India

India’s mining sector has the potential to contribute as much as $70 billion to the country’s economy by 2030 and generate about 6 to 7 million jobs, believes the country’s industry association, the Confederation of Indian Industry.

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A report titled, Mining Opportunities – Realizing Potential was recently released by the CII, though with an added a cautionary note: clearances “still remain an impediment for a smooth transition from auction stage to implementation stage.”

Mining Reforms Having an Effect

The current Modi government initiated reforms in the mining sector, which underperformed during the previous regime, many say, due to red tape. One of the most important steps was the clearance of the National Mineral Exploration Policy (NMEP) by the government in.

NMEP has the following main features for facilitating exploration in the country:

  1. The Ministry of Mines will carry out auctioning of identified exploration blocks for exploration by the private sector on a revenue-sharing basis. If exploration leads to auctionable resources, the revenue will be borne by the successful bidder of those auctionable blocks.
  2. Creation of baseline geoscientific data as a public good for open dissemination free of charge.
  3. A National Geoscientific Data Repository was supposed to be set up to collate all baseline and mineral exploration information generated by various central and state government agencies and also mineral concession holders and to maintain these on a geospatial database.

While these policy changes have been welcomed overall, there has been some criticism over the implementation. The CII report, for example, talks of the “inordinately long time that is required for obtaining this clearance and the cumbersome process involved therein.”

Why Can’t Companies Start Mining Faster?

The report was recently released at the International Mining and Machinery (IMME) and Global Summit 2016. It said that the Environment and Forest clearance processes take a long time and added that there was significant room for improvement in the clearance system in terms of efficiency, speed of decision making, predictability and transaction.

There’s also unexpected criticism from another quarter on the new mining policy. A report in the DNA newspaper, quoting global miner Anglo American PLC, said the Indian auction system discourages foreign direct investment as the auction process does not provide adequate risk-reward incentive.

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In the report, John Vann, group head of exploration at Anglo, said the auction system makes it difficult to see India competing with other countries where Anglo American invests. According to him, the granting of licenses rather than auctioning off mines would give confidence to foreign investors.

For some time now, a debate over the use of rebar, specifically or Glass-Fiber Reinforced Plastic (GFRP ), instead of other forms of steel reinforcement, has been on in Asian industry circles.

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Recently, two events seemed to inflame this ongoing debate. Galvanized rebar was part of the topics taken up for discussion at an international meeting on galvanized steel in India, while a research report, released about the same time, talked of the latest trends in the market in the increased use of GFRP rebar.

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Galvanized steel is the gold standard for construction rebar such as this rebar web waiting for a concrete pour. Can glass-fiber reinforced plastic seriously compete? Photo: Jeff Yoders.

The second international galvanizing conference in Kolkata in eastern India saw participation from a cross section of zinc and alloy industries, including the U.S. Delegates talked about ways to expand the zinc market in India and also how to use zinc in automobile industries, fertilizers, and in rebars.

Zinc in Construction

The Indian Government is showing some interest in the role of zinc in building important infrastructure such as bridges. India’s demand for galvanized steel structures will keep rising because of its growing infrastructure. Steel becomes rust-proof (or corrosion resistant, as the industry says) when coated with a layer of zinc, hence galvanization. If done properly, galvanization extends the useful life of rebar and other products for decades. Read more

Welcome back to the MetalMiner week-in-review! This week we’ve got in-depth reporting on China and market economy status, India getting tough on aluminum imports and Canada… well, you’ll see what happened in Canada.

We Know Gold Prices Have Gone Up… Butt This is Ridiculous

The theft of about $140,000 worth of gold ($180,000 in Canadian dollars) from the Royal Canadian Mint, was supposedly an inside job… in more ways than one.

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After a trial that concluded in Ottawa on Tuesday, Leston Lawrence, a 35-year-old employee of the government mint in Ottawa, stood accused of foiling the facility’s high security and smuggling out 18 7.4-ounce pucks — this is Canada, after all — worth about $6,800 each. He sold most of the pucks, cooled into the size of a purity testing dipper used at the mint, to an Ottawa Gold Sellers retail store at a nearby mall. The accused criminal mastermind also had four more of the pucks in a safe deposit box.

AdobeStock_John_Takai_security_gold

“Go ahead, scan me with the wand. Nothing to see here.” Source: Adobe Stock/John Takai.

The question the Royal Canadian Mounted Police, or the Mint, couldn’t figure out is how he got past the state-of-the-art security that featured full-body metal detectors and secondary screenings with a wand for anyone that tripped the first scan?

Before Lawrence was fired from the Mint and arrested in 2015, investigators also found a tub of Vaseline in his locker. While the wand scanners can pick up even small pieces of metal in a person’s clothes, security officials from the Mint said they probably would not detect dipper-sized gold pucks that were forced between someone’s buttocks using the vaseline.

Ewww, Canada. Read more

India will complete the second phase of its mining auctions later this month, after the first round last year received a lukewarm response. Going under the hammer will be gold, diamond and iron ore mines.

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Mines in five provinces — Karnataka, Andhra Pradesh, Madhya Pradesh, Rajasthan and Jharkhand — will be auctioned. This time, there are 14 iron ore mines, 12 blocks of limestone and one block each of gold, diamond and copper. While some analysts have predicted a better response than last time to the iron ore mining auction, the limestone blocks may not see much action because of the cement market slump.

Round One

In the first round of the auction, the states offered 47 mines bearing minerals such as gold, iron ore, bauxite and limestone.

They were able to auction seven mines in that phase, earning the government billions of dollars over the next 50 years. However, 17 blocks were not sold due to an insufficient number of initial bids on account of factors such as quantity and grade of ore and low quality of the mineralization studies, among other reasons.

The first round also came under scrutiny when the comptroller and auditor general of India (CAG), a body that audits all government expenditures, passed certain adverse observations. It said in a report tabled in the Indian Parliament that competition may have been restricted in the auction of 11 coal blocks on account of multiple bids by corporate groups made through joint ventures or subsidiaries.

What Does This Mean For India’s Steel Exports?

The iron ore auction comes at a time when the Indian government is contemplating a relaxation of export duties on iron ore. This has led to protests from the domestic steel industry.

In a representation to the steel ministry, the Indian Steel Association asked the government to continue with a 30% export duty on all grades of ore, to preserve natural resources for domestic use.

The government already cut the export duty on low-grade fines to 10% earlier this year but continued with a 30% levy on lumps.

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India’s ore production is lagging its growth of steel production. Production, according to steel ministry data, fell at a compound annual growth rate (CAGR) of 6.5% in the past five years.

She’s been described as the “green lady,” and The Guardian once called her the “woman who loves garbage.”

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Veena Sahajwalla, a native of Mumbai, is the director of the Centre for Sustainable Materials Research and Technology at the University of New South Wales in Australia

Last weekend, Sahajwalla was on one of her many visits to India, where she addressed a high profile seminar at the Scrap Recycling Conference: Emerging Markets. There, she told delegates about her pioneering effort in making “green steel” from, guess what? End-of-life rubber tires.

Polymer Injection Technology (PIT), a technology that Sahajwalla invented, can be used to recycle tires to replace coal and coke in the making of steel. While the two-day conference saw almost 300 delegates from the scrap and steel industry confab on issues ranging from the world business of recycling to automobile recycling in India, Veena’s presentation seemed to have created the most buzz.

The Indo-Australian scientist insists that her technology could be the answer to the growing global problem of disposal of waste tires globally. The United States, for example, was the largest producer of waste tires at about 290 million a year, but now China and India are giving the U.S. a run for its money because of increasing sales of new vehicles.

Automobile tires are made from a mix of natural and synthetic rubber, and various structural reinforcing elements including metal wires and chemical additives. The PIT introduces a modification into the conventional manufacturing process for steel. The technology precisely controls the injection of granulated waste tire material in conventional electric arc furnace (EAF) steelmaking, partially replacing non-renewable coke. Tire rubber, like coke, is a good source of hydrocarbons, which means they can be transformed in EAF steelmaking.

New South Wales University researched the replacement technology for years and, today, millions of waste tires are being transformed into high quality steel in Australia.

Recently, the same university also showcased a pilot micro-factory that safely transforms toxic e-waste into high-value metal alloys, offering a low-cost solution to what to do with the millions of phones, computers and other e-waste products plaguing India. Sahajwalla was involved in this project, too.

She told the Asian Scientist Magazine recently that a ton of mobile phones (about 6,000 handsets) contained about 130 kilograms of copper, 3.5 kg of silver, 340 grams of gold and 140 grams of palladium, worth tens of thousands of dollars. Sahajwalla explained that she used precisely controlled high-temperature reactions to produce copper and tin-based alloys from tossed out printed circuit boards (PCBs) while simultaneously destroying toxins.

All this is sweet music to the ears of Indian recycling industry. The country is the world’s second-largest mobile phone market, and the fifth-largest producer of e-waste, discarding roughly 1.9 million metric tons of such waste every year. Veena is confident that the PIT can solve India’s waste tyres problem.

India’s Recycled Metal Market

While the global recycled metal market is estimated to touch $476.2 billion by 2024, India’s scrap recycling industry is set to register an annual growth of 11.4% until the year 2020, according to a recent report by Frost & Sullivan. India’s annual scrap consumption was 20.40 mmt; it imports 6.48 mmt of scrap, and is the world’s third-largest importer.

But India’s traditional metals, ferrous and non-ferrous, recycling rate is about 20%, less than the world average. For some years now, the unorganized sector has been demanding that the Indian government accord it “industry” status and implement a metal recycling policy with a view to ensuring fast-track growth.

India has the potential to become one of largest car recycling regions, and the demand for policy was something that was even discussed at the two-day conference here. The Indian government recently proposed offering consumers an incentive of about $375 (almost 25,133 Indian Rupees) for a passenger car handed in to be scrapped in the hopes of boosting recycling rates.

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A few months ago, the state-run scrap metal trading firm MSTC Ltd. signed an agreement with the Mumbai-based Mahindra Intertrade, a part of the Mahindra Group, to set up an auto shredding and recycling plant in India. The joint venture will help meet India’s annual ferrous scrap usage requirement of about 6 mmt.

The month of August has seen the Indian government slap anti-dumping duties on the import of a variety of steel products from six countries including China, South Korea, Brazil and Indonesia.

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In the first week, the import duty was imposed on hot-rolled steel products, while a few days ago, the duty was enforced on certain cold-rolled flat steel products from different countries to protect the domestic industry from cheap imports.

In the first case, anti-dumping duties $474-557 per metric ton were imposed on hot-rolled flat products of alloy or non-alloy steel from China, Japan, South Korea, Russia, Brazil and Indonesia, according to a government notification.

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Imports of coiled steel will be heavily tariffed in India, too. Source: iStock.

The duty will be in force for six months until February 7.

Hot-Rolled Duties

An anti-dumping duty of $474 per ton was imposed on import of hot-rolled flat products of alloy or non-alloy steel of a width up to 2,100 millimeter with a width up to 25 mm from Korea and Japan.

According to an Indian Express report Korean firms affected by this were Hyundai Steel Co. and POSCO. Three Japanese companies — JFE Steel Corp., Nippon Steel and Sumitomo Metal Corp. are also on the list. A similar anti-dumping duty was slapped on imports of similar products from China. Exporters Angang Steel Company Ltd. and Zhangjiagang were among the hardest hit. Imports of the same from Indonesia, Russia and Brazil attracted the $474 per mt duty. Read more

A new space has opened up for India’s scrap metal recycling business. The government has given its go-ahead to a “state-of-the-art” auto shredding and recycling plant, which has been in the pipeline for about a year.

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The automotive scrap shredder/recycler is the result of an agreement signed with the state-run metal scrap trading firm MSTC (formerly Metal Scrap Trade Corporation) and Mahindra Intertrade, a part of the diversified $17.8 billion Mahindra Group. Mahindra, incidentally, is a well-known auto major in India, too.

Potentially Huge Market

India’s scrap market is estimated to be in the range of about $1.8 billion, and most of the scrap required by the country, about 5-6 million metric tons, is imported.

Scrap Recycling Yard

India will soon receive its first state-of-the-art automotive recycling yard. Source: Adobe Stock/Robert Hainer.

In a thriving auto market, such as India’s, there’s no formal disposal method for end of life vehicles right now, thus the new joint venture has a ready-made market. The JV will start off with a single unit, but will soon expand across India. The idea is to save India precious foreign exchange rupees, in addition to creating jobs. Every ton of new steel manufactured from scrap will help save iron ore, coal, electricity and limestone from being produced. Read more

There’s a quiet battle being fought outside the limelight between India and other steel producing nations over the world’s largest democracy’s protectionist measure, the Minimum Import Price (MIP), introduced in February.

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The MIP, essentially a tariff on imports targeted mainly at neighboring China, is set to expire August 5. While large steelmakers in India are pushing for the continuation of MIP by the government, some member-nations of the World Trade Organization have started to apply pressure to remove the MIP. The MIP on 173 steel items for six months was introduced as a way to curb cheap imports and firm up steel prices in the home market. The MIP ranged from $341 a metric ton to $752/mt depending on which product.

Other Nations Protest the MIP

In a recent meeting of the goods council at the WTO, nine members, including the U.S., the European Union and China, asked India to justify its continued restrictions on imported steel.

There are some who say that if India continues with the MIP after the deadline it could be dragged into dispute proceedings at the WTO by any of the complaining members, although India has consistently maintained it’s done no wrong and the MIP is a general agreement on tariffs and trade-compliant instrument to regulate imports. Almost all steel producing major countries have imposed one form or the other of tariffs or other protectionist measures to curb steel imports. There are also reports here that India could prune the list of 173 steel products and still keep the MIP in effect for most products.

MIP Effect: Imports Fall

In the first quarter of FY17 (India’s fiscal year begins in on April 1) total steel production in India grew by 3.8% year-on-year, while overall steel consumption grew by only 0.3%. In the same period, imports fell by 30.7% year-on-year, according to a new report by rating agency India Rating and Research (Ind-Ra).

According to the agency, the increase in Indian steel production was supported by the MIP policy but was unlikely to continue beyond August after it expires. Since the imposition of the MIP, domestic producers benefited by way of import substitution. Ind-Ra felt the continuation of the industry protection measure beyond August is required to “safeguard the interest of the domestic steel industry, which has shown signs of a recovery in the current fiscal on the back of MIP.”

Free Download: The July 2016 MMI Report

Ind-Ra opined that profitability for most steel producers is likely to remain under pressure due to the newly added capacity. The interest cost and depreciation from these new capacities has now started to impact the income statements and increased both operations and financial leverage for India’s steel industry. For India’s steel companies to see healthy profit generation, capacity utilization levels need to increase significantly.

In the coming years, India will be scouting around for strategic partnerships with multinational mining exploration companies to secure the supply of critical minerals for its defense and manufacturing programs.

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In the opinion of analysts, if the Indian government wants its much-vaunted “Make in India” campaign to be a real success, it has no choice but to do this. Over the coming years, India will need to strategically develop joint partnerships with existing global players to secure assured supply of critical minerals. Read more

Rarely do a government’s stated aims and the aspirations of industry align quite so perfectly as they do in today’s India regarding steel.

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Prime Minister Narendra Modi’s government has been championing a “Make in India” mantra since coming into power in 2014. It has manifested itself in various ways and most intensely with the state-run enterprises who are more open to government pressure. Even so, it has become a pervasive theme across the entire national economy, coercing companies to finds ways of buying domestically in rupees rather than directly importing materials and paying in foreign currency. Read more