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    The Raw Material Conundrum for Steel in India - An Infraline Compendium

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    3 views80 pages

    The Raw Material Conundrum For Steel in India - An Infraline Compendium

    Uploaded by

    S SITAPATI
    Raw materials issues

    Copyright:

    © All Rights Reserved
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    R InfralineEnergy” Pee The Raw Material Conundrum for Steel in India: An Infraline Compendium x Includes Forecasting Till 2015: cles tee fabs SHASHI GARG CEO The push given to capacity creation bythe Government of Indi, during the de-censing and privatization ‘eof 1991, yielded tremendous ress in eataputing the growth of the Indan steel industry to greater hoighes. Mora than two decades later, while much has been accomplished with substan addtion through _reerflé and brown-eld expansions, much more i stil needed to be consummated, We have reached the same inflection point of 1991, wherein a strstegaed and calculated thrust would surly propel ut to ‘compete with the bigest of lobl rations, eluding Chins. ‘Tho sivation today is 2 mix of hope and despair in equal measure, wth great developments interspersed With csnppoining ones recurring in eeguar Frequencies. On one hand, global steel giants have evinced interent since along period but at the same time, they are confronting numerous ieuee which deny ‘esublshment of 2 foothold Simlary, Bath povate and PSU Stoel majors are charting out highly ambicout ‘expanion plan, but have Been unable to secure rw materials with exe, Both iron ore a8 well coal, or handle issues of land acquistion and clearances. Nonetheless, opcmis sl rules the air with the Wording {Group on Stee forthe 12° FYP estimating the country’s soel capacity to rife to 149 MT in FY7 sich in ‘ur is very encouraging for the sector and the nation’s economy 26 2 whole, nfaline believes that challenges lke raw material isecuy,cutdated technology and government restrictions interme of celays in dearances for newor projects and allocation of eaptive raw material mines wil continue to haune the sector fora corsiderable time into the future. In this study, we hve, therefore, endeavored to showcse ‘ur analy ofthe station presen 35 well a the expecta outcomes fl FS. [At ths crucial juncture where the country’s economy is on path to recovery, an event like India Stel 12013 is being orgeized at an opportune time by FICCI, which will ct as an ideal platform for varius ‘stakeholders in the stel industry co interact with Key poly makers in the government to advocate synergy forthe growth ofthe Inutry (On the behalf ofthe Inaine fil, we apprecinte the eforts of FICCI in orgnining this mega event and iso thank them for giving us an opportunity to present our vews. | am sure the dscusions and Fecommendations dered out of the conference would be of tremendous succor to al the paricpant, ‘We wish the event a rand success. InfralineEnergy and Information Services Apri, 2013 CONTENTS | Global Iron Ore Scenario 1. China 2. Australia 3. Braz 1. Indian tron Ore Scenario 21 Goa 3. Odieha 4. Sharkhand 5. Chhaccegarh IIL, India’s iron ore Production & Trade Projections till FYIS. IV. ron Ore Pellets |. Tron Ore Pellets Demand - Supply Senario til FYIS 2. Iron Ore Pellet Trade 3. Expected Pelee Capacity Additions \V. Ferrous Serap! Recycled Steel Scenario |. Global Ferrous Scrap Trade Scenario 2. Indian Ferrous Scrap Trade Scenario VL. Coal in Stee! Making 1 Glet 2. Indi Scenario Vil. indian Stee! Industry Scenario VIIL, Steel Future Outlook 2015 |. Demand - Supply Dynamics for Stel Markee in India - 2015 2. Stee! Intermediaries Production Projection - 2015 3. SeoelTrade Outlook in Inda = 2015 1X Raw Material Requirement till 2015 |. Raw Material Requirement for Sees! 2. India’ ron ore Demand-Supply Dynamics Es a \ (eo) Fa Lo) Re) Te Kel NG Cog aoc A TT ele Ba od 01 P= Iron ore is mined in about 50 countries and almost all (98%) iron ore is used in steelmaking [__ UKRAINE VENEZUELA tribution of iron ore reserves Country. AUSTRALIA BRAZIL RUSSIA ‘CHINA UNITED STATES: CANADA SWEDEN re eens, MT and Mio Toes Infaine Resear USGS (PRIM haan ett oad Uniform positive growth trend in ion ore production till 201 1 CCountry-wise Iron Ore Production during 200% reached 4 "platen! ‘het sable on é (2340) seo 2500 10 2.000 x00 000 100 0 209 a 20H 2012 event Wore To Prosicon (*) ron Ore production converted 20 thet ts percent Fe content is bout equol othe leverage nthe rato the worl (nda fre fram 2009402011 ve ben token fom 18M Source: UNCTAD; USGS on Bre f Mine BM; Wor St! eatin (MSA iin Reser Gam) + Indas share in world production to decrease in FY3 due to Government mandated mining bans inthe key ron ore producing states + Inconerast production in Australis and Bra is expected to surge Country-Wise Shares in Global Iron Ore Produetion in 2012 fusin South Se Ares * (TR) IM Eo 71) World iron ore trade is forecast to increase by 5 percent in 2013, compared to 2012 World's Iron Ore Trade during FYI 13 Gn MT) China's imports are projected to grow strongly. while the majrity of adétonal ron ore exports are expected to come from Australia and Braz CCountry-wise Iron Ore Import during 2011-13 (in MT) ‘Country-wise Iron Ore Export during 2011-13 (in MT) 20 p aoa ™ ut 2013) eee | 2 eis Bessey ar uP th 7 © 10 mo mo mn ao) mm mm memo ama soins ips foray. ia ea Hepation Gina Ens Hah A NC et Hb Am nk’ ae ove ben taken fr DGFT and Scare: BREE UNCTAD: hfe Reseach CHINA IS WoRLD’S. LARGEST PRODUCER, CONSUMER AND IMPORTER OF IRON ee verze area EEE axe eee eae ene eee eee eee lon’ China is set to build national strategic reserves for iron ore in order to ensure supply for her domestic steel industry China’s Iron ore Sector : Key Highlights Reserves (As per USGS) (in. 23,000 * China has large resources of low iron grade nr) rragnetite ores ore 600 MT (In 2012) + Worlds largest producer consumer and importer of tron ore tron Ore Import 7AUMT (i 2012) hs + The domestic Iron Ore production provides less than $0 percent of the Iron Ore requiremenc inthe country Mining Regione | percentage of ron * Northern Reglon ‘ore mines in region + This mammoth growth in Chinese Iron Ore ee eee consumption ean be atoibuted to Chia’s own Bley domes inasracure dle ard ako eee to the rp growth of panned constuction ela ees aneRy 1 Shandong ron & cel oe Mineral Taxes * Resource Tax to) fret aoe nay 2012 China opened he Chin Beting Serres Weis Exchange (CBP) ch Is the ee a + Bap Rie orm “ade Seenaro Netinporter ee echopormrction ° CHS vated tree in sequring ton ee cre miner ty Ain and Austral has been Sameeat Gina to account for 65 percent of global iron ore import by 2018 CChina’s Iron Ore Production and rade China's Iron Ore production during 200 Key Facts + There are about 8000 small mines currently 30% 0 penne ety i 600 Cae + Reason for Neher import 2 = Weld largest consumer of ron ore 20% “0 soa * Domestic production provide less = 400 than 50% of iron requirement i os -Teieseiriomnetenes) cx s + Import Destinations includes Lad ‘Attra Braz nda South fica, Canada OF ° 208 2109 2010 2011 wa mmcrinn ae rege Sar in Words prostion China's Iron Ore imports during 2008-13 (in MT) ™ fa prthe BEE ter, 2914 = mince WETS Gee 2 eee 7 Sco maa MMT n igwoaey = euouseretagaatems 2008 2008 210 201 2 ae Source: BRE, USES: fash BR Austra ee ant Australia exports more than 90 percent of its ron Ore output ‘Austr: Reserves (As per USGS) (in 35,000 MT) Iron Ore Production 525 MT (In 2012) tron Ore Exports 448 7 (i 2012) Mining Regions / percentage of Iron ore mined in rogion Western Australia (96.8%) South Australia (2.0%) Northern torritory (06%) Tasmania (06%) + BHP Bitton Led * RioTinto Group + CITIC Pace Mining Major Mining Companies Forcescue Metals Group Led Anglo American Australa Xetrata Led Mineral Taxes State Royakis + Minerals Resource Rene Tax emRAT) Trade Scenario Net Exporter (Word's Largest exporter of iron ore) Iron ore Sector : Key Highlights Pilbara region of Western Australis accounts for over 96 pereent of the countrys total Iron Ore production onually fo Dea y tay Spe Tosmania Source: avon Mies Ae Dre Increased iron ore output, robust investment, and expansions plans to further increase art fram the coun ‘Australian Iron Ore Production and Trade ‘As por the BREE forecast. in 2013, Australian iron core exports are forecst to increase by 12 per cent, compared with 2012,t0 tral $54 MT The increase in export is supported by increased iron ore output, robust investment and expansions plans inthe country ‘Australian Iron Ore exports during 2008-13 (in MT) 450 300 20 Source: PEE, USES: Reseach 2013) 600 500 400 300 200 10 man on Oe rot 1" 2% 39% = [= i mmAusualin -t-Perentage Share in World's production Koy Facts ‘Low domestic demand of ron ore ‘Worlds largest exporter of ron ore Exports around 90% ofits iron ore output ‘Three major groups- BHP Bilson, Rio Tinto, and the Fortscue Mees Group are the key producers and exporters of iron ore from the country Koy export dostnatons are China japan, the republic of Korea, and Taman R 774m Vole is responsible for 81% of Brazil's iron ore output Brazil's Iron ore Sector : Key Highlights Reserves (As per USGS) (in MT) 28,000 + Reserves are known for their high metal conten which frequenty exceeds 60 percent Fe Grade in Percentage 52.64 Fe + Braallis the worlds third largest producer and Iron Ore Production 375 MT (ln 2012) second largest exporter efron ore Iron Ore Exports 327 MT Gn 2012) + 1n2010,i¢ exported 140 MT ie. 45 percent of all ofits ron Ore to China Mining Regions + Center West ne © Nort East + About 98 percent ofthe total ron Ore mined ote in Beal comes from the region of Carjs In oun Ease the stato of Park and the Quadriitero «South Ferrfero iron belein the state of Minas Gerais Mining Companies + Vale + The largest producers of tron Ore in Braz + SAMARCO are VALE (B1.7 percent, SAMARCO. (66 oN percent), CSN. (29. percent), MMX (1.03 + Hx percent), NAMISA (09 percent) and others + NAMISA (68 percent) Regulatory Authority [NatoralDeparxmentfor Mineral 4 pining in Braz is governed by che Mining Code (Act No. 227) of February (Missy of Mines and Energy) 28, 1967, which isthe main law governing all ‘Trade Scenario Net Exporter the aspects ofthe Braztan mining indury (Worlds 2” Largest) Brazil is the world’s second largest producer, and continue to be one of the largest exporters of iron ore Brazil’ Iron Ore Production and Trade Facts Brazil's Iron Ore production during 2008-13 (in MT) ee ee ee sl ooh AL, eee eae ae Teena |” = . testicle peel oe * bat iat a Bais ron Ore exports during 2008-13 (n MT) 7 7 “ a eae ee an a= avy feet arrays arn Wet poet oo Paes ape the BREE forecast 203 Sr on re = wy eeecrece teenie ae = Caner to 20H oa 395 ae ae can Sores BRE, USE: fine Resor INDIAN IRON ORE SCENARIO Significant reserves of high quality iron ore predominantly in the east of India District-wise Distribution of High Quality Haematite in Indi Total Reser 8093.54 Remaining Resources 9.78855 Total Resources 17,882.08 Percentage Distribution of Haematite Resources Gor Oren pee Sundergarh Keonjhar, Cuttack Bellary, Hospet and 7 ys Source: fine Rema IM KARNATAKA’S STEEL PRODUCERS HAVE, POULIN ‘Mining districts of Bellary, Chitradurga and Tumkur suffered major illegaities and irregularities fron Ore Reserves in Karnataka ax on 14.2070 Geological Mop of Karnataka Showing Iron Ore Occurrence Total Reserves Remaining Resources ‘Total Resources, Seu: Key Facts "= The most important Iron Ore deposits of the sate occur in the Sandur hills of Bellary Hospee sector, Bellary Dis Bababudan hile and” Kudremukh-Gangmula range of Chikmagalur disrce The Bellary Hospet mining sector has been n lt of focus in the recent past mainly due co the legal mining scam and ‘4 Involvement of major political leaders of the stare on LOL ee Te! Mining resumes under R&R Scheme in FYI3 Looking Back ee Koy Facts 3 An interim report by Lolayuiza uncovered rajor violon and | « THIFYIT Karataka was te second largest systematic corruption in mining in Bellary. The report stated that 774 ccs wc a kay eseareer pce MMT of iron ore illegally exported between FY07 and FY amounting ide: 20 INR 1,850 Groves + Steel capacity, in the state, which is 24 percent of total steel production in the —<———————————____—___ ipsa D Karnataka state, governed by the federal opposition Bharatiya Janata from the stata e re Party (JP), banned shipments of ron ore "Steel producers in the state are facing D Based on justice M.B Shah Commission first report on illegal ‘severe iron ore supply crisis ‘mining, Supreme Court banned iron ore mining in three districts ot * 18 iron ore mines from category A and 3 Belary. Chitradurga and Tour ines from category B were restarted by Only NMDC was alowed to operat is two mines n Bary dtrct, sprernmenc under the RR scheme ee Oe Sie eo = + Toa! production capaci of there mines is ee © Supreme Court appoinied CEC. which made che folowne] | parted Under RAR scheme recommendations + SC ako accepted CECS recommendation ‘ ‘Canclaion and auctonng of 49 mines thet have velned the | top produeson at 30 Mr (25 MT rm tes oftheir Kense Belay and 5 MT from Chitradurga and o Partly cloned ton ore mining nthe sce under te RR scheme, | | _Tumkn Under Ra ache, 164 mines bed vpn the degree of iegalty | = Ming from all category C mines have found were brody clsfied or cotegoves #1: B'ond'C been supended, and chor leases A prodcton cop of 25 MTPA canceled, after which these mines are ‘expected to be auctioned off or allocated 10 seo! makers OVALE cs Category A and B mines to get approval but to operate under reduced capacity in FY 14 Korataka Iron ore Production FY08-5 (in MT) 000 snore cnn a omy lon expected S000 4a99 Pa sah by FYIS. . | | m0 ros roe POY?) PA) PUBL lone Aas Wee forte Met La Sane Rg infraline Insights dosicaly 0 13 MT io FYI2, a decline of more than 52 percent compared to previous year Diop. wos the resuk of Imiing and export ban in the sate 2 Sitotion expected to stabilize by FYIS. (0) Category A and B mines to {et opproval butt operate Under reduced capocty 6) Caxegoy

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