India's iron ore production expected to be around 250 mnt in FY23 - SteelMint

India's iron ore production in financial year 2022-2023 (FY23) is expected to be around 250 million tonnes, as per SteelMint estimates. Iron ore production stood at around 24 mnt in January, according to provisional data. Production remained stable, falling slightly by around 2% m-o-m compared with 24.5 mnt in December. Iron ore production had risen to a 9-month high in December after the recovery in steel market sentiments and removal of export tariffs on steel, iron ore and pellets.

The country's total production reached 249 mnt in 2022, as per available data, slightly higher than 246 mnt recorded in 2021. Production in the January-October period last year had declined by 3% y-o-y. However, output in the last quarter rose to over 64 mnt compared with 59.4 mnt in the year-ago period - an increase of 8.5% y-o-y. So, iron ore production increased y-o-y despite volumes dropping sharply by 13% on the year in the July-September period.

Therefore, despite the crippling impact on production and offtake post the imposition of 50% export tariff on iron ore (across grades) and 45% duty on pellets in late-May last year, healthy recovery has been seen in terms of production since October of last year.

Iron ore production picked up even before the withdrawal of export tariffs on steel and steelmaking raw materials in mid-November due mainly to higher domestic crude steel production. India's crude steel output increased by 6% on-year to over 124 mnt in 2022. Steel production in January was recorded at 10.9 mnt - 3% higher than 10.6 mnt in December.

State-wise production

Odisha was the top iron ore producer among the Indian states in January at over 13 mnt, although production declined from over 14 mnt in December. This is due to a few mines in the state nearly exhausting their annual EC limits and, therefore, lowering mineral output. This is also expected to impact production from these mines in February, SteelMint notes. However, production in the state has increased steadily from 7-8 mnt levels in August-September last year. In 2022, Odisha's production stood at over 136 mnt, stable y-o-y.

While Chhattisgarh posted iron ore production of over 4 mnt in January, Karnataka's output was assessed at around 3.4 mnt. Jharkhand produced around 2.4 mnt, which is largely captive production.

Mineral production in Karnataka was impacted following the Supreme Court's verdict lifting decade-long sales restrictions from the state as well as curbs on exports by miners from the state. The transition to an open market system from government-monitored auctions impacted market dynamics initially and resulted in a drop in iron ore production and sales. Total output in 2022 fell to around 35 mnt from 38 mnt in the previous year. However, iron ore output has been inching up gradually since October, as per data.

Top miners

Leading PSU miner NMDC remained the top iron ore producer in January at around 4.2 mnt followed by SAIL at 3 mnt and Tata Steel at around 2.8 mnt. State PSU miner OMC's production was assessed at around 2.7 mnt, while JSW Steel produced around 2.5 mnt.

In 2022, NMDC's production stood at over 40 mnt and the miner has set a target of 50 mnt this year. OMC raised production by 50% to 30 mnt in 2022 from around 20 mnt in the previous year. Among the steel producers, Tata Steel's iron ore production increased to 31.5 mnt, while SAIL and JSW Steel saw output declining y-o-y to roughly 32 mnt and 24 mnt, respectively, in 2022.

Outlook

SteelMint projects India's iron ore production to be around 250 mnt in FY23 - largely stable compared with FY22. Odisha's share in total output is expected to remain above 55% at 138 mnt, while Chhattisgarh is expected to clock production of 40 mnt. Although Karnataka's iron ore production may decline y-o-y to around 36.5 mnt compared with 40 mnt in FY22, Jharkhand's output is expected to increase to 25 mnt.