This report covers the structure, trends, and outlook of India’s metals and minerals sector through H2 2013. The report also offers profiles and a comparative matrix of leading players in the sector, including Hindalco Industries, Hindustan Zinc, and Hindustan Copper.

India's metals and minerals sector has been an important constituent of economic growth in India. The country has been a major global player in minerals and metals in terms of manufacturing, consumption and trading in the last few years. India was the world’s fifth-largest aluminum producer as of 2010 and sixth-largest zinc producer as of 2009. The sector comprises mining, production and trading companies and the big metals players dominate the industry, thus forming a sort of oligopoly.

The first half of FY2013 was difficult for the sector after a domestic industrial slowdown lowered demand. The global situation for metals and minerals was also adverse, with spot prices of several metals going south. However, the prices of metals started showing signs of growth in the third quarter of the fiscal year, backed by the improved economic outlook in the United States, European Union, and China. The sector will remain under pressure in the near term due to a demand slowdown and sticky inflation. However, the outlook for the sector is stable in the long term because of low per capita metal consumption, vast mineral resources, and a growing construction sector. Reforms and clearances in the mining sector will further add to this growth.

Key Points:

• This report discusses the market position of and financial information for several of the sector’s leading players, including Hindalco Industries Limited (HIL), Hindustan Zinc Limited (HZL), and Hindustan Copper Limited (HCL).

• The value of the metallic minerals segment was estimated at around INR 434bn at the end of FY13. During FY09-13, the segment grew at a CAGR of 16%, while the non-metallic minerals sector, which was valued at INR 344bn, grew at a CAGR of 18%.

• Total aluminum production during the first six months of FY13 was around 756 thousand tons. Contrary to the consistent growth achieved in the last five years, total production in H1 FY14 declined by 11% over H1 FY13.

• Total copper production during the first six months of FY14 was around 248,000 tons. This was 33% lower than production over the same period in FY12.

• In H1 FY14, the mining index contracted by 2.5%, while non-metallic mineral products grew by 1.1% on a y/y basis. Meanwhile, the basic metals index contracted by 2.5%. Thus, all three segments underperformed in the first half of FY14 compared to their historical growth rates.