India's iron ore production rises nearly 15% in Jan-Aug'23, outlook optimistic

• Total output reaches 187 mnt compared with 165 mnt in year-ago period
  
  
• Odisha and Karnataka record production growth of 12-18% y-o-y
  
  
• Lloyds, Rungta, NMDC register significant surge in production
  
  

India's iron ore production in January-August 2023 (8MCY23) increased by over 13% y-o-y to 187 million tonnes (mnt) compared with 165 mnt recorded during the same period of last year, as per provisional data with SteelMint. The country's iron ore production stood at 255 mnt in FY23.

Strong and sustained growth in crude steel production is driving iron ore output higher. Ministry of Steel data shows India's crude steel production increased by 12% in April-August of the current fiscal to 57.3 mnt. Steel demand is projected to grow by around 10% y-o-y in FY24.

State-wise production

Odisha, India's top iron ore producing state, had a share of around 56% in the country's total production. In 8MCY23, Odisha recorded growth of over 12% y-o-y with production reaching 104 mnt compared with 93 mnt in the year-ago period. PSU and private merchant miners as well as leading steel producers logged higher production numbers this year.

With over 30 mnt of iron ore output in 8MCY23, Chhattisgarh was the second-largest producer among the Indian states accounting for over 16% of total production. While Chhattisgarh witnessed a hike in output of 9% y-o-y, Karnataka's iron ore production increased by over 18% to nearly 27 mnt from less than 23 mnt last year.

Karnataka is likely to witness a surge in production following the Supreme Court's lifting of curbs on exports and easing of sales norms. Now, there is clarity on production and sales and many miners are opting for a hybrid model of auctions and direct sales. Importantly, Karnataka has started exporting iron ore.

Jharkhand, the other key iron ore producing state, witnessed marginal growth, with production reaching nearly 17 mnt in 8MCY23.

Leading miners

The country's top miner, NMDC, raised production by a significant 13% y-o-y to close to 31 mnt during the period under review compared with 27 mnt in the same period of 2022. The company, in FY24, aims to achieve production of 49 mnt. In 8MCY23, production from the company's Chhattisgarh mines rose by around 9% y-o-y to over 21 mnt, while production from the mines in Karnataka witnessed a sharper growth of 24% to over 9 mnt.

State PSU miner, OMC, increased production by around 4% to 20 mnt during the period under review.

Steel Majors Tata Steel and SAIL logged output at around 25 mnt and 23 mnt, respectively, from their mines in Odisha and Jharkhand - an increase in the range of 2-4% y-o-y.

JSW Steel, on the other hand, raised production to over 13 mnt during the period from its mines in Odisha, an increase of over 12% y-o-y. However, JSW has surrendered its Jajang mine recently due to unviability over minimum dispatch requirements.

AM/NS India, too, raised production by 10% y-o-y to over 7 mnt from its mines in Odisha, thanks to higher output post operationalisation of the Sagasahi mine.

However, the sharpest growth in production was recorded by Lloyds Metals and Energy and Rungta Mines. Lloyds increased production by nearly 75% y-o-y to around 5.5 mnt during the period compared to 3 mnt in the corresponding period of last year. The company received EC for a 10-mnt mine in March 2023. Achieving a growth of 23% y-o-y, Rungta increased total production to over 11 mnt in 8MCY23, thanks to higher output from the company's Odisha mines.

Outlook

SteelMint expects iron ore production to increase to 275-285 mnt in FY24 from over 255 mnt in the preceding fiscal, an increase of around 10% y-o-y. Odisha is looking at total production of around 160 mnt this fiscal, which could possibly be a 12% growth y-o-y from 140 mnt last fiscal. Karnataka may increase output to 40-45 mnt from 38 mnt last financial year. Chhattisgarh and Jharkhand are likely to contribute around 46 mnt and 25 mnt respectively.