Iron ore exports from India to decline by 25% in 2020 amid Covid-19 lockdown, says GlobalData
Out of around 25 non-captive iron ore mines, 22 were successfully auctioned
Iron ore exports from India are expected to decline by around 25% to 23.3 MT in 2020 due to the coronavirus (Covid-19) outbreak and the subsequent closure of ports, shortage of workers and transport restrictions, which are severely disrupting the exports as well as the domestic supply, says GlobalData.
In addition, the auctioning process of several iron ore mines were completed in February 2020 as their leases were about to expire in March 2020. Out of around 25 non-captive iron ore mines, 22 were successfully auctioned while three were put on hold over a pending legal suit from the Supreme Court of India.
Vinneth Bajaj, senior mining analyst at GlobalData, says: “The delays in the auctioning of mines in Odisha, which were to be held in March last year, due to the lack of clarity on the maximum lease area, will severely damage India’s iron ore output in 2020, which is expected to fall to 205.7 MT, a 12.5% decline compared with 2019 (234.9 Mt). The decline could have been over 40 MT, had the Indian government not allowed new owners to start and continue operations until they had acquired fresh forest and environmental clearances, which could have taken up to three years.”
In addition, some idle time is inevitable as operations are reestablished by the new owners. With that in place, GlobalData expects the production to pick up once the lockdown ends, and operating activities resume.
Despite the decline in 2020, the production of iron ore in India is expected to grow over the forecast period (2020–2024) at a compound annual growth rate (CAGR) of 7.2% to reach 271.2 MT in 2024. The resumption of operations at the auctioned mines will be a key factor behind this growth.
Bajaj concludes: “Simultaneously, iron ore exports from India are expected to recover from the 2020 decline and post a forecast-period CAGR of 4.2% to reach 27.5 MT in 2024, supported by improving demand from China.”