BMI View: India's mining sector will experience solid growth, primarily boosted by the country's positive reforms and vast mineral reserves. Despite this, the sector will continue to face challenges due to the country's i nadequate operating environment, mining royalties and low metals price s will prevent India from reaching its full growth potential.
|e/f= BMI estimate/forecast. Source= USGS, UN Data, BMI|
|Mining Industry Value, USDbn||25.96||21.96||23.39||26.18||29.41||32.65|
|Mining Industry Value, USDbn, % y-o-y||-13.42||-15.38||6.50||11.90||12.36||11.00|
Latest Developments & Structural Trends
Although India holds one of the world's largest coal reserves and has significant production growth potential, the country will continue to suffer from a persistent coal deficit over the coming years. Even though the government has made great progress in improving coal mine production and coal off-take, power shortages and strikes by coal unions highlight the need for the government to implement effective reforms. India's coal sector is rife with theft and corruption and hampered by primitive mining techniques. Additionally, significant amounts of coal deposits are located in protected forests or conflict-laden tribal lands, making it extremely difficult to increase production.
While growing domestic demand for commodities will incentivise state-owned miners to expand production, we believe that India's poor operating environment will continue to restrict growth in the mining sector. A spate of bureaucratic and regulatory hurdles will remain major challenges for miners to grapple with over the coming quarters. For instance, the difficulties in land acquisition and the securing of environmental clearances have led to a series of mining projects being delayed over the past year. Vedanta Resources was forced to put its bauxite mining project in Odisha on hold due to fierce protests by the local community. A bright spot, however, is Prime Minister Modi's passage of the Coal Mines (Special Provisions) Bill in March 2015 and reforms made to Coal India, which has helped to boost coal production.
India's mining sector will continue to be dominated by state-owned companies or public-sector undertakings (PSUs) including National Aluminium Corp (NALCO), Steel Authority of India (SAIL), National Mineral Development Corp (NMDC) and Coal India Ltd (CIL). According to the US Geological Survey (USGS), PSUs contribute about 85% of India's total value of mineral production and are the main producers of key commodities such as aluminum, coal, copper, gold and iron ore.
Although the passing of the Mines & Minerals Development and Regulation (MMDR) Act will support India's iron ore output growth, weak iron ore prices will limit the sector growth outlook. We forecast iron ore prices to average USD59/tonne over 2016-2019, significantly lower than USD129/tonne during 2011-2014.
In January 2015, the Indian government issued an executive order to enable bauxite mining licenses to be awarded via auctions, replacing the old system where licences were issued at the discretion of provincial and federal government. The government's new ordinance will lead to the reopening of mines. The new auctioning system for mine licences can potentially help expedite the process for miners waiting for mining licences to begin mine development.
The India Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's India Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in India.
- Use BMI's independent industry forecasts on India to test other views - a key input for successful budgeting and planning in this mining market.
- Target business opportunities and risks in India's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in India.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
- Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
- Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
- Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.
BMI’s Mining Risk Reward Index
BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Competitive Landscape Tables & Analysis
Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.