Indian Government boosts steel production
Added: (Tue Mar 19 2019)
Pressbox (Press Release) -
The current government has taken several pro-active measures in recent years to streamline and organize the overall mining sector much better. There is now a zero tolerance policy on breach of mining codes, encroachment outside mining areas and any breach of environmental laws.
The steel sector is seeing strong support from the government as it is integral to the Make in India movement. Manufacturing in India is well supported by the government and the recent policy draft in February "POLICY FOR PROVIDING PREFERENCE TO DOMESTICALLY MANUFACTURED IRON & STEEL PRODUCTS IN GOVERNMENT PROCUREMENT" emphasizes the governments view in this regards.
The steel production growth over the last few years is ample proof of the government's positive stance. Worldsteel data indicates that India has now with about 106.5 Mill mts steel production in the calendar year 2018 with an annual growth of nearly 5% overtaken Japan to become the 2nd largest steel producer in the world. This follows a 6.2% growth in 2017 to 101.5 Mill mts. Worldsteel has further projected India's steel production to grow by a further 7% in 2019 whereas the overall world steel growth is projected to be only 1.4%.
India has also improved its iron ore production sharply under the current governments watch. India's iron ore output in 2017-18 was 210.28mn t compared with 192.08mn t in 2016-17 and 158mn t in 2015-16, according to government data. The increased iron ore production is necessary to support the steel industry as well. The government has been in favor of using the countries natural resources like iron ore for internal use for steel manufacturing and hence the iron ore exports have been reduced and limited in recent years.
Even though iron ore production has gone up, the government even during the latest budget have maintained a 30% export duty to deter exports of high-grade iron ore from India. In fact, India's iron ore imports in the latest fiscal year has seen sharp growth and 2018-2019 could yet be the first year when India is a net importer of iron ore with over 18 Mill mts of imports. In 2019-2020 it is envisaged to import approx 30 MMT to match the growing demand for Indian infrastructure growth plans. Government shall bring in more measures to preserve the raw material and reduce exports.
The law requires auction of expired mining leases. The auction process and the subsequent regulatory and environmental approvals for the new owner will be more detailed and meticulous to preserve natural resources of the country and hence take longer time. Several leases in one of the main producing areas of Orissa are expiring in March 2020 and will be auctioned. The initial output loss because of the lease expiry has been estimated at 75-80 million MT/yr, which could lead to a sharp spike in imports unless new capacity comes on stream quickly. This could be one of the key reasons the exports may face even more pressure from India and it's highly likely that India will be a net importer of iron ore in the 2019-2022 time frame.