Ups and Downs

Key minerals witness mixed performance

Minerals such as coal, lignite, bauxite, iron ore, copper ores and concentrates, lead ores and concentrates, and zinc ores and concentrates are directly or indirectly used in several infrastructure sectors. Among the major minerals, coal, lignite and iron ore witnessed an increase in production during 2016-17, while the production of some minerals such as bauxite declined.

India Infrastructure Research provides a snapshot of mineral-wise trends in the past few years…

Coal

The production of raw coal (coking and non-coking) increased at a compound annual growth rate (CAGR) of 4.47 per cent between 2012-13 and 2016-17. In 2016-17, the total production of raw coal in the country increased by 3.69 per cent from 639.23 million tonnes (mt) in 2015-16 to 662.79 mt in 2016-17. The share of coking and non-coking coal in total raw coal production has remained almost constant, with coking coal accounting for a 10 per cent share and non-coking coal accounting for 90 per cent. In 2016-17, the production of coking coal stood at 61.66 mt against 60.89 mt in the previous year, a 1.27 per cent growth over 2015-16. The production of non-coking coal stood at 601.13 mt in 2016-17 against 578.34 mt in 2015-16, recording a growth of 3.94 per cent. In 2017-18 (till October), the total production of coal in the country stood at 336.72 mt.

Public sector companies accounted for about 95 per cent (628.72 mt) of the total coal production during 2016-17. Of these, Coal India Limited (CIL) alone accounted for 84.41 per cent of the total coal production in the country, while the share of Singareni Collieries Company Limited (SCCL) stood at just 8.98 per cent. However, the share of private sector companies in total coal production stood at a meagre 5.14 per cent (34.08 mt).

With regard to consumption, between 2012-13 and 2016-17, the demand for coal increased at a CAGR of 2.07 per cent. Non-coking coal accounts for most of the demand for coal (over 90 per cent) and is used mainly in the power, sponge iron, and cement industries. Meanwhile, the demand for coking coal comes mainly from the steel industry and constitutes about 8.5 per cent of the total demand for raw coal.

Coal reserves are found either in the Gondwana or tertiary coalfields. As of April 1, 2017, 99.5 per cent of the coal reserves were located in the Gondwana coalfields, while the tertiary coalfields accounted for only around 0.5 per cent of the total reserves.

Lignite

Total lignite reserves increased to 44,594 mt in 2015-16 from 40,906 mt in 2011-12. Tamil Nadu, Gujarat and Rajasthan together ac-

count for about 99 per cent of the total lignite reserves and the entire proven lignite reserves in the country. During 2016-17, total lignite production stood at 45.23 mt as compared to 46.45 mt in 2012-13. During the April-October period of 2017-18, the production stood at 23.38 mt. In the past, problems pertaining to land acquisition and delays in obtaining regulatory clearances have been major impediments to lignite production.

The Neyveli Lignite Corporation (NLC) and the Gujarat Mineral Development Corporation (GMDC) are the major producers of lignite. In 2016-17, the two producers accounted for about 61 per cent and 17 per cent of total lignite production respectively.

Demand for lignite comes from various industrial segments such as power, cement, textiles and rayon, cement, pulp and paper, bricks, fertilisers, etc. Of these, the power sector is the major consumer of lignite in the country (accounting for almost 90 per cent of the total lignite offtake), followed by the textiles and rayon segments.

Bauxite

Bauxite production increased at a CAGR of 10.38 per cent from 2012-13 to 2016-17.

However, compared to 2015-16, production decreased by a significant 12.3 per cent in 2016-17. For the period April-October 2018, bauxite production stood at 12.3 mt. In terms of state-wise bauxite production, Odisha reported the highest share of around 50 per cent, followed by Gujarat (24 per cent), Jharkhand (9 per cent), Chhattisgarh (8 per cent), Maharashtra (7 per cent) and Madhya Pradesh (2 per cent).

Players with a dominant presence in the bauxite market are National Aluminium Company Limited, Bharat Aluminium Company Limited, GMDC, and Bombay Minerals. These companies own captive bauxite mines, the output from which is used in their smelters to produce aluminium. An industry-wise analysis of bauxite consumption shows that the aluminium industry is the principal consumer (94 per cent in 2013-14), followed by the cement industry (4 per cent).

In 2016-17, around 2.19 mt of bauxite was exported in comparison to 4.2 mt exported in 2012-13. Over the five fiscal years ended 2016-17, the highest level of exports was recorded in 2015-16 at 8.91 mt, followed by 6.81 mt in 2014-15. Imports, on the contrary, have been experiencing a rising trend, from 66,742 tonnes in 2012-13 to around 1.9 mt in 2016-17.

Iron ore

Globally, India ranks fourth in terms of iron ore production, following China, Australia and Brazil. In 2016-17, the country produced 192.08 mt of iron ore, a 21.49 per cent increase as compared to 158.11 mt in the previous year. During 2017-18 (till October 2017), the country produced 108.34 mt of iron ore. A state-wise analysis shows that during 2016-17, Odisha was the leading state in iron ore production accounting for 52 per cent of the total production followed by Chhattisgarh (16 per cent), Karnataka (14 per cent), Jharkhand (11 per cent) and Goa (4 per cent), while the remaining (2 per cent) production was reported from Madhya Pradesh, Rajasthan, Maharashtra, and Andhra Pradesh.

Players in both the public and private sectors are engaged in iron ore production. National Mineral Development Corporation Limited is India’s largest iron ore producer. It produced 34 mt of iron ore during 2016-17, recording a CAGR of around 5 per cent since 2012-13. This is reportedly the highest ever annual production by the company since its inception. Steel Authority of India Limited produced 27.3 mt of iron during 2016-17, a year-on-year increase of about 10 per cent from 2015-16 and a CAGR of around 6 per cent during the period 2012-13 to 2016-17. Further, Odisha Mining Corporation Limited reported a production of 6.37 mt of iron ore during 2016-17, a 6 per cent year-on-year increase from 2015-16, and a robust CAGR of around 27 per cent between 2012-13 and 2016-17. Tata Steel, the biggest producer of iron ore in the private sector, produced 21.28 mt during 2016-17, registering an increase of about 30 per cent over the previous year. Its production increased at a CAGR of around 9 per cent during the period 2011-12 to 2015-16.

According to export-import data compiled by the Ministry of Mines, during 2016-17, iron ore exports totalled 30.47 mt, registering a massive increase of about 460 per cent as compared to 5.44 mt in 2015-16. Meanwhile, iron ore imports were 4.61 mt in 2016-17, a decline of 35.1 per cent from 2015-16, but a 50.75 per cent increase from 2012-13.

Copper concentrates

During 2016-17, copper concentrate production stood at 134,790 tonnes as compared to 124,000 tonnes in 2012-13, marking a decline of about 8.7 per cent. For the five-year period 2012-13 to 2016-17, copper concentrate production increased at a CAGR of 2.15 per cent. In 2017-18 (till October 2017), copper concentrate production stood at 70,000 tonnes.

A state-wise analysis of copper concentrate production shows that the highest share is contributed by Madhya Pradesh (about 50 per cent), followed by Rajasthan (42 per cent) and Jharkhand (about 8 per cent).

Copper is used in a vast array of applications, ranging from electronics and telecom to the transport sector. The electronics and electrical industry is the largest consumer of copper accounting for 34 per cent of the total consumption. Meanwhile, the transport industry accounts for 11 per cent of the total consumption and the consumer durables, building and construction, and engineering industries account for 8 per cent consumption each.

Lead and zinc ores and concentrates

During 2016-17, production of lead concentrate stood at 268,002 tonnes, while the five- year CAGR (2012-13 to 2016-17) stood at 10 per cent. Meanwhile, the production of zinc concentrate stood at 1.48 mt in 2016-17. The production of zinc concentrate remained somewhat consistent between 2012-13 and 2016-17, with a 0.7 per cent increase between 2015-16 and 2016-17.

On the consumption side, the leading consumer of lead is the battery industry, accounting for over 70 per cent of the total consumption, while more than half the zinc produced is used in the galvanising of iron and steel.

In 2016-17, India exported 53,912 tonnes of zinc ores and concentrates, recording a 29 per cent decline from 75,870 tonnes in 2012-13. However, in 2014-15 and 2015-16, exports stood at just 41 tonnes and 558 tonnes respectively.

Conclusion

The country has a vast mining potential and is the leading producer of some select minerals. However, the performance of the mining industry is largely correlated with the performance of the manufacturing sector, as a number of sub-segments are consumers of key minerals. Going forward, exploration is expected to pick up pace with the introduction of noteworthy policies such as the National Mineral Exploration Policy, 2016. Greater investments and the enhanced role of the private sector are some of the likely results from the stated policy. Further, opportunities for contract mining/mine development-cum-operations are also going to be abundant. However, judicial and institutional capabilities must be enhanced to support the sector. Such steps will not only increase mining output, but will also ensure a level playing field, thus attracting greater private participation.

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