National Mineral Policy 2006 - Department of Mines

as the basis for determining the adequacy of resources in the country. However, to determinethe adequacy of resources the demand side also needs to be looked at. The demand for ironore is a function of the demand for steel. The thumb-rule for ratio of iron ore to steel is 1.6:1.The world produces 1 billion tonnes of steel a year, for which it needs 1.6 billion tonnes ofiron ore. The world’s iron ore reserves are estimated to be 370 billion tonnes. So evenignoring the aspect of new finds, the world has resources for 230 years at current levels ofproduction. Similarly, according to the National Steel Policy document, India produced 35million tonnes of steel, for which it needed 54 million tonnes of iron ore. At 110 milliontonnes of steel as envisioned by the Ministry of Steel for 2020, India will need 176 milliontonnes of iron ore every year for the local industry. At the 2004–05 rate of production of 142million tonnes per annum, the depletion of iron ore reserves would be about 2 billion tonnesuntil 2020, leaving a balance of 21.58 billion tonnes. If the domestic production grows andthe exports also rise to 100 million tonnes by that year the level of resources would be about21 billion tonnes in 2020. On the basis of these estimates, the annual depletion of reserveswould be 276 million tonnes beyond 2020. At this rate, in 2020, India would have enoughreserves for about 75 years. In this calculation, we do not take into account either the furtherincrease in domestic steel capacity or the new finds of reserves beyond 2020.7.33 Consumption of steel rises with the demand for housing, other commercialconstruction, and infrastructure. The consumption pattern of steel in India, China, and SouthKorea is shown in Table 7.5.Table 7.5: Steel Consumption Pattern in India, China, and South Korea(per cent)Sector India China South KoreaConstruction 61 55 40Capital Goods/Machinery 11 17 11Consumer Durables 5 2 7Automobiles 8 5 20Ship building -- -- 18Others 15 21 4Total 100 100 100Source: Papers presented in INDIA/IISI/OECD Workshop, New Delhi, 16 and 17 May 2006.It is argued that once the construction boom in the country is over then its steel requirementstabilises, as it mainly needs steel for maintaining its housing and industrial base. In 2003, theper capita consumption of steel in the US was 337 kg, in Europe (16 countries) it was 361 kg,153