India

India produced 8.4 million metric tons of steel in January, registering a growth of 12% against the same period last year, according to data by the World Steel Association. India became one of the top major steel producers in the world, beating China whose production grew by 7.4%.

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The WSA report only props up what the government here has been saying for some time now, that India is making efforts to ramp up domestic steel and to ensure more consumers opt for it rather than other materials such as plastic.

India needs more scrap if it’s to meet its production goals. Source: Alumisource.

At a “Make In Steel” conference in the nation’s capital, New Delhi, Minister of Steel Chaudhary Birender Singh said steel demand grew 3.3% from April to December 2016, and growth was expected to continue in the coming months due to long-term government policies and an increase in infrastructure spending. Clearly, all of this is not mere lip service.

Steel Ministry officials and domestic steelmakers are optimistic that with more infrastructure projects coming up, demand will likely continue to increase.

The WSA predicted steel demand in India will grow at a rate of 5.7% in 2017.

To push demand, the government has used a combination of measures — incentives, imposition of various trade remedial measures such as minimum import prices, anti-dumping and safeguard measures and better quality control.

To increase consumption and production, it also unveiled a draft National Steel Policy 2017, to soon replace the National Steel Policy 2005. The policy aims to increase the domestic steel production capacity to 300 mmt from the current 85 mmt by 2030-31.

Now, as one more step in the process, it has decided to set up of two scrap-based steel plants, one in the west and the other in the north of the country, to boost production capacity. India has relatively few steel scrap-based electric arc furnaces (EAFs) of low capacity compared to similar-sized nations.

Over 40% of scrap available in the four states in northern India and around 67% of the scrap the western state of Gujarat was imported. Steel made out of scrap is expected to be of higher quality and could be used for expanding production of end-use products such as scientific instrument.

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Currently, India imports 6 mmt of scrap annually but will be able to produce 7.5 mmt of scrap by 2025 as supply from end-of-life cars and trucks, a major supply stream, is expected to grow.

Slowly but surely, India seems to be shifting the goal posts on its minimum import price policy designed to protect the domestic steel industry.

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India recently extended the anti-dumping duty on cold-rolled flat steel products from four nations, including China, Brazil and South Korea to guard the domestic steel industry from cheap imports for another two months. The duty was expected to expire after six months and was recently extended to give it a total duration of eight.

Domestic Indian steelmakers could see their protective minimum import prices for steel products lifted. Source: Adobe Stock/ft2010.

India had previously imposed a minimum import prices (MIP) to protect the steel industry and the cold-rolled duties came in addition to the MIP. The policy was described as a short-term emergency measure while anti-dumping duties are a long-term measure to protect the country’s trade.

Yet, according to a recent media report, India’s steel secretary Aruna Sharma said there would be no minimum import price (MIP) extension for 19 steel products.

How the MIP Started

India started imposing an anti-dumping duty of $474-$557 per metric ton on hot-rolled flat products of alloy and non-alloy steel imported from China, Japan, South Korea, Russia, Brazil and Indonesia in August. Read more

I am not sure this would go down well in the U.S., but take the most populous country in the world, with an estimated population of 1.3 billion of whom 22% are judged to be living in poverty and give them a state-provided universal basic income (UBI) payable to every single person. Sound like madness? Sound like a recipe for financial disaster? Sound like a socialist pipe dream? Maybe, but the idea is being actively debated in India according to the Economist.

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Although the pre-annual budget economic survey, published on January 31, did not make any promises, it did outline an idea to pay every citizen 7,620 rupees ($113) a year. Far from a king’s ransom — it is equivalent to less than a month’s pay at the minimum wage in a city, but it would cut absolute poverty from 22% of the population to less than 0.5%. The money would largely come from recycling funds from around 950 existing welfare schemes, including those that offer subsidized food, water, fertilizer and much else besides. Altogether, these add up to roughly the 5% of GDP that the UBI would cost, the government’s chief economic adviser, Arvind Subramanian estimates. Read more

India is the world’s second-largest importer of gold after China.

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India’s gold import bill was up 12% in 2015 reaching $35 billion. 2016 final numbers are expected to come in at about the same rate, although a sharp drop in demand during December — said to be due to Prime Minister Narendra Modi’s move to scrap 500- and 1,000-rupee banknotes as a “demonetization” crackdown on corruption and tax evasion — is said to have hit the largely cash-facilitated gold jewellery market hard in the short term.

Even so, Gold imports are a considerable burden on India’s balance of payments coming second only to oil in the demand it puts on India’s foreign exchange reserves. India imports 900 to 1,000 metric tons per year, but local gold output is just 2 to 3 mt per year. In the same way that the Indian government has encouraged onshore and offshore oil exploration, you would expect indigenous gold mining would be an industry the government actively encourages.

Although India has mines that go back more than 120 years, its annual gold production is miniscule. According to an article in the Hindu times that could be about to change. The Kolar gold field was forced to close in 2001 due to mounting losses at operator Bharat Gold. The state-owned company had been mining the Kolar reserves since independence in 1947 but the mines are deep — down to 3 kilometers — and Bharat was operating with outmoded technology and a large, unproductive legacy workforce. But Mineral Exploration Corp. estimates show reserves to be worth $1.17 billion in the mines, with another $880.28 million in gold-bearing deposits estimated to be left over in residual dumps from previous mining operations.

How Can India Mine More Domestic Gold?

It is debatable whether state-owned Bharat gold has the expertise to economically exploit such deep and relatively low-grade reserves, but established global miners such as Vedanta may hold more potential. In February 2016, the firm became the first private company to successfully bid for a gold mine in India — the Baghmara gold mine in Chhattisgarh — a mine with potential gold reserves of 2.7 mt of contained metal. Sure, that’s a fraction of Kolar’s 35-mt potential but a good start for a firm of Vedanta’s standing to start in India’s gold mining sector.

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India is never likely to rival South Africa, Canada or Australia as a gold miner, but that’s not the point. Any contribution to the domestic market will lessen the impact gold imports have on the country’s balance of payments. With domestic reserves estimated at over 100 mt there appears to be scope, with the right state and government backing, for miners to reduce some of those imports and create domestic employment.

Initial panic in India over reports of an executive order to be signed by U.S. President Donald J. Trump tightening the non-immigrant H-1B visa regime has subsided. Outsourcers, primarily from India, are the top recipients of H-1B visas, managing the technology departments of large U..S corporations with imported staff.

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From anxiety, the mood here has now dropped to a “wait and see” one. The Government of India has tried to allay fears by saying no such executive order has been passed and Foreign Ministry spokesman Vikas Swarup explained to the media that three private bills in the matter had been introduced in the U.S. House of Representatives, adding that such bills had been introduced in the past, too, and the mere introduction of them is nothing new. For now, the government does not want to say anything more, since the bills have to go through the full Congressional process.

Panic at the IT Department

Analysts say the panic was natural since news about the likely change in the H-1B visa rules came soon after the new President banned refugees and travelers from seven predominantly Muslim countries from traveling to the U.S. (the travel ban has since been temporarily lifted by a temporary restraining order from a federal judge). Read more

After more than four years of languishing, some hope’s been rekindled in India’s iron ore mining sector.

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Ore production jumped 22% between April and October, according to figures released by the government. Iron ore production stood at 100 million metric tons during the resurgence, against 81 mmt during the same April to October period a year ago. What’s brought even more cheer is the news that exports, too, jumped 9 times their previous level, to 9 mmt from last April to September, as compared to 1 mmt, the same period last year.

Export Taxes

With a steep price hike in global markets aided by protectionist measures for the domestic steel industry, will India see a resurgence in iron ore exports? Not so fast.

India has plentiful iron ore stockpiled but taxes are holding up exports. Source: Adobe Stock/nikitos77.

The protectionist measures imposed by India’s government previously included an export duty tax of 30% on high-grade iron ore. Many within the mining sector are of the opinion that the export tax must go, or at the very least be reduced, to boost exports. Read more

Anti-dumping actions were once again a hot topic this year. Back in February India imposed a minimum import price for nearly all foreign steel entering the country. This was only one of many anti-dumping actions taken this year with both the U.S. and European Union tightening tariffs this year. — Jeff Yoders, editor

It’s a problem that’s dogged almost all the major economies as well as developing nations – the dilemma of steel cheap imports. Steelmakers in the U.S. have, in the past, not only cried foul at the World Trade Organization but also imposed steep anti-dumping duties on cheap imports from China, Korea and India making their way into the U.S. market, thus further depriving an already-stressed out market.

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A few days ago, as reported by MetalMiner, seven EU nations asked the European Commission to intervene to stop cheap imports of steel, particularly from China and Russia.

India has imposed a minimum import price on most steel products. Source Adobe Stock/Jovanning.

India has imposed a minimum import price on most steel products. Source Adobe Stock/Jovanning.

In India, a market where steel consumption continues to grow bucking global trends, the situation is no different. So, finally giving in to the loud protests by domestic steel companies against cheap imports, the Indian government recently imposed a minimum import price (MIP) ranging from $341 to $752 per metric ton on 173 steel products as a “temporary” measure.

Minimum Import Prices

The MIP conditions are valid for six months from the date of the notification or until further orders, whichever is earlier. The MIP, though, will not be applicable on imports under the advance authorization scheme and high-grade pipes used for pipeline transportation systems in the petroleum and natural gas industry are exempt.

The move seems to have gone down well with a majority of the steel trade bodies and a large section of India’s steel industry, but some have called it simply a band-aid for the hemorrhaging steel sector.

India’s domestic steel production between April-January 2016 dropped 1.8 % to 75.66 million mt, while imports rose 24.1% to 9.3 mmt. Consumption grew 4.2% to 65.91 mmt. For domestic steelmakers, apart from the MIP, the import duty has also been raised to 10% for flat products and 7.5% for long products.

The rationale behind the MIP was explained by Steel Secretary Aruna Sundararajan, in an interview with The Economic Times. She said the move would give India’s steel industry much-needed breathing space to get healthy.

Emergency Measure

Over the last couple of years, India had seen a spurt in steel imports, leading to a decline in prices. According to the Steel Secretary, India had over 400 mmt of surplus steel. All that surplus has put the domestic steel industry into distress.

While imposing the MIP, the Indian government also took care to ensure that downstream users were not affected. That’s why certain categories of steel — required by end-user industries — not manufactured in India, were exempted.

The government’s decision to impose MIP will, however, reduce the benefit of lower commodity prices for automobile companies, according to many experts. Also, according to the engineering goods exporters’ body, EEPC India, the MIP will lead to further erosion in engineering exports. It has thus sought from the government a compensatory mechanism to make up for the increased raw material price (about 10%) for the distressed exporters, mostly in the small and medium-sized enterprises segments.

The Indian government has dubbed the MIP an “emergency provision.” In the next six months, it will be looking at anti-dumping duties  and moving toward more stable, longer-term measures. It will also be keeping a close watch on imports after the MIP, as well as the response of domestic steel companies and consumers.

India is becoming a growing powerhouse in the base metals industry and — although producers seem more intent in expanding outside the country, witness Aditya Birla’s smart acquisition of Novelis — the country has the two significant advantages that encourage an expectation of rapid domestic growth. These are low current per capita consumption and the world’s fifth-largest domestic reserves of bauxite.

Obstacles to India and Base Metals

Assured rapid domestic growth is not a slam dunk, though. Power costs in India are high and competing demands for power in a country with a severe shortage of generating capacity mean refiners have to build their own captive power stations to ensure continuity and price competitiveness.

Both mining and plant construction then run into problems of land ownership and poor supporting infrastructure. Both issues that could be addressed if there was the political will and, as such, can be said to be self-inflicted. That’s cold comfort to producers struggling to get projects approved and developed on budget. So, maybe, it comes as no surprise that producers have been lobbying hard for protection against imports.

Sources: Bloomberg and World Bureau of Metal Studies

According to industry sources quoted by the Economic Times of India, imports of aluminum have increased by 159% in 2015 compared to 2011 levels. Possibly more worrying for the industry is that the country is importing more than 50% of aluminum consumed. While India has annual aluminum consumption of 3 million metric tons, half of that is supplied by imports. India’s production capacity is 4 mmt. Read more

Six years its first proposal, Indian mining giant Adani seems as if it’s finally ready to start its $16.5 billion coal project in Queensland, Australia.

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The company recently secured the approval for a permanent rail line for what’s known as the Carmichael project. An official statement by the company said Queensland’s Coordinator-General had given “the latest, and final, secondary approval” for about 19-and-a-half miles of permanent track, as well as a 300-bed camp.”

The permission will add to the nearly 242 miles of heavy haul track connecting the mine to Abbot Point port. Chief Executive of Adani Australian, Jeyakumar Janakaraj, said in a press statement, “We are particularly focusing on the construction of our planned near-400-kilometer (248 miles) rail line to be constructed between the Carmichael mine and our bulk port facility at Abbott Point near Bowen.”

When fully operational, the mine will reportedly be the largest in Australia, involving the dredging 3.53 million cubic feet of soil near the Great Barrier Reef Marine Park. The project will ensure Adani a steady supply of coal to be used for electricity generation, benefiting a hundred million Indians.

The proposed project ran afoul with green groups in Australia, quickly taking on a “jobs versus ecology” dimension. As per some claims, the project is likely to create at least 11,000 jobs, and the company has promised to farm these out to locals, and not bring in labor from abroad.

After getting approval, Adani Group Chairman Gautam Adani met Australian Prime Minister Malcolm Turnbull, amid protests from groups in Melbourne. Adani has said the project will start in the new year.

Supporters of the project insist mines such as these will provide an economic stimulus to North Queensland.

Matt Canavan, Minister for Northern Australia, was quoted in a section of the media as saying this would be the first time a new minerals basin would be opened up in 40 years.

Adani also announced that it will set up regional centers for providing vital support services for the project and associated infrastructure and headquarters for its rail and port operations.

Townsville would become Adani mining’s regional headquarters, while the Mackay-Bowen area would become the regional headquarters for its rail and port operations. Adani said its shift to the regional Queensland centres would allow it to more directly harness local skills.

The project has faced a lengthy environmental approval process and a number of court challenges. Earlier, this year, it finally got Queensland government approval to mine. Some say, however, that while the Carmichael mine has the final government approvals, there are still a few hurdles it has to surmount.

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An appeal has been lodged with Australia’s full Federal Court seeking to overturn the Commonwealth approval, and is due to be heard in March.

India has brought the world’s largest solar power plant online.

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At the end of November, the world’s biggest solar power plant was completed in the southern part of India and its already generating power.

Spread over 2,500 acres in the Tamil Nadu province, the new solar plant replaces the Topaz Solar Farm in Riverside County, Calif., as the largest solar power farm in one location in the world. The Indian solar farm can generate 648 megawatts of green electricity, while Topaz generates 550 mw. India aims to power about 60 million homes by using solar energy by 2022. The Tamil Nadu plant, built by Adani Power, can light up about 150,000 homes. India aims to produce 40% of its electricity from renewables by 2022. Read more