As India pipped Japan as the second largest producer of steel after China in 2018, India is on track to produce the most iron ore in nine years as independent miners extract more of the steel-making raw material before the expiry of their leases next year.
The country is set to produce as much as 210 million tonnes in the financial year ending March 31, 2019, R.K. Sharma, secretary general at the Federation of Indian Mineral Industries, said to Bloomberg News. That would make it the highest output since 2009-10, when it produced 219 million tonnes.
Iron ore output is set to cross 200 million tons for the second straight year as the country’s growth drives demand for steel and producers rush to expand plants. Independent miners, or those without their own mills and who sell their output in the market, are also ramping up production ahead of a 2020 deadline to hand back their mines to the government for re-auctioning under India’s new mining policy.
India in 2015 embraced competitive auctions as the best long-term approach to clamp down on corruption after bruising scandals over discretionary or free allotments of mines. The Indian Bureau of Mines has compiled a list of 288 iron ore, bauxite, limestone and manganese mines whose permits expire in March 2020 and the government has asked states to start auctions for these by July 1, 2019.
Lack of adequate logistics has meant that steel mills in India, set to emerge as the biggest producer of the metal after China, have increasingly been relying on overseas supplies of the raw material.
Imports in the eight months to November more than doubled to 10 million tonnes from a year earlier, surpassing the 8.7 million tonnes bought in 2017-18, according to the nation’s trade ministry.
India could be a “big story” for steel and iron ore this year with the rise in imports in 2018 being the start of a long-term structural trend rather than a one-off blip, Wood Mackenzie Ltd. said in a 16 January note. By 2030, the country could ship in over 100 million tonnes a year of the ore and could potentially double annual imports in the subsequent decade.