21 Dec 2019

Ferro-alloy industry stares at sizeable job loss as mines shut down

Demand-supply mismatch could further affect domestic steel production
Aditi Divekar  |  Mumbai  Last Updated at December 21, 2019 01:32 IST

With sevenmanganese and four chromite non-captive mines ontheir way to shut down by March 2020, the mining industry is staring at asizeable job loss since the ratio of direct andindirect employment is 1:10.

“Nearly 90per cent of the labour is on contract basis at these mines. Thisincludes migratory labour also,” Sunil Duggal, president at Federation ofIndian Mineral Industries (FIMI) told Business Standard viatelephonic interaction.

This,however, is just the beginning since mining leases of total 329 mines ofprivate mining companies, including 48 operative and 281 non-operative minesspread across 10 states, is set to expire on 31, March 2020.

Of these, 50 per cent of operativemines are in Odisha and the largest shares of non-operative mines are of Goawith 184 mines and Karnataka with about 42 mines.

“There is no guarantee whether thenew owner (post auctioning) will employ the entire workforce at the mine siteas a lot also depends on how much technological advancements would be appliedto the mines, which could curtail employment,” Duggal added.

Since the ratio of direct andindirect employment is 1:10, an estimated 250,000 direct job losses areexpected by March 31, 2020. The cumulative loss is expected to reach 2.5million (25 lakh) and can grow further. Also, once mining stops, the revival ofmining activity takes months, said FIMI.

“The contribution of miningindustry in India’s GDP is continuously decreasing. At present it is just about1.53 per cent as compared to 7-7.5 per cent in mineral rich countries likeAustralia and South Africa. India’s production of minerals worth stood at Rs58,638 crore, while the import of minerals is worth Rs 434,925 crore, about 8-9times more. Moreover, Indian miners are not able to export many minerals due tolevy of heavy export duty”, explained Duggal of FIMI.

With focus on infrastructure and domesticmanufacturing, India has set a steel production target of 300 million tonne ofcrude steel by 2030-31. This means the industry needs to increase the presentcapacity by 2.11 times from 142 million tonne to 300 million tonne in the next11 years.

This translates into annualrequirement of 11 million tonne of manganese ore and 5 million tonne of chromeore, according to the National Steel Policy (NSP) 2017.

Despite having a total productioncapacity of 5.15 million tonne per annum in the ferro-alloy industry, thisindustry has been battling a slowdown in the past five years (2013-18), withproduction of ferro-chrome stagnant at 1 million tonne, ferro-manganese at 0.52million tonne and ferro-silicon at 0.09 million tonne.

Ferroalloy production is an importantpart of the manufacturing chain between mining and steel and alloys and not asingle steel grade is produced without ferroalloys, said experts.

India has manganese ore to the tuneof 496 million tonne and chrome ore to the tune of 344 million tonne as onApril, 2015, said FIMI. However, the country is currently importing theseminerals.

A demand-supply mismatch in theferro-alloy industry could also affect domestic steel production further. Thelatter is already reeling under production cuts due to weak demand scenario inthe domestic market.

Among the top steel producers inthe country, Sajjan Jindal-led JSW Steel reported a drop in crude steelproduction for November by 7 per cent on year-on-year basis to 12.90 milliontonne with long steel production dropping by 14 per cent on year-on-year basisin the period under review.

Reference: Business Standard 


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