World Iron Ore Scenario

World Iron Ore Scenario Three largest companies Cia Vale Do Rio Doce (CVRD), Rio Tinto and BHP-Billiton together control about 30% of global production. •

•Top 4 iron ore suppliers account for 65% of seaborne iron ore trade - CVRD,Rio Tinto, BHPB & Mitsui •Top 5 steel makers account for 16% of production Arcelor/NSC/Posco/LNM(Ispat)/Corus • China is the clear driving force in the global trade iron ore market

• China’s GDP growth due to massive industrialization, urbanization, infrastructural development supported by massive steel industry expansion. • Existing blast furnace capacity of 220 million tonnes likely to increase by about +90 MT by 2005 and +170 MT by 2010. • Iron ore production in China is likely to increase to about 350 MT in 2-3 years and steel consumption to about 450 MT by 2010 and 885 MT by 2020. •This will catapult Asian steel output to almost match the rest of the world’s entire production. Global sea borne trade has grown from 119 MT between 1976-1998 to 169 MT between 1999-2004. (Sea borne trade during 2003 was 523 MT provisionally). •

Analysis of China market of iron ore

• Expected rise in iron ore demand by about 240 MT

between 2004 and 2010. • Rio Tinto is adding 53 MT by 2006 and another 37 MT by 2010. • BHP-Billiton is adding 35-40 MT by 2006/07 and a further 25-30 MT by 2010 (71.5 MT produced in 2003). • CVRD is adding 85 MT in 2006 and 100 MT in 2007 from its northern system and 140 MT by 2008 from its southern system (186 MT produced in 2003 from both the systems). • 15 MT will be added by S Africa. • Indian share in global market will decline due to increase in its domestic consumption.

• Global iron ore consumption continues to grow over at least next five years. • Price environment will remain buoyant. • Only after 2006, there is a possibility of easing the pressure on supply provided the development plans envisaged by the producers are also put into action. • Chinese growth expected to go from 9.1% to 8.2% from next year onwards and thereafter flatten out at 7%.

Indian Iron Ore Resource • Large potential of iron ore. • Vast resource of about 17.7 billion tonnes (Hematite 12.32 billion tonnes and Magnetite 5.4 billion tonnes). • Out of 624 mining leases, only 225 working mines (during 2002-03). •From the estimated 12745 MT as on1.4.1990, the resources have increased to 17712 MT as on 1.4.2000.

PROJECTEDDEMAND Forecastedironore requirement, whichalso includes exports at current levels: 122milliontonneby2006-07 156milliontonneby2011-12

Domestic ironore requirement: 84 milliontonneby2006-07 114milliontonneby2011-12

RESOURCES IN VARIOUS SECTORS IN INDIA VIS-À-VIS PRODUCTION (Qty in Million Tons) Present Production Sector Resources (Approx.) Zone A- Jharkhand & Orissa 7458 37 Zone B- Chhatisgarh 3588 24 Zone C- Bellary Hospet 1315 18 Zone D- Goa Redi 1091 24 Zone E- Karnataka (Magnetite) 3843 7 TOTAL 17295 110

COMPANY

MINES

PRODUCTION CAPACITY ( Million Tonnes )

NMDC

Bailadila, Chattisgarh Donimalai, Karnataka Jharkhand, Orissa & Chhatisgarh western Ghat

SAIL KIOCL Other Govt Undertakings Total Public Sector GOA TISCO & OTHERS Jharkhand, Orissa & Karnataka Total Private Sector Grand Total

17 5 24 7 3 56 23 31 54 110

NMDC’s Present Production • Bailadila Sector: Deposit 14/11B: 7 million T Deposit 5: 7 million T Deposit 10/11A: 3 million T • Donimalai Sector: Present Capacity: 5 million Tonne

NMDC Future Plans •In the year 2004-05: 22 million T (est.) •By year 2010: 30 million T (By adding capacity viz. 11B, Kumaraswamy and augmenting production from 10/11A)

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