India to add over 21 mn t iron ore capacity in FY'22

India's iron ore capacity is set to increase by 21.14 mn t in FY'22. Of the new environment clearances (ECs) that have been issued for the current financial year, 15.14 mn t - or nearly 72% of new production expected to come online - is from captive iron ore mines. The country's total iron ore EC capacity stands at about 370 mn t, SteelMint data shows.

Captive production to rise

The existing 12 mn t capacity of Tata Steel's Joda East iron ore mine in Odisha, covering 671.093 ha, has been increased to 15.90 mn t per annum, as per the mining plan for FY'22. Boosting iron ore capacity is essential for the steelmaker with anticipated expansion in steelmaking capacity at its flagship Jamshedpur steel plant and at the Kalinganagar plant in Odisha.

In addition, the steelmaker has gradual expansion plans for sister companies - Tata BSL, Tata Steel Long Products (formerly Tata Sponge Ltd), Usha Martin Ltd, post-acquisition, as well as Tata Metaliks.

Similarly, integrated steel producer AM/NS India has received new EC for over 7.16 mn t per annum of run of mine (ROM) iron ore production from its 139.165 ha Ghoraburhani-Sagasahi block within Odisha's Koira mining circle in Sundargarh district. Combined with the Thakurani iron ore mine (won by AM/NS India at the Odisha auctions in 2020) with an annual capacity of 5.5 mn t, AM/NS India's total iron ore capacity in Odisha currently stands at over 12.6 mn t per annum.

The Sagasahi block had previously been acquired by Essar Steel Ltd through auction in 2016. The lease deed in favour of AM/NS India was signed in late-Mar'21 and the mine is expected to start production from Jun'21, as tree felling is currently going on, as per latest reports.

JSW Steel's Dharmapura and BBH mines in Karnataka, with a combined production limit of 1.8 mn t, have already started operations this fiscal. These are among the nine mines that the steel major won at successive auctions in Karnataka since 2016. JSW Steel's captive iron ore production from Karnataka stood at around 5.3 mn t in FY'21. The steel major is also trying to increase output from its newly acquired mines in Odisha to sustain expansion plans at the Dolvi and Vijaynagar steelworks.

Further capacity addition in the captive bracket is expected to come from the expansion to 2.95 mn t/year (from just 0.5 mn t) of the Chhotedongar-Narayanpur iron ore mine in Chhattisgarh. Belonging to steel producer Jayaswal Neco Industries Ltd, the mining plan had been approved by the IBM in 2019 for ROM production of 2.95 mn t/year.

Boost to OMC

Among merchant producers of iron ore, only state-owned Odisha Mining Corporation (OMC) has been granted permission against proposals for expansion of current ECs, as per fresh mining plans, to 6 mn t per annum. The Khandbandh, Banspani and Mahaparhat iron ore mines of OMC have expanded EC limits of 1 mn t each, while the Dubna-Sakradihi mines have an EC limit of 3 mn t/year.

The Khandbandh mine is expected to be operational by the end of 2021, as forest clearance (FC) is still pending. The Banspani mine, covering over 308 ha and with a lease period till 2036, was also held up due to FC issues, it is learnt. The EC limit for Mahaparbat (Unchabali) has been scaled up from the previous 0.7 mn t to 1 mn t/year.

The 3 mn t/year Dubna-Sakradihi block in Odisha's Keonjhar district has an amalgamated lease area of over 1332 ha with an extended lease period till 2029. The Sakradihi block is for iron ore while Dubna is for manganese.

Odisha: New capacity and lease expiries

A state-wise analysis of iron ore capacity addition in FY'22 shows that an overwhelming 80%, or 17.06 mn t, is set to be added from India's leading ore-producing state Odisha. Chhattisgarh and Karnataka are expected to account for 2.9 mn t and 1.8 mn t respectively of capacity enhancement in the current fiscal.

However, Odisha will also witness the expiry of key merchant iron ore leases totaling about 12.15 mn t of production on an annual basis. The Thakurani B block of Sarda Mines Private Ltd (SMPL) is set for expiry on 13 Aug'21, while the Nuagaon, Kadodiha block belonging to Essel Mining is expiring on 28 Aug. So, while over 17 mn t of new EC capacity comes online in Odisha, more than 12 mn t of existing capacity expires.

As per SteelMint data, India's iron ore production in FY'21 was recorded at over 205 mn t, down from 245 mn t in the preceding fiscal.