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Metals and Mining
For updated information, please visit www.ibef.org
AUGUST
2012
2 2
Contents
Advantage India
Market overview and trends
Growth drivers
Success stories: CIL, SAIL
Opportunities
Useful information
For updated information, please visit www.ibef.org
Metals and Mining AUGUST
2012
3 3
Metals and Mining
For updated information, please visit www.ibef.org ADVANTAGE INDIA
Advantage India
Advantage India
• Rise in infrastructure development and automotive production driving growth in the sector
• Power and cement industries also aiding growth in the metals and mining sector
• There is significant scope for new mining capacities in iron ore, bauxite, and coal
• Untapped metal reserves in India are to the tune of 82 billion tonnes
• India holds a fair advantage in cost of production and conversion costs in steel and alumina
• It’s strategic location enables convenient exports to developed as well as the fast-developing Asian markets
• 100 per cent FDI allowed in the mining sector under the Automatic Route
• Mining lease granted for a long duration of minimum 20 years and up to 30 years
Industry value:
USD305.5 billion
2015F
Industry value:
USD50.8 billion
2005
Source: Datamonitor, Aranca Research Notes: FDI – Foreign Direct Investment
Demand growth Attractive opportunities
Competitive advantage Policy support
AUGUST
2012
4 4
Contents
Advantage India
Market overview and trends
Growth drivers
Success stories: CIL, SAIL
Opportunities
Useful information
For updated information, please visit www.ibef.org
Metals and Mining AUGUST
2012
5 5 For updated information, please visit www.ibef.org MARKET OVERVIEW AND TRENDS
Evolution of the Indian metals and mining sector
• Mining sector received a boost post independence under the impact of successive Five Year Plans
• Central Government promulgated Industrial Policy Resolution
• The exploration of minerals was intensified and the Geological Survey of India was strengthened
• Indian Bureau of Mines was established to look after the scientific development of mineral resources
• Mineral Exploration Corporation established to conduct exploration with focus on coal, iron ore, limestone, dolomite and manganese ore
• India is the largest
producer of sheet mica, the third largest producer of iron ore and the fifth largest producer of bauxite in the world
• Crude steel production in India expanded at a CAGR of 6.8 per cent over 1980-2011
• India accounted for 7.1 per cent of the metals and mining industry in the Asia-Pacific region in 2010
1947
1956
1972
Present
Notes: CAGR – Compound Annual Growth Rate
Metals and Mining AUGUST
2012
6 6 For updated information, please visit www.ibef.org
Segments of metals and mining industry
Source: Aranca Research
MARKET OVERVIEW AND TRENDS
Metals and Mining
Iron and steel
Coal
Aluminium
Base metals
Precious metals and minerals
Iron and steel segment offers a product mix which includes hot rolled parallel flange beams and columns rails, plates, coils,
wire rods, and continuously cast products such as billets, blooms, beam, blank, rounds and slab, and metallics and ferro
alloy
Coal market consists of primary coal (anthracite, bituminous and lignite)
Aluminium segment includes alumina chemicals, primary aluminium, aluminium extrusions, aluminium rolled products
Base metal market consists of lead, zinc, copper, nickel and tin
Precious metals market includes gold, silver, platinum, palladium, rhodium, diamond
Metals and Mining AUGUST
2012
7 7 For updated information, please visit www.ibef.org
Strong growth in India’s metals and mining sector over the years
→ India’s metals and mining industry recorded an astounding 30 per cent growth in 2010 to touch USD106.4 billion
→ Much of the above growth in the industry’s value can be attributed to higher prices given that production volume growth was relatively lower at 2.1 per cent (total production stood at 684.4 million metric tonnes)
→ Production volumes have been growing steadily over the years – over 2005-10, it registered a CAGR of 5.7%; with prices also rising during this period, the sector’s value rose by around 16 per cent (CAGR)
Value of India’s metals and mining industry (USD billion)
Source: Datamonitor, Aranca Research
MARKET OVERVIEW AND TRENDS
Notes: CAGR – Compound Annual Growth Rate
50.8
59.8 71.7
102.6
81.8
106.4
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010
Metals and Mining AUGUST
2012
8 8
71.7%
8.3%
7.1%
3.9% 9.0%
China
Japan
India
South Korea
Rest of Asia-Pacific
For updated information, please visit www.ibef.org
→ Iron and steel is the largest segment of the Indian metals and mining industry, accounting for 73.8 per cent of the overall industry value (2010); coal is the other major sub-segment with a 20.8 per cent share
→ India accounted for 7.1 per cent of the metals and mining industry in the Asia-Pacific region in 2010
Shares in India’s metals and mining industry (2010)
Source: Datamonitor, Aranca Research
MARKET OVERVIEW AND TRENDS
73.8%
20.8%
3.2% 2.0%
0.2% Iron & Steel
Coal
Aluminium
Base Metals
Precious metals &minerals
Iron and steel accounts for a major share in India’s metals and mining sector
India’s share in the metals and mining industry in Asia-Pacific (2010)
Metals and Mining AUGUST
2012
9 9 For updated information, please visit www.ibef.org
Iron ore: Production remains strong
→ India is the world’s fourth largest iron ore producer (global share of 11 per cent)
→ Iron ore production is estimated to have grown at a CAGR of 2.6 per cent between FY07 to FY11; total production in FY11 stood at almost 208 million tonnes
→ In FY11, the share of the private sector in total iron ore production in India was 72 per cent
→ Andhra Pradesh, Chhattisgarh, Goa and Jharkhand accounted for 97 per cent of India’s total iron ore production in FY11
Iron ore production (million tonnes)
Source: Ministry of Mines (Annual Report 2011-12), Aranca Research
MARKET OVERVIEW AND TRENDS
187.7
213.3 233.8
218.6 208.0
FY07 FY08 FY09 FY10 FY11
Metals and Mining AUGUST
2012
10 10 For updated information, please visit www.ibef.org
Rising steel demand driving growth in iron ore production
→ Given that iron ore is a key ingredient in steel production, the expansion in iron ore production in India can be linked to the country’s fast-expanding steel sector
→ Crude steel production expanded at a CAGR of 8.0 per cent over 2005-11 to touch 72.2 million metric tonnes
→ India is the fourth largest producer of crude steel in the world (2011) with a global share of 4.8 per cent
Source: World Steel Association, Aranca Research
MARKET OVERVIEW AND TRENDS
Shares in global crude steel production (2011)
45.9%
7.2%
5.8%
4.8% 4.6% China
Japan
United States
India
Russia
Crude steel production (million metric tonnes)
45.8 49.5
53.1 57.8
62.8 66.8
72.2
0
10
20
30
40
50
60
70
80
2005 2006 2007 2008 2009 2010 2011
Metals and Mining AUGUST
2012
11 11 For updated information, please visit www.ibef.org
Rising domestic demand puts pressure on supply of iron and steel … (1/2)
→ India is the world’s third largest exporter of iron ore
→ With rising domestic demand-supply gap and to make domestic supplies more attractive, the government on March 2011 hiked freight charges and taxes on iron ore exports
India’s exports of iron and steel (USD billion)
Source: International Trade Centre, Aranca Research
MARKET OVERVIEW AND TRENDS
5.2
6.0
8.2
4.4
7.0
0.0
2.0
4.0
6.0
8.0
10.0
2006 2007 2008 2009 2010
Metals and Mining AUGUST
2012
12 12 For updated information, please visit www.ibef.org
Rising domestic demand puts pressure on supply of iron and steel … (2/2)
→ India has turned into a net importer of iron and steel due to strong growth in the manufacturing sector and rising infrastructure projects
→ India’s transition into a net importer of steel despite the strong growth in domestic steel production shows the demand potential of the sector
→ The impact of strong growth in domestic steel
production has been most felt in the iron ore sector; with steel firms’ ever rising demand for the raw material, India’s imports of iron ore has been growing steadily (for example, iron and steel imports increased at a CAGR of 10.6 per cent over 2006-10)
India’s imports of iron and steel (USD billion)
Source: International Trade Centre, Aranca Research
MARKET OVERVIEW AND TRENDS
5.6
8.4
10.8
8.5 8.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2006 2007 2008 2009 2010
Metals and Mining AUGUST
2012
13 13 For updated information, please visit www.ibef.org
Coal production growing at a steady pace
→ Coal production recorded a CAGR of 8 per cent over FY08-10
→ In the coming years, coal production in the country is likely to receive a boost as the government plans to replace the country’s captive mining policy in coal and iron ore with an open bidding one
Coal production (million tonnes)
Source: Government of India (GOI), Ministry of Coal, Aranca Research
Notes: CAGR – Compound Annual Growth Rate BE – Budget Estimate
MARKET OVERVIEW AND TRENDS
457.0
492.8
533.0
572.4
554.0
400
450
500
550
600
FY08 FY09 FY10 FY11BE FY12BE
Metals and Mining AUGUST
2012
14 14 For updated information, please visit www.ibef.org
India’s role in global coal production
→ India is the world’s fourth-largest producer of coal, with the world’s fourth-largest reserves
→ Coal India Ltd (CIL), a Government of India enterprise, is the world’s largest coal company based on raw coal production and coal reserves
Shares in global coal production (2010)
Source: BP - Statistical Review of World Energy 2011, Aranca Research
MARKET OVERVIEW AND TRENDS
14.8%
6.3%
48.3%
5.8%
5.0%
19.8% US
Australia
China
India
Indonesia
Rest of the World
Metals and Mining AUGUST
2012
15
Source: Geological Survey of India, Indian Bureau of Mines, Aranca Research
Key geological coal and iron ore deposits in India
Coal deposits in million tonnes (mt) Iron ore deposits in million tonnes (mt)
States with major coal deposits
• Jharkhand (76,963 mt)
• Odisha (66,307 mt)
• Chhattisgarh (46,682 mt)
• West Bengal (29,853 mt)
• Andhra Pradesh (22,016 mt)
• Madhya Pradesh (21,988 mt)
• Maharashtra (10,308 mt)
States with lower coal deposits
• Uttar Pradesh (1062 mt)
• Meghalaya (577 mt)
• Assam (387 mt)
• Nagaland (316 mt)
• Bihar (160 mt)
• Sikkim(101 mt)
• Arunachal Pradesh (90 mt)
States with iron ore deposits
• Odisha (44.8 mt)
• Karnataka (34.3 mt)
• Goa (3.7 mt)
• Chhattisgarh (3.4 mt)
• Jharkhand (3.2 mt)
• Andhra Pradesh (0.8 mt)
• Madhya Pradesh (0.3 mt)
• Maharashtra (0.1 mt)
Metals and Mining AUGUST
2012
For updated information, please visit www.ibef.org MARKET OVERVIEW AND TRENDS
16 16 For updated information, please visit www.ibef.org
Major metals and mining players in the country
MARKET OVERVIEW AND TRENDS
Segment Major Player Market Share Other players
Iron and Steel NA Sesa Goa, SAIL, Orissa Minerals
Coal 80% Bharat Coking Coal, Reliance Natural Resources, Northern Coalfields
Aluminium 60% National Aluminium Company (NALCO),
Bharat Aluminium Company (BALCO)
Metals and Mining AUGUST
2012
17 17 For updated information, please visit www.ibef.org MARKET OVERVIEW AND TRENDS
Notable trends in the metals and mining sector
Captive mining for coal
• In captive mining for coal, companies are permitted to set up coal washeries and for specified end uses, including the setting up of power plants, fertilisers and steel units
• Under the captive route, the government has allocated 198 coal blocks with geological reserves of about 42 billion tonnes to various public and private sector companies
Focus on domestic market
• The demand for metal and metal products is rising in the domestic market with India being a net importer in the metals segment
• In March 2011, freight charges and taxes on iron ore exports were increased to boost domestic supplies
Overseas ventures
• In search of greater mineral opportunities, an increasing number of Indian mining companies are venturing overseas in a bid to secure stable, long-term supplies of minerals especially in the areas of coal and iron ore
• Coal India plans to export 10 MT of coal from Mozambique to India in the next 10 years; the company is seeking more licence blocks in Mozambique
Notes: MT – Metric Tonnes
Metals and Mining AUGUST
2012
18 18
Contents
Advantage India
Market overview and trends
Growth drivers
Success stories: CIL, SAIL
Opportunities
Useful information
For updated information, please visit www.ibef.org
Metals and Mining AUGUST
2012
19 19 For updated information, please visit www.ibef.org GROWTH DRIVERS
Strong fundamentals and policy support aiding growth
Policy support
Relaxed FDI norms
Allowing private ownership
Reduced customs duty
Increasing investments
Value of M&A deals in metals
and mining rose at a CAGR of 138
per cent over 2008-11
Increasing FDI
Sustained growth in India’s
automotive sector
Aluminium and coal benefiting from rising
power production
Rising production of cement increasing
demand for coal
Growing infrastructure investments
Inviting Resulting in
Higher demand for metals
Notes: M&A – Mergers and Acquisitions; FDI – Foreign Direct Investment
Metals and Mining AUGUST
2012
20 20 For updated information, please visit www.ibef.org
Power and automotive production fuelling demand … (1/2)
→ Sustained growth in India’s automotive sector has been driving demand for steel and aluminium
→ Automotives production increased at a CAGR of 13.2 per cent over FY05-12
→ Passenger vehicles was the fastest growing segment during this period with a CAGR of 14.5 per cent
→ India is expected to become the world’s seventh-largest automobile market by 2016 and the third largest by 2030
Source : SIAM, Aranca Research Notes: FY – Indian Financial Year (April – March)
GROWTH DRIVERS
Total production of automobiles in India (million units)
1.2
1.3
1.3
1.6
1.8
2.4
3.0
3.1
0.4
0.4
0.5
0.6
0.4
0.6
0.8
0.8
0.4
0.4
0.6
0.5
0.5
0.6
0.8
0.8
6.5
7.6
8.5
8 8.4
10
.5 1
3.4
15
.5
0
3
6
9
12
15
18
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Passenger Vehicle Commercial Vehicle
Three Wheelers Two Wheelers
Metals and Mining AUGUST
2012
21 21
617.5 662.5
704.5 723.8 771.6
811.1 876.4
0
200
400
600
800
1000
FY06 FY07 FY08 FY09 FY10 FY11 FY12p
For updated information, please visit www.ibef.org
Power and automotive production fuelling demand … (2/2)
→ The power sector accounts for a large share of the consumption of aluminium and coal in the country
→ Power generation in India increased at a CAGR of 6.0 per cent during FY06-12
→ In the Eleventh Plan, India is estimated to have added around 60,000 MW of generation capacity at an investment of USD11.5 billion
→ To meet growing power demand, the Power Ministry has targeted capacity addition of 85,000 MW in the Twelfth Plan (2012-17) period
Source : Central Electricity Authority (CEA), Aranca Research Notes: TWh- Terawatt-hour, p- provisional
GROWTH DRIVERS
Power generation in India (in TWh)
Metals and Mining AUGUST
2012
22 22 For updated information, please visit www.ibef.org
A fast-expanding construction sector has aided growth in metals demand … (1/2)
→ Infrastructure projects continue to provide lucrative business opportunities for steel, zinc and aluminium producers
→ India’s infrastructure sector has grown at a CAGR of 18 per cent over FY08-11
GROWTH DRIVERS
India’s expanding infrastructure industry (USD billion)
Source : Business Monitor International ‘s (BMI) report on infrastructure industry in India, Aranca Research
Note: F – forecasts (by BMI)
37.0 47.4 48.2
60.8 67.8 76.4
92.5
110.6
131.6
156.9
0
30
60
90
120
150
180
FY08 FY09 FY10 FY11 FY12F FY13F FY14F FY15F FY16F FY17F
Metals and Mining AUGUST
2012
23 23 For updated information, please visit www.ibef.org
→ India’s residential and non-residential building industry expanded at a CAGR of 11 per cent over FY08-11
→ Growth in the sector is set to increase in the next few years; forecasts put the CAGR for FY12-17 at 15.4 per cent
→ Iron and steel being a core component of the real estate sector, demand for these metals is set to continue given strong growth expectations for the residential and commercial building industry
GROWTH DRIVERS
Residential and non-residential building industry (USD billion)
Source : Business Monitor International’s (BMI) report on infrastructure industry in India, Aranca Research
Note: F – forecasts (by BMI)
56.3 55.4 68.6 75.3
82.6 95.8
112.3
131.1
153.9
0
40
80
120
160
200
FY09 FY10 FY11 FY12F FY13F FY14F FY15F FY16F FY17F
A fast-expanding construction sector has aided growth in metals demand … (2/2)
Metals and Mining AUGUST
2012
24 24 For updated information, please visit www.ibef.org
Rising cement production – contributor to growing coal demand
→ India is the world’s second-largest producer of cement; the sector’s strong expansion over the past decade has been a key contributor to rising coal demand
→ By FY13, the cement sector is expected to add additional capacity of 92.3 million tonnes
GROWTH DRIVERS
Cement production in India (million tonnes)
Source: CMA, Edelweiss research, Ministry of External Affairs (Govt. of India), Aranca Research
Note: #- first ten months of FY12 i.e. Apr 2011 to Jan 2012
169.5 183.6
201.2
174.3
145.0
0
50
100
150
200
250
FY08 FY09 FY10 FY11 FY12#
Metals and Mining AUGUST
2012
25 25 For updated information, please visit www.ibef.org
Factors behind rising cement production in India
GROWTH DRIVERS
Source: Aranca Research
Higher cement production
Increasing number of houses
Large infrastructure projects
Expanding road construction
Government support
Metals and Mining AUGUST
2012
26 26 For updated information, please visit www.ibef.org
India has a distinct competitive advantage over its peers
→ Within the Asia-Pacific region, India is ahead of South Korea and Philippines in the mining sector; at the same time it is in competition with Australia, Malaysia, China, Indonesia and Japan
Source : India mining report by BMI-Q2 2012, Aranca Research Note: Description of each headline given in the Appendix
GROWTH DRIVERS
Limits of potential returns Risks to realisation of returns
Mining Industry
Country structure
Limits Market risks
Country risk
Risks Mining rating
India 25.0 52.8 34.7 68.5 53.2 60.8 42.6
South Korea 10.0 66.2 29.7 77.7 57.5 67.6 41.0
Japan 12.5 70.8 32.9 86.4 77.9 82.1 47.7
Philippines 17.5 56.2 31.1 60.4 41.5 51.0 37.0
Metals and Mining AUGUST
2012
27 27 For updated information, please visit www.ibef.org
Strong policy support gives metal and mining sector a boost
Notes: FDI – Foreign Direct Investment
GROWTH DRIVERS
Allowing private ownership
• Government of India is encouraging private ownership for steel operations and other high priority industry
Reduced custom duty • Government of India significantly reduced the duty payable on finished steel
products and has streamlined the associated approval process
Relaxed FDI norms
• FDI up to 100 per cent is permitted under the Automatic Route to explore and exploit all non-fuel and non-atomic minerals and process all metals as well as for metallurgy
• FDI caps for coal and lignite has been increased to 100 per cent under the automatic route
Approved NMP • In a positive move for the sector, in 2008, the Indian Cabinet approved the
National Mineral Policy (NMP) 2008, to boost FDI in mining
Metals and Mining AUGUST
2012
28 28 For updated information, please visit www.ibef.org
MMDR bill
GROWTH DRIVERS
Overview of the MMDR bill
• GOI approved the new mining bill – the Mines and Minerals Development Bill (MMDR) – on 30th Sep 2011; the bill calls for mining firms to share either profits or amounts equivalent to royalties with local communities
• The proposed bill is expected to make it easier to win local approval and smoothen the land acquisition process
General restrictions and mineral concessions
Process of revenue collection and usage
• Central government to establish National Mineral Fund; respective state governments to establish State Mineral Fund(s)
• District Mineral Foundation will be set up by the state government which will work for the interest and benefit of persons or families affected by mining related operation in the district and will be managed by a governing council
• The mining tax collected will be spent within the district
• Reservation of areas for PSUs removed
• State governments to set up special courts to expedite prosecution in illegal mining
• Statutory Coordination cum Empowered Committee at central and state levels to decide upon stringent penalties for offences
Notes: GOI – Government of India PSUs – Public Sector Undertakings
Metals and Mining AUGUST
2012
29 29 For updated information, please visit www.ibef.org
Foreign investments flowing in; rise in planned expenditure … (1/2)
→ Cumulative FDI inflows over Apr 2000 – Feb 2012 into the metals and mining sector stood at USD7.3 billion
→ The sector accounted for 4.5 per cent of total cumulative FDI inflows during the period
GROWTH DRIVERS
FDI inflows into metals and mining over Apr 2000 - Feb 2012 (USD million)
Source : Department of Industrial Policy & Promotion, Aranca Research
Notes: FDI – Foreign Direct Investment
6,019.8
940.4 337.3
24.8 0
2,000
4,000
6,000
8,000
MetallurgicalIndustry
Mining Diamond,Gold
Ornaments
CoalProduction
Metals and Mining AUGUST
2012
30 30 For updated information, please visit www.ibef.org
Foreign investments flowing in; rise in planned expenditure … (2/2)
→ Total M&A deal value in metals and mining increased at a CAGR of 138 per cent during 2008-11
→ In 2011, M&A deal value in the mining sector stood at USD11.2 billion, 292 per cent higher than the corresponding figure for 2010 (USD2.9 billion)
GROWTH DRIVERS
Source: Thomson Banker, Deal tracker, Aranca Research
M&A activities (as of May 2012)
Acquirer Target Acquisition Price
(USD million)
Vedanta Resources PLC Cairn India Ltd (30.4% stake in December 2011) 4,541.9
Vedanta Resources PLC Cairn India Ltd (10.1% stake in July 2011) 1,513.2
GVK Power & Infrastructure Ltd Hancock Coal-Queensland Coal 1,260.0
Sesa Goa Ltd Cairn India Ltd 1,175.9
JFE Steel Corp JSW Steel Ltd 1,029.1
Lanco Resources Australia Griffin Coal Mining Co Pty Ltd 722.7
Metals and Mining AUGUST
2012
31 31
Contents
Advantage India
Market overview and trends
Growth drivers
Success stories: CIL, SAIL
Opportunities
Useful information
For updated information, please visit www.ibef.org
Metals and Mining AUGUST
2012
32 32 For updated information, please visit www.ibef.org
Coal India Limited (CIL): Leader in mining industry in India … (1/2)
Notes: CAGR – Compound Annual Growth Rate, MoU – Memorandum of Understanding,
FY – Indian financial year (April – March)
Revenues (USD billion)
SUCCESS STORIES:CIL, SAIL
→ CIL signed an MoU with Ministry of Coal in 2011, wherein CIL targets to produce 461.5 million tonnes of coal
→ CIL also signed an MoU with Shipping Corporation of India in 2010 to create comprehensive end-to-end logistic solutions
Source: Bloomberg, Aranca Research Note: *- 9M of FY12 (Apr 2011- Dec 2011)
6.5
8.1 8.5
9.4
11.0
9.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
FY07 FY08 FY09 FY10 FY11 FY12*
Metals and Mining AUGUST
2012
• Set up in 1967, Coal India Limited (CIL) is the largest coal mining company in India
• Coal India contributes around 85 per cent of total coal production in India
33 33 For updated information, please visit www.ibef.org
Coal India Limited (CIL): Leader in mining industry in India … (2/2)
Coal Production (in million tonnes)
SUCCESS STORIES:CIL, SAIL
→ The company's strategic overseas ventures with Colombia and US enabled it to meet India's rising energy demand
→ CIL plans to invest about USD6.25 billion to increase capacity, acquire new mining projects, machineries and equipment
→ Government has recently allocated 116 coal blocks to CIL for expansion
Source: Company Website, Aranca Research Note: *- 9M of FY12 (Apr 2011- Dec 2011)
336.6
353.3
377.2
395.1
390.0
264.2
24.3
26.2
26.5
36.1
41.4
27.1
0 100 200 300 400 500
FY07
FY08
FY09
FY10
FY11
FY12*
Non Coking Coal Coking Coal
Metals and Mining AUGUST
2012
34 34 For updated information, please visit www.ibef.org
Steel Authority of India Ltd (SAIL): A story of steel … (1/2)
Notes: Viswakarma Award is for outstanding achievement or good performance on the part of workers in increasing productivity, quality,
safety, working conditions, import substitution etc
Revenues (USD billion)
SUCCESS STORIES:CIL, SAIL
→ SAIL has entered into a Joint Venture with POSCO, Korea; Kobe Steel Limited, Japan; Rashtriya Ispat Nigam Ltd; Larsen & Toubro Ltd; National Mineral Development Corporation; Hindustan Prefab Ltd; and IRCON International Limited, Turkey
→ SAIL employees bagged the maximum number of Viswakarma Awards declared in Aug 2009
→ SAIL's expansion plan worth USD15 billion will increase its production capacity from 14 million tonnes per year (current) to 24 million tonnes by 2013
Source: Company website, Aranca Research Note: *- 9M of FY12 (Apr 2011- Dec 2011)
CAGR – Compounded Annual Growth Rate
7.1
8.2 9.0 8.4 8.9
6.7
0
2
4
6
8
10
FY07 FY08 FY09 FY10 FY11 FY12*
CAGR 5.9%
Metals and Mining AUGUST
2012
• Incorporated in 1954, Steel Authority of India Ltd (SAIL) is India's second largest producer of iron ore
35 35 For updated information, please visit www.ibef.org
Total saleable steel production (million tonnes)
SUCCESS STORIES:CIL, SAIL
→ It won the Gold Trophy of “SCOPE Meritorious Award for R&D, Technology Development & Innovation” for 2007-08
→ It was also awarded the “Corporate Social Responsibility & Responsiveness“ by the President of India in FY09
Source: Company website, Aranca Research Note: *- 9M of FY12 (Apr 2011- Dec 2011)
Steel Authority of India Ltd (SAIL): A story of steel … (2/2)
12.6
13.0
12.5 12.6 12.9
9.1
8.0
9.0
10.0
11.0
12.0
13.0
14.0
FY07 FY08 FY09 FY10 FY11 FY12*
Metals and Mining AUGUST
2012
36 36
Contents
Advantage India
Market overview and trends
Growth drivers
Success stories: CIL, SAIL
Opportunities
Useful information
For updated information, please visit www.ibef.org
Metals and Mining AUGUST
2012
37 37 For updated information, please visit www.ibef.org
Opportunities
OPPORTUNITIES
Untapped market with strong growth potential
• India’s per capita steel consumption was 55 kg in mid 2011 compared to the global average of 225 kg
• Rural per capita steel consumption is likely to double from its present consumption of 9.7 kg by 2015
• By FY12, a shortfall is expected in domestic supply of steel worth 3-8 million tonnes
Scope for new mining capacities in iron ore, bauxite
and coal
• India has the world’s fifth-largest reserve base of bauxite and fourth-largest base of iron ore respectively, and accounts for about 7 per cent and 10 per cent respectively, of total world production
• India also has the fourth-largest global reserve base of coal, and accounts for 7.5 per cent of the total world production
Rapid growth of user-industries to drive demand for metals
and minerals
• Strong long-term demand from the steel industry is expected to further boost the iron ore industry
• Increasing power production is likely to catapult demand for coal
• Booming construction, automobiles, and packaging industries are expected to lend substantial support to the metals and mining sector
Note: kg - kilograms
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Contents
Advantage India
Market overview and trends
Growth drivers
Success stories: CIL, SAIL
Opportunities
Useful information
For updated information, please visit www.ibef.org
Metals and Mining AUGUST
2012
39 39 For updated information, please visit www.ibef.org USEFUL INFORMATION
Industry Associations
Aluminium Association of India 118, 1st Floor, Ramanashree Arcade 18, M. G. Road Bengaluru, Karnataka-560 001 Phone: 91- 80-25582197, 25582757 Fax: 91-80-25594535 E-mail: [email protected] Federation of Indian Mineral Industries FIMI House, B-311, Okhla Industrial Area Phase-I, New Delhi-110 020 Phone: 91-11- 26814596 Fax: 91-11- 26814593 E-mail: [email protected] Indian Stainless Steel Development Association L -22/4, DLF Phase–II Gurgaon, Haryana-122 002 Phone: 91-124 - 4375501 Fax: 91-124 - 4375509 E-mail: [email protected]
Metals and Mining AUGUST
2012
40 40 For updated information, please visit www.ibef.org
Appendix
BMI’s Mining Business Environment Ratings
• Market structure: it takes into consideration mining output in USD billion, sector value growth, % y-o-y r, mining sector, % of GDP
• Country structure: it takes into consideration labour market infrastructure, physical infrastructure r, tax, and scope of state
• Market risks: it considers metals prices, 5-year, forecast average, metals price forecast, average 5-year growth, regulatory framework, legal framework
• Country risk: it considers, long-term external risk, corruption, bureaucracy , long-term policy continuity
• Mining ratings: it shows the overall scores of the above indicators
USEFUL INFORMATION
Metals and Mining AUGUST
2012
41 41 For updated information, please visit www.ibef.org
Glossary
→ CAGR: Compound Annual Growth Rate
→ FDI: Foreign Direct Investment
→ FY: Indian Financial Year (April to March)
→ So FY10 implies April 2009 to March 2010
→ GOI: Government of India
→ IBM : The Indian Bureau of Mines
→ MoU: Memorandum of Understanding
→ PPP: It could denote two things (mentioned in the presentation accordingly) –
→ Purchasing Power Parity (used in calculating per-capita GDP)
→ Public Private Partnership (a type of joint venture between the public and private sectors)
→ PE: Private Equity
→ USD: US Dollar
→ Conversion rate used: USD1= INR48
→ Wherever applicable, numbers have been rounded off to the nearest whole number
USEFUL INFORMATION
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2012
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India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this
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Disclaimer
For updated information, please visit www.ibef.org DISCLAIMER
Metals and Mining AUGUST
2012