India: Odisha's iron ore production to rise sharply to 142 mnt in FY'22 - OMC Director

• Around 54 mnt of iron ore capacity to be added in state
  
  
• Odisha iron ore output to grow to over 200 mnt in FY'25
  
  
• OMC's share rising in overall production
  
  

Iron ore output from Odisha, India's largest iron ore producing state, is expected to be around 142 million tonnes in FY'22, nearly catching up with the 144 mnt recorded in FY'20, Sabyasachi Mohanty, Director, (Technical) Operations, Odisha Mining Corporation (OMC), said during an online session on iron ore production outlook at SteelMint's ENGAGE 2.0 held recently.

Production in Odisha in the ongoing fiscal is already at 109 mnt till Jan'22, higher than 106 mnt achieved in FY'21. Production is estimated to increase sharply by 34% y-o-y in FY'22. Output plunged 26% in Odisha in FY'21 due to Covid-related restrictions in the iron and allied sectors as well as non-operationalisation of the mines auctioned before Mar'20, he said.

Rise in Odisha production

Odisha's share in India's iron ore production fell from around 60% in FY'20 to 52% in FY'21, although the state's share is forecast to rise to 56-58% in the current fiscal, he pointed out.

In line with the National Steel Policy, 2017, India's iron ore consumption and production are set to increase, Mohanty contended. Likewise, production in Odisha is forecast to rise to 209 mnt by FY'25.

Iron ore mining capacity in the state will increase by around 54 mnt in the coming years, with JSW Steel increasing capacity of its Narayanaposhi mine from 6 mnt to 20 mnt and the Nuagaon mine from 5.62 mnt to 20 mnt per annum. Tata Steel and AM/NS India are also raising the capacity of their mines in Odisha.

Rise in OMC's share

OMC is planning to raise its EC capacity from the Jilling and Guali mines that were allotted to it after months of non-production following the 2020 minerals auctions. Capacity of the Guali mine will be raised from 5.72 mnt to 30 mnt, while Jilling's capacity will be increased to 10 mnt from 5.7 per annum at present.

Odisha's EC capacity will rise to 283 mnt by FY'26, Mohanty said. Of this, captive miners will have a share of 107 mnt, while the merchant producers, largely dominated by OMC, will have a share of around 112 mnt. The greenfield mines recently auctioned will have a share of 22 mnt.

The share of merchant producers will continue to shrink and except OMC there are no major expansion plans of merchant iron ore mining leases in Odisha, he observed. OMC's total capacity addition in the near term will be 28 mnt, he said, and an additional 3 mnt will come from Banspani, Khandbandha and Unchabali.

These are old, non-working mines of OMC where production is expected to start following a court order. In addition, the capacity of the Dubna Sakradihi iron and manganese mine will be raised from 3 mnt to 6 mnt per annum. As a result, OMC's share in Odisha's iron ore production is set to rise from an estimated 21% in FY'22 to over 30% in FY'30.

Higher prices

Commenting on the structural shift towards higher domestic iron ore prices, the mining expert said that prices had started rising from mid-2020 onwards on tight supply due to non-operationalisation of the auctioned leases.

However, from mid-2021, the imposition of additional royalty and premium on government leases that had remained outside the ambit of auction has led to a sudden increase in domestic iron ore prices.

Therefore, prices are unlikely to fall to the levels witnessed prior to the auction in Mar'20 and are expected to remain generally firm, he said.