METALS AND MINING For updated information, please visit www.ibef.org June 2020 Table of Contents Executive Summary……………….….……....3 Advantage India……………….…..….….…....4 Market Overview and Trends……….…….....6 Notable Trends…...………….….…...……....20 Growth Drivers……………………................23 Opportunities…….………........………….….33 Industry Associations...……....…………..…36 Useful Information…………….....…….….....38 EXECUTIVE SUMMARY . India is the third largest producer of coal^. Coal production in the country stood at 729.10 million tonnes (MT) Third largest coal in FY20 and reached 55.42 MT in FY21 (till April 2020). producer . India is expected to overtake Australia and the US in early 2020s to take the position of the world’s second- largest coal producer. Fourth largest iron ore . India ranks fourth globally in terms of iron ore production**. Production of iron ore in FY20 stood at 205.74 producer MT. Second largest steel . India became the world’s second largest crude steel producer in 2019 with production at 111.2 MT. producer Aluminium production . Combined Aluminium production in India stood at 3.6 MT in FY20. Long duration mining . India has vast mineral potential with mining leases granted for longer duration of 20 to 30 years. lease Note: CAGR - Compound Annual Growth Rate, ^BP Statistical Review of World Energy 2019, **USGS Mineral Commodity Summaries 2019, MT-million tonnes . Source: Ministry of Coal, Worldsteel.org, BP, Ernst and Young 3 Metals and Mining For updated information, please visit www.ibef.org Metals and Mining ADVANTAGE INDIA ADVANTAGE INDIA . Rise in infrastructure development and . There is significant scope for new mining capacities in iron ore, automotive production are driving growth. bauxite and coal. Power and cement industries also aiding . Considerable opportunities for future discoveries of sub- growth in the metals and mining sector. surface deposits. The Ministry of Steel aims to increase the steel . Demand for iron and steel is set to continue, production capacity to 300 MT by 2030-31 from given the strong growth expectations for the 134.6 MT in 2017-2018, indicating new residential and commercial building industry. opportunities in the sector. ADVANTAGE INDIA . India holds a fair advantage in cost of . 100 per cent FDI allowed in the mining production and conversion costs in steel sector and exploration of metal and non- and alumina. metal ores under the automatic route. Its strategic location enables convenient . National Mineral Policy 2019 was export to developed as well as the fast- launched for transparency, better developing Asian markets. regulation and enforcement, and . India produces 95 minerals – 4 fuel- balanced socio-economic growth in the related minerals, 10 metallic minerals, 23 sector. non-metallic minerals, 3 atomic minerals and 55 minor minerals (including building and other minerals). Notes: FDI - Foreign Direct Investment, MMDR Bill - Mines and Mineral (Development and Regulation) Bill Source: Data Monitor, RBI, Ey, Ministry of Mines 5 Metals and Mining For updated information, please visit www.ibef.org Metals and Mining MARKET OVERVIEW EVOLUTION OF THE INDIAN MINING SECTOR . Mining sector received a boost . Mineral Exploration Corporation established . Ministry of Mines notified revised royalty post independence under the to conduct exploration with focus on coal, rates and dead rent in September 2014 impact of successive 5 Year iron ore, limestone, dolomite and manganese and the revised rates came into effect on Plans. ore. September 1, 2014. Indian mining sector was opened to Foreign Direct Investment in 1993 after the announcement of the New Mineral Policy. 2018 1956 2012 1947 1972 2014 onwards . Central Government promulgated Industrial . Mineral Exploration Corporation . Total crude steel production in India reached Policy Resolution. established to conduct exploration with 111.2 million tonnes in 2019 making the nd . The exploration of minerals was intensified, and focus on coal, iron ore, limestone, country the 2 largest crude steel producer in the Geological Survey of India was dolomite and manganese ore. the world. strengthened. Indian mining sector was opened up to . An airborne geophysical survey of the . Indian Bureau of Mines was established to look Foreign Direct Investment in 1993 after Obvious Geological Potential Area was after the scientific development of mineral the announcement of the New Mineral inaugurated in April 2017 and will cover a 0.2 resources. Policy. million sq km area. It is one of most efficient and cost-effective methods of resource Source: World Steel Association (WSA), DPIIT, DataMonitor exploration worldwide. 7 Metals and Mining For updated information, please visit www.ibef.org SEGMENTS OF METALS AND MINING INDUSTRY Iron and steel segment offers a product mix which includes hot rolled parallel flange beams and columns rails, plates, coils, wire rods and continuously cast Iron and steel products such as billets, blooms, beam, blank, rounds and slab and metallics and ferro alloy Coal Coal market consists of primary coal (anthracite, bituminous and lignite) Aluminium segment includes primary aluminium, aluminium extrusions, aluminium Aluminium rolled products, alumina chemicals Metals and mining Bauxites are sub-divided into 2 basic types based on the processing methods - Bauxite Tropical bauxite and European bauxite Base metals Base metal market consists of lead, zinc, copper, nickel and tin Precious metals and Precious metals market includes gold, silver, platinum, palladium, rhodium and minerals diamond 8 Metals and Mining For updated information, please visit www.ibef.org STRONG GROWTH IN INDIA’S METALS AND MINING SECTOR OVER THE YEARS GVA from Mining and Quarrying (US$ billion)* Mineral Production in India (US$ billion)^ 60.00 20.00 50.00 18.00 56.02 55.70 55.51 16.00 40.00 51.88 46.02 14.00 14.35 16.12 30.00 12.00 13.92 13.46 20.00 10.00 13.01 8.00 17.74 10.00 6.00 0.00 4.00 FY16 FY17 FY18RE FY19RE FY20AE 2.00 0.00 FY14 FY15 FY16 FY17 FY18P FY19E . India metals and mining sector has witnessed strong growth over the past few years. GVA from mining and quarrying reached US$ 56.02 billion in FY20AE. Mineral production in India also surged, achieving a CAGR of 6.40 per cent between FY10 to FY19E and reached US$ 17.74 billion in FY19. The number of operative mines (excluding atomic minerals, petroleum (crude), natural gas (utilized) and minor minerals) in India reached 1,405 in FY19 from 1,430 in FY18. Notes: CAGR - Compound Annual Growth Rate, RE – Revised estimates, AE- second Advance estimate, ^Excluding atomic and fuel minerals, GVA - Gross Value Added Source: Ministry of Statistics and Programme Implementation, Ministry of Mines 9 Metals and Mining For updated information, please visit www.ibef.org COMPOSITION OF INDIA’S METALS AND MINING SECTOR Production of Metallic and Non-Metallic Minerals (US$ billion) Share of states in mineral^ production FY19 Odisha 10.00 2% 9.00 Rajasthan 8.00 Karnataka 7.00 8.73 6.00 Chhattisgarh 5.00 7.22 41% Jharkhand 4.00 5.69 3.00 4.81 14% Madhya Pradesh 4.46 1.29 1.17 1.15 2.00 1.08 0.63 Maharashtra 1.00 0.00 Andhra Pradesh 12% Gujarat FY16 FY17 FY20* FY18P FY19E 17% Other states Metallic Minerals Non-Metallic Minerals . Production of as many as 95 minerals is undertaken in India, including 4 fuel minerals, 10 metallic minerals, 23 non-metallic minerals, 3 atomic minerals and 55 minor minerals (including building and other materials). Odishas wa the leading producer of minerals with production worth US$ 3.94 billion in FY19^, followed by Rajasthan, Chhattisgarh, Karnataka and Jharkhand with production of minerals worth US$ 1.65 billion, US$ 1.37 billion, US$ 1.17 billion and US$ 0.33 billion, respectively. Production of metallic minerals in the country increased from US$ 4.81 billion in FY16 to US$ 8.73 billion in FY19E. During the same period, production of non-metallic minerals increased from US$ 1.08 billion to US$ 1.29 billion. Notes: MMT- Million Metric Tonnes, E-Estimate, ^ - excluding fuel, atomic and minor minerals, P- Provisional, *- Till September 2019 Source: Ministry of Mines 10 Metals and Mining For updated information, please visit www.ibef.org IRON ORE PRODUCTION . Irone or is a key input for production of steel and primary iron. VisakhapatnamIron ore port production traffic (million (MT) tonnes) . Majority (over 85 per cent) of iron ore reserves are of medium- to 250 high-grade and are directly used in blast furnace and direct reduced iron (DRI) plants in the form of sized lumps or sinters or pellets. sIndia wa estimated to be the fourth largest producer of iron ore in 200 2019. Iron ore production in the country increased from 158.11 MT in FY16 150 to 199.21 MT in FY19 and is estimated to reach 205.70 MT by FY20. 100 205.70 200.96 199.21 192.08 158.11 50 0 FY16 FY17 FY18 FY19 FY20E Notes: CAGR- Compounded Annual Growth Rate, P – Provisional, E – Estimate Source: Business Standard, Ministry of Mines (Annual Report) 11 Metals and Mining For updated information, please visit www.ibef.org RISING STEEL DEMAND DRIVING GROWTH Finished steel production and consumption (MT) VisakhapatnamCrude Steel port production traffic (million (MT) tonnes) 150 135 120 110 105 95 90 110.92 108.50 103.13 75 97.95 104.98 98.70 101.81 101.28 80 101.05 100.00 90.98 90.71 60 89.79 84.04 81.52 45 65 30 15 50 FY16 FY17 FY18 FY19 FY20 0 FY16 FY17 FY18 FY19 FY20 Production Consumption . Withe th Indian economy expected to grow more than 7 per cent in the years to come, sectors such as infrastructure and automobiles will receive a renewed thrust, which would in turn generate demand for steel in the country. India’s crude steel production crossed 100 MT for the first time in FY18.