Iron-ore output set to rise 10% in FY15, could cross 150 mt

Growth will be moderate due to pending clearances, Odisha production cap

India's iron ore production is set to see a moderate growth of 10-12 per cent to 150 million tonnes (mt) in FY15, following a small decline in FY14. The growth is likely to come from Karnataka and Goa but the production cap in Odisha will restrict it.

According to miners and analysts, most growth will come from Karnataka, where several mines are in the final stages of securing regulatory approvals. Sesa Sterlite started production towards the end of December. Other mines, including NMDC's, are gearing up to increase their production. Mineral Enterprises is waiting for renewal of leases.

"Unless Goa restarts mining, though partially, we cannot expect a big jump in production in FY15. Many more mines are set to restart in Karnataka and the total production is unlikely to exceed 20 mt. There is a big suspense over production caps in Odisha based on the Shah Commission recommendations. In total, we can expect 150 million tonnes in FY15," said Basant Poddar, senior vice-president, Federation of Indian Mineral Industries.

Analysts said production of ore in 2013-14 was likely to remain flat at 135 mt, the same as the previous year, or decline three-five per cent.

"The output will be flat year-on-year in 2013-14 as Goa was out of business. Jharkhand and Chhattisgarh have more or less remained flat in the current year till now. In Karnataka, too, the production is yet to pick up as many leases are still waiting for clearances," said Ritesh Shah, senior analyst with Espirito Santo.

He said the production in 2014-15 could go up to 150-153 mt mainly due to the opening of more mines in Karnataka and partial resumption in Goa. OreTeam Research, a Delhi-based research firm, has pegged the production for FY15 in excess of 150 mt. "OreTeam forecast for 2014-15 indicates a better yield, but not with a bigger margin as production caps could compensate for the increase in mining. More, the mining expansion plans would also be slow to get through due to political uncertainty at the Centre," said Prakash Duvvuri, head of research.

New leases are hard to come by and Karnataka's auctioning system is still awaited, he added. OreTeam, however, projects five-six million tonnes of increase in production to cross 150 mt in 2014-15.

"Looking beyond 2015-16, the production should increase with a greater intensity and breach 165 mt. A lot would depend on the situation in Goa and Karnataka and the role of the Supreme Court."