Page 41 - Mines and Minerals Reporter eMagazine - Volume October 2021

NEWS DESK

This comes against the backdrop of National Mineral Policy to curtail output, "
goals to increase mineral production by 200% in 7 years. Of In- further support-
dia’s obvious geological potential area of 0.571 million sq. km, ing prices in re-
only 10% has been explored. “The Minister called upon the cent weeks. In
States that received the mining block reports to act on the the first fortnight
reports without any delay to make the auction process fast- of October 2021,
er. He also directed the Ministry of Mines to make available the prices have Given the continued earnings surge,
more financial assistance to States. Stating that proactive further improved expectation of 6-7% demand growth
approach by State governments can bring about tangible re- by ~11-26%1 in FY2022 and deleveraging of
forms in mining, the Minister assured all assistance from the compared to end balance sheets supported by healthy
Centre. Shri Joshi pointed out that despite having the fourth September 2021. accruals, the industry outlook has
largest coal reserve, India is still importing thermal coal and As per ICRA note, been revised to Positive from Stable.
our mineral potential is no way less than other mineral rich in the domestic Further, given the strong performance,
countries like Australia," the statement said. market, while the the credit metrics of the companies in
ongoing thermal ICRA’s sample set are also expected
Robust prices, improving coal shortage will to witness a significant improvement
increase the cost
with a projected total Debt/OPBDITA
demand to drive perfor- of production, of 1.2 times and interest cover of 8.7
and coal avail-
times during FY2022 compared to a
mance of domestic base ability remains a total Debt/ OPBDITA of 2.2 times and
near-term
con-
interest cover of 5.2 times in FY2021.
metals companies; outlook cern, the buoyant The buoyant price levels have also
metal prices will
revised to Positive: ICRA support operat- incentivised higher metal produc-
ing margins for
tion both from new facilities as well
base metal com- as facilities that were shut down/
panies in FY2022. curtailed during the pandemic and
• Base metals prices remain buoyant in the current calendar
year on the back of steady improvement in demand As for the domes- earlier. In addition, rising energy costs
conditions and supply restrictions owing to power crisis in tic demand-sup- globally remain a concern. Notwith-
China ply scenario, standing the same, absolute metals
• Coal availability issues in the domestic market remains a while consump- prices would remain at a significantly
near-term concern high level in CY2021, thus improving
tion was impact- the financial performance of the base
ed in FY2021, an metals players,
on-ferrous metal prices have witnessed a strong re- improvement has
covery from the lows witnessed post the onset of the
Npandemic in March 2020 to multi-year highs prevailing been visible in Jayanta Roy,
the current year
as on date. A steady turnaround in demand conditions, espe- with higher sales Senior Vice-President and
cially in China, saw base metals (aluminium, copper and zinc) volumes in Q1 Group Head, Corporate Sector
prices increasing by over 34-56% on a Y-o-Y basis in the cur- FY2022 compared Ratings, ICRA
rent calendar year. Additionally, the power crisis in China and to corresponding period of last year. As per ICRA’s estimates,
the resultant surging energy cost has forced many producers
the demand of base metals is expected to register a healthy
growth of 6-7% in FY2022. Despite the healthy growth, do-
mestic production of aluminium and zinc remains in excess of
consumption. The situation is likely to persist going forward
as well, as domestic capacity is high, and manufacturers are
expected to operate the plants at a high utilisation level. This
in turn would lead to large export volumes. Off-take risks in
the international market, however, would remain low, given
the cost competitiveness of the domestic manufacturers and
the recent production cuts in China. However, lower copper
production has created a large deficit in the domestic copper
market, resulting in large imports, and the situation is unlikely
to improve in the near term. demand-supply for aluminium

OCTOBER 2021 / MINES & MINERALS REPORTER 39