steel recorded more or less stable production y-o-y from Odisha. SteelMint data shows that iron ore production from the state in Dec’20 stood at 10.17 mnt, a decrease of 14% y-o-y compared with 11.86 mnt in Dec’20.

NMDC’s production up 30%

In 2021, Chhattisgarh witnessed an uptick in iron ore output. The state witnessed an increase of 17% y-o-y in production to over 40 mnt. Likewise, Karnataka saw production rise sharply by nearly 20% to over 38 mnt compared with 32 mnt in CY’20.

Production from Chhattisgarh and Karnataka are expected to rise on higher output by PSU miner NMDC in the coming months as well as auctions of mining leases. India’s top miner, NMDC boosted production by around 30% on the year to 40.62 mnt in 2021 from around 31 mnt in 2020.

Production from Jharkhand increased to over 24 mnt from 21 mnt in 2020, with a large chunk of it coming from the captive mines of steel producers.

Looking ahead

Going forward, although no major auctions are scheduled from Odisha in 2022, additional volumes are expected from the mines auctioned in the second phase of the Odisha auctions in Aug-Sept’21.

In addition, capacity expansion plans of major merchant miners as well as steel majors are expected to boost production further.

India’s steel production is expected to touch the 120 mnt mark in 2022 and domestic iron ore production has to rise in tandem to meet the growing needs of the steel industry.