METALS AND MINING

February 2023
For updated information, please visit www.ibef.org
Table of Contents

Executive Summary 3

Advantage India 4

Market Overview 6

Recent Trends and Strategies 20

Growth Drivers 24

Opportunities 34

Key Industry Contacts 38

Appendix 40

2
Executive summary

1. Coal production 5. Long duration

In the current financial year upto January mining lease
2023, India has produced about 698.24
India has a vast mineral potential with
MT of coal as compared to about 602.49
MT during the same period of last year
5 mining leases granted for a longer
with a growth of about 16 %. 1 duration of 50 years.
Ministry of Coal aims to enhance coal
production to ambitious target of 1.23
Billion Tonne (BT) by 2024-25.

2. Fourth-largest iron 2 4 4. Aluminium production

ore producer India has the second largest production
capacity of aluminium in the world of about
India's iron ore production stood at 250 MT
in FY22 - a sharp increase of 23%
compared with 204 MT in FY21.
3 4 million tonnes per annum (MTPA).

In 2021-22, exports of iron ore stood at

US$ 2.5 billion as compared to US$ 5.0
billion in 2020-21.
3. Steel production
India is a global force in steel production and the
second largest crude steel producer in the world.
In the current fiscal, (April-November 2022) domestic
finished steel production stood at 78.090 MT, 6.9%
higher than corresponding period last year.
Domestic crude steel production stood at 81.96 MT
and was up by 5.6% over same period last year of
77.58 MT.

3
Advantage India

4
Advantage India

2. DEMAND GROWTH 3. ATTRACTIVE OPPORTUNITIES

▪ In 2023, the mineral’s demand is likely to increase ▪ By becoming Aatmanirbhar in producing speciality steel, India
by 3%, driven by expanded electrification and will move up the steel value chain and come at par with
overall economic growth in India. advanced steel-making countries like Korea and Japan.
▪ Being the third largest energy consuming country in ▪ Under PLI Scheme for Specialty Steel, 67 applications from 30
the world, there is always increased demand for companies have been selected that will attract committed
power and electricity in the country, and hence the investment of Rs. 42,500 crore (US$ 5.1 billion) with a
surge in demand for coal. downstream capacity addition of 26 million tonne and
▪ Demand for steel is likely to grow by ~10% as the employment generation potential of 70,000.
government’s augmented focus on infrastructural
development continues with increased construction
of roads, railways, airports, etc.

1. COMPETITIVE
4. POLICY SUPPORT
ADVANTAGE ▪ Enactment of Mines and
▪ India holds a fair advantage in
cost of production and 2 3 Minerals (Development and
Regulation) Amendment Act,
conversion costs in steel and 2021 enabled captive mines
alumina. owners (other than atomic
▪ As of FY22, the number of minerals) to sell up to 50% of
reporting mines in India were their annual mineral (including
estimated at 1,245, of which coal) production in the open
reporting mines for metallic
minerals were estimated at 525
1 4 market.

and non-metallic minerals at

720.

5
Market Overview

6
Evolution of the Indian mining sector

1947 1956 1972 2012 - 2014 2018 2020 onwards

▪ Mining sector ▪ Central Government ▪ Mineral Exploration ▪ Mineral Exploration • The Karnataka state• The government plans
received a boost promulgated Corporation Corporation government is proposing to monetize assets
post independence Industrial established to established to a new mining policy worth Rs. 28,727 crore
under the impact of Policy Resolution. conduct exploration conduct exploration wherein sand will be (US$ 3.68 billion) in the
successive 5 Year ▪ The exploration of with focus on coal, with focus on coal, offered—at a nominal mining sector over
Plans. minerals was iron ore, limestone, iron ore, limestone, rate of Rs. 100 (US$ 1.3) 2022-25.
dolomite and dolomite and per tonne excluding• PLI Scheme for
intensified, and the
manganese ore. manganese ore. transportation cost—to domestic production of
Geological Survey
people to build houses for specialty steel has
of India was ▪ Indian mining sector ▪ Indian mining sector
less than Rs. 10 lakh been approved with an
strengthened. was opened to was opened up to (US$ 13,344.01). outlay of Rs. 6,322
▪ Indian Bureau of Foreign Direct FDI in 1993 after • The Ministry of Mines crore (US$ 762.4
Mines was Investment in 1993 announcement of notified the Mineral million) by the Cabinet.
established to look after the New Mineral Policy. Conservation and
after the scientific announcement of ▪ Ministry of Mines Development
development of the New Mineral notified revised (Amendment) Rules in
mineral resources. Policy. royalty rates and November 2021 to
dead rent in provide rules regarding
September 2014 conservation of minerals,
and the revised systematic and scientific
rates came into mining, development of
effect on September minerals in the country for
1, 2014. environment protection.

7
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
Metals and rolled products, alumina chemicals.
mining

BauxBPM are sub-divided into two 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
Rising steel demand driving growth

Finished steel production and consumption (million tonnes) Crude steel production (million tonnes)

150
135
120 110

126.86
105 120.14

110.92

108.50
106.60

90

101.29

101.03
100.00

103.18
98.26

103.13

103.00
97.50

96.38
94.66
95

93.43
92.16

75

90.71

97.95
84.04
81.52
76.99

60

89.79
88.98
45 80
30
15
0 65
FY18
FY15

FY16

FY17

FY19

FY20

FY21

FY23*
50
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23*
Production Consumption

▪ India is a global force in steel production and the second largest crude steel producer in the world.
▪ During April-January FY23, the cumulative production of crude steel stood at 103.18 MT, finished steel stood at 98.26 MT and consumption of
finished steel stood at 96.38 MT.
▪ The Indian government’s approved National Steel Policy (NSP) 2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per
capita steel consumption by 2030-31.
▪ In August 2022, Tata Steel signed a MoU with the Government of Punjab for setting up a 0.75 MnTPA long products steel plant with a scrap-based
electric arc furnace.
▪ SAIL has supplied about 30000 tonnes of the specialty steel for nation’s first indigenously built Aircraft Carrier INS Vikrant for Indian Navy which
commissioned on 02nd September, 2022 at Cochin Shipyard Ltd.
▪ In November 2022, IIT Bombay and JSW Group entered into an exclusive strategic agreement to establish first-of-its-kind, state-of-the-art JSW
Technology Hub in India for steel manufacturing in India.

Notes: CAGR - Compound Annual Growth Rate, MT - Million Tonnes, *- Until January 2023
Source: World Steel Association, News Articles

9
Rising domestic demand puts pressure on supply of iron and
steel… (1/2)

▪ During April-January FY23, exports of finished steel stood at 53.29 India’s export of iron and steel (US$ billion)
LMT.

▪ In January 2023, export of finished steel stood at 5.88 LMT ^CAGR 17.15%
increased by 33% M-o-M.

▪ In December 2022, iron ore exports stood at US$ 156 million. 20

▪ In November 2022, the government has withdrawn the export duty 18

17.62
on steel products, iron ore lumps and fines (less than 58% iron
16
content) and iron pellets, while the export duty of iron ore lumps and
fines (more than 58% iron content) has been reduced from 50% to 14
30%. The reversal of the export duty hike is expected to boost the
Indian exports of steel products in the near to medium term. 12

12.12
11.24
▪ Demand for steel is expected to grow by around 10% through 2022 10

9.74
amid the government's continued focus on the construction of roads,

9.28
8

8.68
railways, ports and airports.
6

5.49
4

0
FY16 FY17 FY18 FY19 FY20 FY21 FY22

Notes: CAGR - Compound Annual Growth Rate,

Source: Ministry of Commerce, DGCIS - Directorate General of Commercial Intelligence and Statistics, Engineering Exports Promotion Council

10
Strong growth in India’s metals & mining sector over the years

GVA from mining at Constant Prices (US$ billion) Mineral production in India (US$ billion)

30.00
44.0
25.00
43.0

24.95
43.3

20.78
42.0 20.00
42.1

20.20
19.49
41.0

17.21
15.00
40.0
39.0 10.00
38.0 38.5
5.00
37.0
36.0 0.00
FY20 FY21 FY22 (2nd AE) FY18 FY19P FY20P FY21P FY22E

▪ GVA from mining and quarrying stood at US$ 43.3 billion in FY22, as per the advance estimates.

▪ In FY22, mineral production is estimated at Rs.190,392 crore (US$ 24.95 billion).

▪ In December 2022, production level of important minerals were: Coal 833 lakh tonnes, Lignite 35 lakh tonnes, Natural gas (utilized) 2888 million
cu. m., Petroleum (crude) 25 lakh tonnes, Bauxite 2272 thousand tonnes, Chromite 340 thousand tonnes, Copper conc. 10 thousand tonnes , Gold
174 kg, Iron ore 251 lakh tonnes, Lead conc.30 thousand tonnes, Manganese ore 307 thousand tonnes, Zinc conc. 137 thousand tonnes,
Limestone 355 lakh tonnes, Phosphorite 170 thousand tonnes, Magnesite 9 thousand tonnes and Diamond 43 carat.

▪ Minerals showing positive growth during December 2022: Gold (64.2%), Phosphorite (53.9%), Iron Ore (19.5%), Limestone(14.5), Manganese
Ore(12.8%), Coal(11.4%), Zinc conc (9.4%), Lead conc (4.5%), Copper conc (3.9%), and Natural Gas (2.6%).

▪ In September 2022, exports of mica, coal & other ores and minerals including processed minerals stood at US$ 426.32 million exhibiting growth of
7.31% as compared to September 2021.
Notes: CAGR - Compound Annual Growth Rate, ^Excluding atomic and fuel minerals, GVA - Gross Value Added, P- Provisional, AE- Advance Estimate
Source: Ministry of Statistics and Programme Implementation, Ministry of Mines

11
Composition of India’s metals and mining sector

Production of metallic and non-metallic minerals (US$ billion) Share of states in mineral production FY22E

12.00
Odisha
10.00 5%

9.68
11%

9.10

9.10
8.00
8.76

Chhattisgarh
6.00
6.96

4.00
14%
1.28

1.22
1.17
Karnataka
1.16
1.16

47%
2.00

0.00
Rajasthan
FY18

FY19P

FY20P

FY21P

FY22E
16%

Jharkhand
Metallic Minerals Non-Metallic Minerals

▪ India is home to 1,531 operating mines. 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).

▪ The country has large reserves of iron ore, bauxite, chromium, manganese ore, baryte, rare earth and mineral salts.

▪ Odisha was the leading producer of minerals with 47% market share, followed by Chhattisgarh at 16% and Karnataka at 14%.

▪ Production of metallic minerals in the country increased from US$ 6.96 billion in FY18 to US$ 9.1 billion in FY22E. In the same period, production
of non-metallic minerals increased from US$ 1.16 billion in FY18 to US$ 1.22 billion in FY22E.

Notes: MMT- Million Metric Tonnes, E-Estimate, ^ - excluding fuel and atomic minerals, P- Provisional, E- Estimate
Source: Ministry of Mines

12
Iron ore production
▪ Iron ore is a key input for production of steel and primary iron.

▪ India's iron ore production stood at 250 MT in FY22, increase of 23%

compared with 204 MT in FY21. Iron ore production (million tonnes)

▪ Majority (over 85%) of iron ore reserves are of medium- to high-grade

300
and are directly used in blast furnace and direct reduced iron (DRI)
plants in the form of sized lumps or sinters or pellets.
250
▪ At the end of the financial year 2022, India's export value of iron ore
stood at approximately US$ 3.25 billion.
200
▪ The index of mineral production of mining and quarrying sector for the
month of December 2022 stood at 107.4, 9.8% higher as compared to
150

250.00
the level in the month of December 2021.

222
206
▪ Government has taken various steps to increase production and

204
201
195
100

158
availability of iron ore, which inter-alia include Mining and Mineral

129
Policy reforms to ensure enhanced production, early auction &
50
operationalization of expired mines, ease of doing business,
seamless transfer of all valid rights & approvals, incentivizing for
0
starting of mining operation & dispatch, transfer of mining leases, FY15 FY16 FY17 FY18 FY19 FY20E FY21 FY22
allowing captive mines to sell upto 50% of the minerals produced,
enhancing exploration activities, etc.

Source: Business Standard, Ministry of Mines (Annual Report)

13
Rising domestic demand puts pressure on supply of iron and
steel… (2/2)

▪ Iron and steel imports stood at US$ 1,991.41 million in October 2022
India’s import of iron and steel (US$ billion)
▪ Imports of steel have increased by 27.4% to 4.4 million tonnes in 9
months of FY23 from 3.5 million tonnes over the same period in FY22.
^CAGR 7.4%
▪ The domestic steel demand growth will be healthy at 10-12% in FY23,
driven by continued thrust on infrastructure development and pick-up

17.30
in the real estate and construction activities amid an overall economic
revival.

▪ India’s steel consumption was at 106 million tonnes in FY22, up from

95 million tonnes in FY21, an increase of 11.4% y-o-y on account of
increased consumption by the government on varied infrastructure
projects, as well as the resumption of real estate and construction
work on a lower-base of FY21.

12.57
▪ In October 2022, Welspun Metallics Limited forayed into Steel

12.04
11.25
manufacturing as a part of the company’s overall business growth and

10.73
10.43
diversification strategy by launching a state-of-the-art Greenfield

8.24
manufacturing facility in Anjar, Gujarat.

▪ In February 2023, JSW Group announced to build a steel plant in

Andhra Pradesh's YSR Kadapa district with an investment of Rs.
8,800 crore (US$ 1 billion).

FY16 FY17 FY 18 FY19 FY20 FY21 FY22

Notes: CAGR - Compound Annual Growth Rate, ^CAGR is up to FY22

Source: Ministry of Commerce, DGCIS - Directorate General of Commercial Intelligence and Statistics

14
Coal production growing at a steady pace
▪ India’s coal production reached a new milestone of 698 Million Tonne (MT)
during FY23 (April-January 2023), a 16% y-o-y growth, driven by a 15.2% y-o-y
Coal production (million tonnes)
increase in production by Coal India Limited (CIL).
▪ The power sector continued to be the largest consumer of domestic coal,
^CAGR 3.01%
accounting for the total dispatches of 609 MT during FY23 (April-January 2023),
an increase of 10.5% y-o-y.
800.00
▪ Coal production from captive mines increased by 30.7% y-o-y in FY23 (April-
780.00
January 2023) and contributed 13.4% to the total coal production during this
period, vs. 11.8% during the same period in FY22. 760.00
▪ By the end of this fiscal year, Coal production is estimated to reach 850–900 MT
740.00
driven by Coal India Limited’s expected ramp-up in production to achieve the

739.36

729.10
Ministry of Coal’s target to produce 1 billion tonnes by FY26 and 1.5 billion 720.00

777.31
719.95
tonnes by FY30. 700.00

698.24
▪ Steady growth in captive coal production was led by the government’s support

688.78
680.00
and allowing the sale of up to 50% of the annual production from existing

671.53
operational captive coal mines in the open market. 660.00

▪ Coal imports increased by 25.6% y-o-y to 192 MT as of FY23 (April-December). 640.00

▪ To reduce dependence on imported coal over the medium-long term, the
620.00
Government has taken various initiatives including auctioning of coal blocks for
commercial mining, FDI under the automatic route, expansion of existing mines, 600.00
FY17 FY18 FY19 FY20 FY21 FY22 FY23*
the opening of new mines under CIL and development of evacuation
infrastructure.
Notes: CAGR - Compound Annual Growth Rate, * - April – January 2023
Source: Ministry of Coal, News Articles

15
India’s role in global Aluminium production

▪ The world production of Aluminium during October-December 2021 India’s share in global aluminium production (2019E)
was about 16.62 million tonnes against world consumption of 16.56
million tonnes.

▪ It was estimated that during January-March 2022, world consumption

1.71% 14.30%
of Aluminium would be 16.49 million tonnes against world production
1.32%
of around 16.19 million tonnes.
2.18%
▪ The share of India in the world production was 6.14 % during 2.02%
2.49%
October-December 2021.
4.20%
55.94%
▪ The per capita consumption of Aluminium in India is about 2.5 kg, 4.51%
compared to the world average of about 11 kg and China’s 24 kg,
6.14%
while many developing countries have already reached 8 kg.
5.59%
▪ India is ranked fourth in the world in terms of bauxite reserves and
has high quality metallurgical grade bauxite deposits with close to 4
China Russia
billion tonne reserves.
India Canada
United Arab Emirates Australia
▪ India will be the "stand-out growth market" for aluminium
Norway Bahrain
consumption in the coming years as it pursues construction projects Iceland United States
Other countries
to resolve an infrastructure deficit, which sees usage more than
tripling to 9.5 million tonnes by 2030 from 2.6 million tonnes in 2021.

Note: ICRA - Information Credit Rating Agency Ltd.

Source: World Bureau of Metal Statistics (WBMS), Aluminium Association of India, Economist Intelligence Unit (EIU), ICRA Management Consulting Services Ltd (IMaCS)

16
Growing domestic demand to support Aluminium production

▪ Aluminium is a critical for all the key sectors that will aid in India Aluminium production (million tonnes)
becoming a US$ 5 trillion economy.

▪ Increasing infrastructural development and automotive production are ^CAGR 10.62%

4.00
the key factors driving the market growth.

3.69
3.50

3.65
▪ Production of aluminium stood at 33.5 lakh tonnes in FY22 (upto

3.40
January 2022).
3.00
▪ In January 2022, NALCO produced 40,694 metric tonnes of Aluminium

2.90
2.50

2.65
and sold 41,488 metric tonnes of Aluminium metal.

2.44
▪ India’s Aluminum exports was reported at US$ 7,950,466.673 in 2.00
December 2021.
1.50
▪ In 2021, an Indian state committee recommended the expansion of
Vedanta Ltd’s Lanjigarh Alumina refinery from 1 million tonnes to 6
1.00
million tonnes, an investment that would cost the company Rs. 64.83
billion (US$ 993 million). 0.50

▪ In July 2022, Hindalco Industries Limited signed an MoU with Phinergy

0.00
and IOC Phinergy Private Limited (IOP) on R&D and pilot production of

FY16

FY17

FY18

FY21*
FY19

FY20
aluminium plates for Aluminium-Air batteries, and recycling of
aluminium, after usage in these batteries.

Note: CAGR - Compound Annual Growth Rate, F- Forecast, ^CAGR is till FY20, *- Until December 2020
Source: CARE Ratings, Ministry of Mines, DGCIS, News Articles

17
Stronger economic growth to support Aluminium consumption

▪ Extensive growth in electric vehicles, renewables, modern Visakhapatnam

Aluminium consumption
port traffic(million
(milliontonnes)
tonnes)
infrastructure, energy efficient consumer goods and greater
dependence on strategic sectors such as aerospace defence, will *CAGR 19.58%
6.00
drive Aluminium consumption to grow at a CAGR of more than 10%.

▪ The global Aluminium consumption has been driven majorly by India

5.30
5.00
and China having growth rate of approximately 10% till pre COVID
times.
4.00
▪ Last decade has seen India's consumption almost double from 2.2
million tons in FY11 to about 4 million tons in FY19.

3.40
3.00

3.21
3.00
▪ India's Aluminium demand is estimated to double again by the year
2025 with current resilient GDP growth rate driven by increasing
2.00

1.99
urbanization and push for boosting domestic infrastructure,
automotive, aviation, defence, and power sectors.
1.00
▪ Aluminium consumption is expected to reach 7.2 million tonnes in the
next five years.
0.00

FY18

FY19
FY16

FY17

FY21F
Note: CAGR - Compound Annual Growth Rate, F - Forecast, *CAGR is till FY19
Source: Care Ratings, Indian Bureau of Mines

18
Major metals and mining players in the country

Segment Major player Market share Other players

Iron and Steel NA Sesa Goa, SAIL, Orissa Minerals

Singareni Collieries Company, Reliance Natural

Coal 80%
Resources

National Aluminium Company (NALCO),

Aluminium 60%
Bharat Aluminium Company (BALCO)

19
Recent Trends and Strategies

20
Notable trends in the metals and mining sector… (1/3)

1
Captive mining for coal
▪ Steady growth in captive coal production was led by the government’s support and allowing the sale of up to 50% of the annual production
from existing operational captive coal mines in the open market.

2
Longer duration lease
▪ India has seen a significant growth in minerals with the Government granting lease for longer duration, between 20-30 years.

3
Focus on domestic market
▪ As per data from the Ministry of Statistics and Programme Implementation (MOSPI), India's mining GDP increased from Rs. 739.90 billion
(US$ 8.98 billion) in the fourth quarter of 2020 to Rs. 913.03 billion (US$ 11.09 billion) in the first quarter of 2021.
▪ In February 2023, JSW Group announced to build a steel plant in Andhra Pradesh's YSR Kadapa district with an investment of Rs. 8,800
crore (US$ 1 billion).
▪ In 2021, an Indian state committee recommended the expansion of Vedanta Ltd’s Lanjigarh Alumina refinery from 1 million tonnes to 6
million tonnes, an investment that would cost the company Rs. 64.83 billion (US$ 993 million).

4
Overseas ventures
▪ Three Indian state-run companies, National Aluminium Co Ltd, Hindustan Copper Ltd and Mineral Exploration Corp formed a joint venture
to buy mining assets overseas that have minerals such as lithium and cobalt, which are used in the manufacture of batteries for electric
vehicles.

21
Notable trends in the metals and mining sector… (2/3)

5
Outlook of metal and mining
▪ The index of mineral production of mining and quarrying sector for the month of December 2022 stood at 107.4, 9.8% higher as
compared to the level in the month of December 2021.

6
Build strategic alliances
▪ In February 2023, ArcelorMittal - Nippon Steel is investing Rs. 60,000 crore (US$ 7.3 billion) to expand its steelmaking capacity in Hazira
to 15MT a year from 9MT.
▪ In February 2023, NMDC signed an agreement for collaborative research with CSIR-IMMT, Bhubaneswar on “Feasibility Studies for
Preparation of Fused Magnesia from Kimberlite Tailings” at its Head Office in Hyderabad.
▪ In November 2022, IIT Bombay and JSW Group entered into an exclusive strategic agreement to establish first-of-its-kind, state-of-the-
art JSW Technology Hub in India for steel manufacturing in India.
▪ In August 2022, Tata Steel signed a MoU with the Government of Punjab for setting up a 0.75 MnTPA long products steel plant with a
scrap-based electric arc furnace.
▪ In July 2022, Hindalco Industries Limited has signed an MoU with Phinergy and IOC Phinergy Private Limited (IOP) on R&D and pilot
production of aluminium plates for Aluminium-Air batteries, and recycling of aluminium, after usage in these batteries.
▪ In October 2022, Coal India Limited (CIL) signed a MoU with Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL), for setting up
1,190 MW solar power project.

7
International Collaboration
▪ Innovative mineral exploration activities using state-of-the-art technology by Geological Survey of India (GSI), stepped up efforts by Khanij
Bidesh India Limited (KABIL) to source strategic minerals from countries like Australia, Argentina and Chile.

22
Notable trends in the metals and mining sector… (3/3)

8
Focus on technology
▪ By accelerating digital transformation, metals and mining players can boost throughput, simplify processes, lower costs, improve metal
recovery and yield, and reduce supply chain complexity.
▪ India should focus on making investments in cutting-edge mine planning technology and software to map out the ecological impacts of
mining and extraction operations.
▪ Focusing on cutting-edge exploratory technologies will provide miners with a competitive edge, and the transformation will multiply with
the size of the economy.
▪ In order to address the sector’s negative social and environmental ripple effects and achieve unnoticeable societal and ecological
harmony, sustainability in the sector will drive additional technological innovation and development.
▪ Automation and digitization, among other technological breakthroughs, have had a profound impact on the mining industry globally, and
India needs to adapt those in order to improve its global positioning in the sector.
▪ A new Sub-sector ‘Production of Syn-Gas leading to coal gasification’ has been created in 2022 under the NRS linkage auctions in order
to encourage coal gasification technology so that new consumers requiring coal for gasification are incentivized.

9
Cost optimisation
▪ Players in the industry are trying to minimise cost to gain competitive advantage.

• For example, SAIL is trying to reduce cost by entering into an MoU for coal bed methane and propane gas to reduce cost of energy.

▪ Optimising input resources, operating efficiency for handling assets available with the company, reducing overhead costs and stabilising
newly formed operation units.

23
Growth Drivers

24
Strong fundamentals and policy support aiding growth

Higher demand for Increasing

Policy support Innovation
metals investment

Expanding research
Growing
and development
infrastructure Relaxed FDI norms Increasing FDI
and distribution
investment
facilities in India

Sustained growth in
Allowing private Use of modern Increasing private
India’s automotive
ownership technology participation
sector Inviting Driving Resulting

Aluminium and coal

Reduced customs Providing support to
benefiting from
global projects from
rising power duty
India
production

Rising production of
Tax and other
cement increasing
incentives
demand for coal

Notes: MandA - Mergers and Acquisitions, FDI - Foreign Direct Investment

Source: : TechSci Research

25
A fast-expanding construction sector has aided growth... (1/2)

▪ India is witnessing a sustained growth in the infrastructure build up.

▪ In FY23 (until December 2022), the combined index of eight core Production Growth of Key Core Industries (% YoY) between
industries stood at 152.2 driven by the production of coal, refinery April 2022 to August 2022
products, fertilizers, steel, electricity and cement industries. 0
22.7%
▪ National Highways had increased from 91,000 km in 2008 to 0
1,44,634 km in 2022, and the pace of construction had improved 10.6% 10.5%
from 12 km a day to 37 km in 2022. 0 5.8%
2.6%
▪ Revenue growth has been strong over the years. Indian Railways’ 0
Natural Gas Steel Cement Electricity Coal
earning from freight loadings reached Rs. 135,387 crore (US$ 16.36
billion) in FY23 (till January 2023).

▪ Traffic handled at major ports stood at 647 million tonnes in April- Growth in infrastructure-related activities in FY22 (in %)
January 2023. 20 15.7
15
▪ As on January 2023, India’s total installed electricity generation 10 6.90
4.50
capacity stood at 411,694 MW. 5
0
▪ It has been estimated that India is going to require US$ 4.5 trillion of -5
investment by 2040 for infrastructure development. -10
-15
▪ In Budget 2023-24, capital investment outlay for infrastructure is
-20
being increased by 33% to Rs.10 lakh crore (US$ 122 billion), which -25 -21.30

Rail freight

major ports
Electricity Generation

National Highway
would be 3.3 per cent of GDP.

Cargo at
earning
Construction
▪ On 2nd September 2022, Steel Authority of India Ltd. (SAIL) has
supplied about 30,000 tonnes of the specialty steel for nation’s first
indigenously built Aircraft Carrier INS Vikrant for Indian Navy which
commissioned at Cochin Shipyard Ltd.

Note: F - Forecasts (by BMI), CAGR - Compounded Annual Growth Rate, BU- Billion Unit
Source: Business Monitor International‘s (BMI) Report on infrastructure industry in India

26
A fast-expanding construction sector has aided growth... (2/2)

▪ The construction sector’s Gross Value Added (GVA) at current

Annual Growth Rates of IIP (%) for construction
prices was estimated at US$ 172.04 billion as per the second
advanced estimate of FY21.
0.40
▪ The share of building and infrastructure construction in overall steel
consumption is 60-65% today.
0.30
31.2%
▪ Mandatory road crash barriers on national highways, rising
concretization, use of pre-engineered buildings, design changes in
0.20
urban housing (underground parking and bigger span) – all augur
well for steel demand in the long term.

▪ In October 2022, JSW Cement planned to invest more than Rs. 0.10

3,200 crore (US$ 386.5 million) to establish an integrated greenfield

cement manufacturing facility in Madhya Pradesh as well as a split 0.00
grinding unit in Uttar Pradesh.

-0.10

-0.20
-24.3%

-0.30
March 2020 March 2021

Note: PE - Provisional Estimated, YoY - Year on Year

Source: Business Monitor International‘s (BMI) Report on infrastructure industry in India

27
Power fuelling demand

▪ As of January 2023, India’s total installed electricity generation

Installed
Visakhapatnam
electricity
port
generation
traffic (million
capacity
tonnes)
(GW)
capacity stood at 411,694 MW.
▪ As of February 2023, India’s installed renewable energy capacity has
CAGR 6.08%
increased 396% in the last 8.5 years and stands at more than
174.53 Giga Watts (including large Hydro), which is about 42.5% of 450
the country’s total capacity.
▪ As of February 2023, the installed solar energy capacity has 400

411.69
399.49
increased by 24.4 times in the last 9 years and stands at 63.3 GW.

382.15
▪ India's power consumption grew by 13.31% on an annual basis to

370.11
350

356.10
127.39 billion units (BU) in September 2022 and 11.65% in H1 FY23.

344.00
▪ The electricity generation target of Conventional Sources for the year

326.84
300
2021-22 was fixed at 1356 BU i.e., growth of around 9.83% over the

280.33
actual conventional generation of 1234.608 BU for the previous year
250
(2020-21).

▪ As of May 2022, India has a total thermal installed capacity of 236.1 200
GW of which 58.6% of the thermal power is obtained from coal and
the rest from Lignite, Diesel, and Gas. 150

▪ Share of non-fossil fuel-based generation capacity in the total

installed capacity of the Country likely to increase from 42% as of 100
October 2022 to more than 64% by 2029-30.
50

0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23*
Note: * - Till January 2023
Source: Ministry of Power, Central Electricity Authority (CEA),

28
Favourable policies are supporting the sector growth
1. Mines and Minerals Development
& Regulation Act 2021 7. Bank Loans
• For increasing mineral production and • State Bank of India (SBI) is planning to
time bound operationalization of mines, introduce a policy to lend loans to the
increasing employment and investment
in the mining sector, maintaining 1 7 •
coal miners before the landmark auction.
As per the planned policy, SBI is open to
continuity in mining operations after provide some of the financing required to
change of lessee, increasing the pace of put 41 coal mines with a combined
exploration and auction of mineral annual production capacity of 225 million
resources and resolving long pending
issues that have slowed the growth of
6 tonnes to private companies.

the sector.

2. National Mineral 2 6. Skill Development

Policy 2019 Plan for the Mining
Sector (2016-22)
• To bring more transparency, better
regulation and enforcement, balanced
5 • Focus on upgradation of skill sets to
socio-economic growth along with
sustainable mining practices. 3 foster adaptation of new state of art
technology.
• Proposed to grant ‘industry’ status to
mining with an objective of boosting 4 • Increase the capacity and quality of
training infrastructure and trainers
financing of private sector. to address human resource needs.
• Supported M&A of mining players.

3. Relaxed FDI norms 5. Reduced custom duty

4. Allowing
• FDI up to 100% is allowed in exploration,
private ownership • Government of India significantly
mining, minerals processing metallurgy and
reduced the duty payable on finished
exploration of metal and non-metal ores under
• Government of India is encouraging steel products and has streamlined the
the automatic route for all non-fuel and non-
private ownership for steel operations associated approval process.
atomic minerals including diamonds and
and other high priority industry. .
precious stones.
.

29
MMDR Act

1. Relaxation on duties 3. General restrictions

▪ In November 2022, the government removed and concessions
export duties on steel and stainless steel to
strengthen the nation's steel sector, and allow it to ▪ To ensure ease of doing business,restriction

3
firmly establish its position in the global market. on transfer of mineral concessions are
▪ The Basic Customs Duty (BCD) on removed and now mineral concession can
• ships imported for breaking up is being be transferred without any transfer charge.
reduced from 5% to 2.5%.
• coal-tar pitch is being reduced from 10% to 5%.
• battery waste and battery scrap is being 2. Process of
reduced from 10% to 5%.
• steel grade limestone and steel grade dolomite revenue collection
is being reduced from 5% to 2.5%.
and usage
1 2 ▪ District Mineral Foundation (DMF) has
been established in 622 districts of 23
States and a total of Rs. 71,128.71
Crore (US$ 8.5 billion) has been
collected till October 2022 under DMF.
▪ To implement projects under
PMKKKY, by utilizing the funds under
DMF, Rs. 64,185.76 Crore (US$ 7.7
billion) have been allocated for various
projects and Rs. 37,923.18 Crore
(US$ 4.6 billion) has been utilized.
▪ Total 253,747 projects have been
sanctioned under the scheme
and 135,912 projects have been
completed till October 2022 benefitting
large number of people in different
States.

30
Mineral auction rules, 2015

3. Mining lease
▪ Mining auctions conducted under the ambit
of state Government.
1. Auction modalities ▪ Types of lease granted:

▪ In order to facilitate the auction of

large area blocks, global positioning
system has been allowed for
3 • Mining lease - where evidence of
mineral contents is established.
• Composite lease - combination of a
prospecting licence and a mining lease.
identification and demarcation of the
area where a composite licence is
proposed to be granted through
auction. Further, the requirement of
classification of area to be auctioned,
for composite licence, into forests
land, land owned by the State
Government, and land not owned by
the State Government has been
1 2 2. Net worth
removed.
▪ In 2022, 90 mineral blocks have been
successfully auctioned in the country.
requirements
Of these, 51 mineral blocks were ▪ For annual average production up to
auctioned for Mining Lease (ML) and • Rs 2 crore (US$ 311,090) - net worth
the remaining 39 were auctioned as required: Rs. 50 lakh (US$ 77,773).
Composite Licences (CL). • Rs 20 crore (US$ 3.11 million) - net
worth required: Rs. 10 crore (US$
1.56 million).
• Small bidders can include value of
unencumbered immovable property
in net worth.

31
Foreign investments flowing in India

▪ FDI up to 100% is allowed in exploration, mining, minerals FDI equity inflow in the sector from April 2000 to September
processing metallurgy and exploration of metal and non-metal ores 2022 (US$ million)
under the automatic route for all non-fuel and non-atomic minerals
including diamonds and precious stones.
▪ Between April 2000-September 2022, FDI inflows in the metallurgical
industry stood at US$ 17.09 billion, followed by the mining (US$ 3.40 27.73
Metallurgical
billion), diamond & gold ornaments (US$ 1.21 billion) and coal Industries
production (US$ 27.73 million) industries.
1,219.89
▪ The metals and mining sector received third highest inflows from
foreign investors in FY2023. 3,405.69
▪ In January 2023, Vedanta announced that its board had approved Mining
the sale of its international zinc assets in South Africa and Namibia
to subsidiary Hindustan Zinc (HZL) for US$ 2.98 billion.
▪ In March 2022, MOU with detailed collaborative framework was
between KABIL, India and Critical Mineral Office (CMO), Department
Diamond, Gold
of Industry, Science and Resources (DISER), Govt. of Australia for Ornaments
carrying out joint due diligence and further joint investment in Li & Co
mineral assets of Australia. 17,094.01
▪ In February 2023, Essar Capital Limited, investment manager of
Essar Global Fund Limited, announced to set up steel plants in Coal Production
Odisha and a facility to import liquefied natural gas (LNG) at Hazira
in Gujarat.

Source: Department of Industrial Policy and Promotion

32
Merger and acquisitions

M&A activities

Acquirer Target Acquisition price (US$ billion)

JSW Steel Ltd. Bhushan Power and Steel (BPSL) 2.69

ArcelorMittal Essar Steel 6.01

Tata Steel Bhushan Steel 7.04

Mr. Anil Agarwal Anglo American (Partial stake purchased) 2.0

JSW Energy Ltd. Jindal Steel and Power Ltd. 0.97

Reiterated its interest to acquire majority stake in Neelachal Ispat
SAIL -
Nigam Ltd (NINL) in Jajpur, Odisha

Joint Venture between Vedanta Merger of Sterlite Industries (Indian subsidiary of Vedanta
3.90
Resources and Sesa Goa Resources ) and Sesa Goa

GVK Power and Infrastructure Ltd. Hancock Coal-Queensland Coal 1.26

Sesa Goa Ltd. Cairn India Ltd. 1.18

JFE Steel Corp. JSW Steel Ltd. 1.03

Lanco Resources Australia Griffin Coal Mining Co Pty Ltd. 0.72

Vedanta Cairn India 1.56

Oil and Natural Gas Corporation

Gujarat State Petroleum - KG Basin 1.20
(ONGC)

Tata Steel Ltd. Brahmani River Pellets Ltd. 0.13

Source: Thomson Banker, Deal Tracker

33
Opportunities

34
Opportunities

1
Government’s initiative
▪ The government plans to monetize assets worth Rs. 28,727 crore (US$ 3.68 billion) in the mining sector over 2022-25.
▪ In 2022, PLI Scheme for domestic production of specialty steel has been approved with an outlay of Rs.6,322 crore (US$ 762.4
million) by the Cabinet.
▪ Mines and Minerals (Development and Regulation) Amendment Act, 2021, notified on 28.03.2021, for giving boost to mineral
production, improving ease of doing business in the country and increasing contribution of mineral production to GDP.
▪ Enactment of Mines and Minerals (Development and Regulation) Amendment Act, 2021 enabled captive mines owners (other than
atomic minerals) to sell up to 50% of their annual mineral (including coal) production in the open market.
▪ Import duty on Anthracite/Pulverized Coal Injection (PCI) coal, Coke and Semi-coke and Ferro-Nickel were reduced to zero.
▪ Export duty on Iron ores/ concentrates and iron ore pellets was raised to 50% and 45% respectively.
▪ In addition, 15% export duty was imposed on pig iron and several steel products.
▪ District Mineral Foundation (DMF) has been established in 622 districts of 23 States and a total of Rs. 71,128.71 Crore (US$ 8.5
billion) has been collected till October 2022 under DMF.

2
Scope for new mining capacities in iron ore, bauxite and coal
▪ India has the world’s seventh-largest reserve base of bauxite and fourth-largest base of iron ore, which accounts for about 7% and
11% of the total world production, respectively.
▪ Moreover, India had the world’s fifth-largest coal reserve at 319.02 billion tonnes in FY19.

Source: WSA, Ernst and Young, News Article

35
Opportunities

3
Rapid growth of user-industries to drive demand for metals and minerals
▪ In 2023, the mineral’s demand is likely to increase by 3%, driven by expanded electrification and overall economic growth in India.
▪ Being the third largest energy consuming country in the world, there is always increased demand for power and electricity in the
country, and hence the surge in demand for coal.
▪ Demand for steel is likely to grow by ~10% as the government’s augmented focus on infrastructural development continues with
increased construction of roads, railways, airports, etc.

4
Expansion by existing players
▪ In February 2023, ArcelorMittal - Nippon Steel is investing Rs. 60,000 crore (US$ 7.3 billion) to expand its steelmaking capacity in
Hazira to 15MT a year from 9MT.
▪ In February 2023, JSW Group announced to build a steel plant in Andhra Pradesh's YSR Kadapa district with an investment of Rs.
8,800 crore (US$ 1 billion).
▪ In 2021, an Indian state committee recommended the expansion of Vedanta Ltd’s Lanjigarh Alumina refinery from 1 million tonnes to
6 million tonnes, an investment that would cost the company Rs. 64.83 billion (US$ 993 million).

5
Ongoing feasibility study on steel projects
▪ In May 2021, ArcelorMittal Nippon Steel (AMNS) India collaborated with the Odisha government to carry out a feasibility study for a
steel project in the state at a proposed capacity of 12 million tonnes per annum (MTPA). Estimated investment of the project stands
at Rs. 50,000 crore (US$ 6.89 billion).

Source: WSA, Ernst and Young, Press Release

36
Opportunities in the iron ore sector

1
Exploration in proposed exploration zones
▪ Odisha: Bonai (Keonjhar belt) and Tomka (Daitari and Umerkoke belts).
▪ Jharkhand: All major high-grade ore deposits; contain low-grade lateritic ores.
▪ Karnataka: Bagalkot, Tumkur, and Chitradurga districts.
▪ Maharashtra: Sindhudurg, Gadchiroli and Gondia.
▪ Chhattisgarh: All 14 deposits of Bailadila range, Dantewada district.
▪ Andhra Pradesh: Kadapa, Kurnool, Karimnagar, Adilabad, and Guntur districts.

2
Scope for new mining capacities in iron ore, bauxite and coal
For 11 coal mines, the government has received 26 proposals. The online bids were encrypted and opened electronically.
▪ Pelletisation capacity is about 59.30 metric tonnes per annum (MTPA)*.
▪ Sintering capacity is about 70.05 MTPA*.
▪ Scope for domestic and foreign firms to explore PPP opportunities.
▪ Joint Venture or technical participation with midcap players with lease/license and seeking capital, expertise and technology.
▪ Through the auction route, players can get access to coal mines and iron ore reserves.
▪ Introduction of Mines and Minerals (Development and Regulation) Amendment Bill 2015 to encourage investment and
introducing viable mining practices.

Notes: MT - Metric Tonnes, MTPA - Metric Tonnes Per Annum, *: As per Indian Minerals Yearbook 2017
Source: PwC, Ministry of Mines

37
Key Industry Contacts

38
Key industry contacts

Agency Contact Information

Ispat Bhawan, Lodi Road, New Delhi - 110 003

Phone: 91- 11 24300100, 24367481-86
SAIL - Steel Authority of India Ltd. Fax: 91-11 24367015
E-mail: [email protected]
Website: https://www.sail.co.in/
FIMI House, B-311, Okhla Industrial Area
Phase-I, New Delhi-110 020
Federation of Indian Mineral
Phone: 91-11- 26814596
Industries
Fax: 91-11- 26814593
E-mail: [email protected]
Website: http://www.fedmin.com/
L -22/4, DLF Phase-II
Gurgaon, Haryana-122 002
Indian Stainless Steel
Phone: 91-124 - 4375501
Development Association
Fax: 91-124 - 4375509
E-mail: [email protected]
Website: https://www.stainlessindia.org/

39
 Appendix

40
Appendix

▪ BMI’s Mining Business Environment Ratings

• Market structure: It takes into consideration mining output in US$ billion, sector value growth,% y-o-y r, mining sector,% of GDP

• Country structure: It takes into consideration labour market infrastructure, physical infrastructure r, tax, and scope of state

• Market risks: It considers metals prices, 5-year, forecast average, metals price forecast, average 5-year growth, regulatory framework, legal
framework

• Country risk: It considers, long-term external risk, corruption, bureaucracy, long-term policy continuity

• Mining ratings: It shows the overall scores of the above indicators

41
Glossary

▪ CAGR: Compound Annual Growth Rate

▪ FDI: Foreign Direct Investment

▪ FY: Indian Financial Year (April to March); So, FY10 implies April 2009 to March 2010

▪ GOI: Government of India

▪ IBM: The Indian Bureau of Mines

▪ MoU: Memorandum of Understanding

▪ PPP: It could denote two things (mentioned in the presentation accordingly) -

• Purchasing Power Parity (used in calculating per-capita GDP)

• Public Private Partnership (a type of joint venture between the public and private sectors)

▪ PE: Private Equity

▪ US$ : US Dollar

▪ Wherever applicable, numbers have been rounded off to the nearest whole number

42
Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$
2004-05 44.95 2005 44.11
2005-06 44.28 2006 45.33
2006-07 45.29 2007 41.29
2007-08 40.24 2008 43.42
2008-09 45.91 2009 48.35
2009-10 47.42 2010 45.74
2010-11 45.58 2011 46.67
2011-12 47.95 2012 53.49
2012-13 54.45 2013 58.63
2013-14 60.50 2014 61.03
2014-15 61.15 2015 64.15
2015-16 65.46 2016 67.21
2016-17 67.09 2017 65.12
2017-18 64.45 2018 68.36
2018-19 69.89 2019 69.89
2019-20 70.49 2020 74.18
2020-21 73.20 2021 73.93
2021-22 74.42 2022 79.82
2022-23 78.60 2023* 82.74

Note: *- Until February 2023

Source: Foreign Exchange Dealers’ Association of India

43
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44