India’s iron ore production remained strong touching 22 mn t in Jan’21 – lower by just 1% compared to 22.3 mn t in Dec’20 – with slow but steady return to pre-pandemic levels, SteelMint data reveals. Improving supplies from Nov’20 onwards has inevitably resulted in better capacity utilisation for the secondary steel sector.
India’s total iron ore production in the Apr-Jan’21 period stood at 159.5 mn t. Odisha led from the front with 82.9 mn t during the period followed by Karnataka with 28.47 mn t and Chhattisgarh with 27.98 mn t. Jharkhand’s iron ore production in the Apr-Jan’21 period was estimated at 16.58 mn t.
Auctioned mines fare better
Production from Odisha – India’s leading iron ore producing state – touched 12.06 mn t in Jan’21, marginally higher (2%) compared to 11.86 mn t in the preceding month. Operationalisation of auctioned iron ore mines in the state seems to have boosted volumes from Odisha, SteelMint understands.
Note that the Ministry of Mines (MoM) has proposed to fix a minimum quarterly dispatch rule for the auctioned leases following rounds of deliberations with the Odisha government on iron ore supply shortfall. Earlier, the state government too had show-caused the new lessees for failing to maintain minimum dispatch volumes.
Production in Odisha has returned to pre-Covid levels and the momentum is likely to continue due to the following factors: a) two auctioned leases – Guali and Jilling-Langalota with a combined capacity of 12 mn t per annum – have resumed operations after the government transferred the mines to state-run OMC; b) integrated steel-maker AM/NS India is likely to commence operations at its Ghoraburhani Sagasahi block with an EC limit of 7.16 mn t; and c) the Odisha government is bringing more greenfield mines under the hammer.
SteelMint data shows that production from the non-auctioned mines in the state stood at 8.78 mn t in Jan’21 compared to 8.65 mn t in Dec’20. Production from the auctioned mines was up by 1.5% m-o-m to 3.28 mn t in Jan’21. AM/NS India raised production considerably from under 0.5 mn t in Dec’20 to over 0.62 mn t in Jan’21 from its Thakurani mine.
However, JSW’s iron ore production from its four mines in Odisha fell to 1.83 mn t from 2.17 mn t in Dec’20. JSW’s merchant iron ore sourcing from Karnataka e-auctions as well as from NMDC (Chhattisgarh) and Odisha miners dropped 34% in Jan’21, as per SteelMint reports. Production from the 7 operational mines in Karnataka inched up to 0.52 mn t in Jan’21 compared to 0.49 mn t in Dec’20. So, although JSW’s capacity utilisation has increased to 96%, according to the company’s BSE disclosure, the share of merchant sourcing has been dwindling with rise in captive production.
Among the leading merchant miners OMC’s production in Jan’21 dropped to 1.58 mn t from 1.77 mn t in the preceding month. However, Rungta Mines recorded an increase in monthly output to 1.36 mn t against 1.25 mn t in Dec’20.
Improving numbers pressure prices
While production from Chhattisgarh and Jharkhand rose by 5% and 6% respectively in Jan’21 against Dec’20, Karnataka’s output for the month nosedived 32% to 2.66 mn t from 3.91 mn t in Dec’20. Miners had stepped on the gas in Dec’20, SteelMint believes, as prices were at elevated levels. In fact, Dec’20 production was the highest monthly output from the southern state in FY21 so far.
NMDC has reduced iron ore prices after successive hikes for 9 straight months followed by leading Odisha merchant producers. SteelMint projects increasing production to exert additional pressure on prices in the coming days.
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