India's iron ore production rises by around 2% y-o-y in CY'24 - BigMint data

• Production up 5% y-o-y in Odisha and Karnataka
  
  
• NMDC sees marginal decline in output due to labour agitation
  
  
• New legislations, minerals taxes in different states to impact market
  
  

Morning Brief: Iron ore production in India is projected to have increased by around 2% y-o-y to reach 284 million tonnes (mnt) in calendar year 2024 (CY'24), as per provisional data available with BigMint. Iron ore production in CY'23 stood at 279 mnt.

State-wise production

Odisha continued to top the charts among the leading iron ore producing states. Iron ore production in the state increased by 5% y-o-y to nearly 160 mnt. Chhattisgarh and Karnataka produced 45 mnt and 42 mnt, respectively, with production in the latter rising 5% y-o-y.

However, Jharkhand witnessed a drop in production, with total output reaching around 19 mnt.

Leading miners

NMDC remained the top iron ore miner in the country in CY'24, although total production declined by 4%y-o-y to 44 mnt compared to 46 mnt in CY'23. This was mainly due to the employees' agitation at NMDC in May 2024 and thereafter centering around wage revision which impacted operations.

Integrated steel producer Tata Steel achieved a 6% growth in production, with output touching 38 mnt, while OMC clocked total production at 37 mnt, an impressive 16% higher y-o-y.

JSW Steel recorded an 8% growth in production, while SAIL's total output is expected to stay stable y-o-y at 34 mnt.

However, Rungta Mines is projected to have increased its ore production by around 18% y-o-y to approximately 20 mnt.

Why production edged up in CY'24?

• Growth in steel production: Domestic production of iron ore, the key steelmaking ingredient, is wholly dependent on the growth of the country's crude steel output. Provisional data with BigMint show that India's crude steel production is expected to have inched up by 5% y-o-y to around 148 mnt. This was the prime driver behind iron ore production in the country.
  
  
• Surging demand from pellet, DRI sectors: Increasing steel production creates the requirement for raw materials used in steelmaking. Data reveal that while India's hot metal production increased by around 2% y-o-y to 88 mnt in CY'24, growth in pellet and sponge iron production were far sharper. While pellet production surged by 10% y-o-y to over 100 mnt, sponge iron output increased by around 8% to approximately 54 mnt. Likewise, domestic demand for iron ore is supposed to have edged up by around 4% y-o-y to 242 mnt in CY'24.
  
  
• Capacity expansion of major miners: Major state PSU miner OMC's production growth is attributable to higher production at the miner's Gandhamardan, Guali and Jilling iron ore mines. OMC has received EC for capacity expansion at auctioned mines such as Jilling. Likewise, Rungta Mines too has received approval to extend capacity of the Sanindpur mine to nearly 20 mnt. Production from this mine was higher in CY'24. Private steel players such as Tata Steel and JSW have expansion approvals and are increasing production. Lloyds Metals, too, is expanding iron ore production in a massive way.
  
  

Outlook

Despite incremental production from Goa and higher output from Odisha and Karnataka, India's iron ore production seems to have increased only marginally in CY'24 due mainly to lower volumes from NMDC, subdued sentiments in the domestic market due to a high level of steel imports, as well as a subdued iron ore exports market.

Looking ahead, a high domestic mining tax regime and new minerals rights taxes likely to be implemented by different states are surely going to have an impact on the domestic iron ore and steel markets. However, robust fundamentals such as sustained growth in crude steel and mettalics production and capacity expansion by both PSU and private miners are expected to drive domestic iron ore production.