India’s demand for steel and iron ore will not follow the same direct, rapid upward trend that characterised industrial growth in China, according to Indian mining group Vedanta.
With China’s economy settling down to GDP growth of around 4-6pc/yr, India is the next major economic driver for global commodities demand, Vedanta chief executive Tom Albanese told the annual Mines and Money event in London. Albanese previously headed UK-Australian mining firm Rio Tinto.
“India is the next demand and supply story, but neither will be in hyperdrive,” Albanese said. China’s economic industrialisation took place at unprecedented speed, driven by a government that pursued growth as its first priority, he said.
Albanese suggested that steel, iron ore and other metals prices are “still a lot lower than they were five years ago”, because China is “now going through an accelerated post-industrial phase”, while slower-emerging economies such as India have not yet had time to fill the gap in demand. But the fundamental growth drivers remain the same, with steel needed as the basic building block of an industrialising economy, he said.
India’s political and social frameworks meant that commodities consumption growth will not be as straightforward as that seen in China, Albanese said. Indian state ownership of almost all domestic mineral resources has stifled exploration, for legitimate reasons, Albanese said. And the high level of distrust between the public and private sectors has slowed the pace of mining and infrastructure projects.
And the Indian government’s recently introduced currency restrictions are causing some problems, from a purchasing perspective, Albanese said.
He did not address the 5.5mn t/yr cap on Vendanta’s Indian iron ore output — which the company is contesting — but he acknowledged that India’s high population density created genuine land-use conflicts, compared with large iron ore-producing regions such as Western Australia. It is up to mining companies to negotiate workable solutions to these disputes and foster a productive relationship with state and national authorities, Albanese said.
Source: PlattsPrevious Next