Picking Up Pace: Production performance of key minerals

Production performance of key minerals

Minerals such as coal, lignite, bauxite, iron ore, and other select metallic and non-metallic minerals are vital inputs for several infrastructure sectors. In terms of production, all the minerals except lignite and zinc concentrate registered an increase in production in 2015-16, over the levels witnessed in 2014-15.

Indian Infrastructure presents a snapshot of the production trends in various minerals over the past few years…

Coal

Perhaps the most important mineral produced in the country is coal. The production of raw coal (coking and non-coking) increased at a compound annual growth rate (CAGR) of 4.26 per cent between 2011-12 and 2015-16. The share of coking and non-coking coal in the total raw coal production has remained almost constant, with coking coal accounting for a 90 per cent share and non-coking coal accounting for the remaining 10 per cent.

In 2016-17 (till December), around 337.77 million tonnes (mt) of coal was produced. In 2015-16, the total production of raw coal in the country increased by 4.18 per cent from 612.43 mt in 2014-15 to 638.05 mt. This increase in production, along with the supply of better quality coal and improvements in despatch resulted in a reduction of coal imports from 217.78 mt in 2014-15 to 199.88 mt in 2015-16. This trend continued in 2016-17, with coal imports dropping by around 5 per cent during the period April-May 2016 as compared to the corresponding period in the previous year. However, the increase in production has also given rise to a supply glut as demand from power producers has lagged output. Reportedly, this has left Coal India Limited with 45-50 mt of coal stockpiled at its mines and the company is currently exploring export opportunities to address the issue.

Lignite

During April-December 2016, lignite production stood at 16.5 mt. In 2015-16, the figure stood at stood at 44.1 mt, a CAGR of 1.03 per cent since 2011-12. State-wise, Rajasthan’s share in lignite production increased to 20 per cent in 2015-16 from just 7 per cent in 2011-12. However, during the same year, the share of Tamil Nadu declined to 56 per cent as compared to 58.09 per cent in 2011-12. Overall, issues pertaining to land acquisition and delays in obtaining regulatory clearances have been major impediments to lignite production.

Iron ore

In the current financial year, for the period April-December 2016, iron ore production stood at 134.26 mt. In 2015-16, 155.2 mt of iron ore was produced, marking an increase of 20.39 per cent over the 128.91 mt produced in the preceding year. However, during the period between 2011-12 and 2015-16, the production trend was a mixed one, with output marking a decline in both 2012-13 and 2014-15.

Considering a state-wise split, during 2015-16, Odisha led iron ore production, accounting for 51 per cent of the total, followed by Chhattisgarh and Karnataka both at 16 per cent, Jharkhand at 12 per cent and Madhya Pradesh at 3 per cent, while the remaining 2 per cent production was from Goa, Andhra Pradesh, Maharashtra and Rajasthan.

Bauxite

In 2016-17 (till December), bauxite production stood at 18.17 mt. During 2015-16, bauxite production increased by 26.6 per cent, from 22.22 mt in 2014-15 to 28.13 mt. Further, during the period 2011-12 to 2015-16, bauxite production grew at a CAGR of 21.57 per cent.

Considering the state-wise production scenario, Gujarat reported the highest share in bauxite production at around 39 per cent, followed by Odisha at 37 per cent, while Maharashtra, Chhattisgarh and Jharkhand accounted for a 7 per cent share each. Madhya Pradesh had a mere 2 per cent share of the total bauxite production in the country.

Other metallic minerals

Regarding other metallic metals, the production of copper ore grew by about 11.4 per cent from 3.51 mt in 2014-15 to 3.91 mt in 2015-16. For the five-year period between 2011-12 and 2015-16, copper ore production grew at a CAGR of 2.96 per cent. During the same period, the production of copper concentrate grew at a marginal CAGR of around 0.57 per cent. Further, in 2015-16, the production of copper concentrate stood at 0.13 mt, 18 per cent higher than the 0.11 mt produced during 2014-15. During April to December 2016, copper concentrate production stood at 0.09 mt.

In 2015-16, lead and zinc ore production stood at 9.43 mt, which was marginally higher than the 9.35 mt produced in the previous year. During the five-year period between 2010-11 and 2014-15, lead and zinc ore production grew at a CAGR of 5.53 per cent. Lead and zinc ore is primarily produced in the state of Rajasthan.

During 2015-16, the production of lead concentrate stood at 0.26 mt. During the period between 2011-12 and 2015-16, the production of lead concentrate grew at a CAGR of 12.95 per cent. During the April-December 2016 period, a total of 0.18 mt of lead concentrate was produced. Similarly, in 2015-16, the total production of zinc concentrate stood at 1.47 mt and the production of zinc concentrate grew at a CAGR of 1.04 per cent between 2011-12 and 2015-16. During April-December 2016, the production of zinc concentrate stood at 0.96 mt.

Non-metallic minerals

In 2015-16, limestone production stood at 343.6 mt, growing at a CAGR of 6.96 per cent between 2011-12 and 2015-16. During April-December 2016, the production of limestone stood at 230.22 mt. Meanwhile, in the period April 2015 to February 2016, Rajasthan reported the highest share in limestone production at 60.27 mt, followed by Madhya Pradesh at 34.58 mt, Andhra Pradesh at 29.76 mt, Karnataka at 24.42 mt, Gujarat at 22.92 mt and Telangana at 21.44 mt.

During 2014-15, the production of dolomite, quartz, kaolin, and silica and other sands, stood at 6.21 mt, 1.38 mt, 3.86 mt and 5.15 mt respectively, recording a decline of 15 per cent, 7.38 per cent, 20.41 per cent and 18.25 per cent, respectively, over the previous year. During the period 2010-11 to 2014-15, the production of dolomite, quartz and kaolin grew at a CAGR of 1.59 per cent, 29.54 per cent and 9.14 per cent respectively, while the production of silica and other sands decreased by 1.31 per cent from 2010-11 to 2015-16.

Sector outlook

Overall, growth in the mining sector has picked up momentum over the past couple of years, despite issues concerning land use and availability, a shortage of skilled manpower, financial constraints, and environmental problems. A big positive is that mining output is indispensable for economic growth. However, supply-side problems must be dealt with, both at the policy and project execution levels. With regard to equipment and technology utilisation, there is a strong case for urgently making the required investments.