Explosives Industry Eyes 11.7% CAGR By FY20

Coal likely to play leading role in pushing up demand

- Madhumita Mookerji

Buoyed by potentially dynamic coal and iron ore sectors in the coming years, the Indian explosives industry is expected to clock an 11.7 percent volume compound annual growth rate (CAGR) to around 1.5 million tons (mt) by financial year 2019-20 (FY20), as per industry sources.

In fact, this 11.7 percent CAGR, sources say, is better than the 8.6 percent volume CAGR seen over 2009-17.

Coal is likely to play a leading role in pushing up the fortunes of the explosives players with an expected 6.5 percent CAGR in coal production, with the sources basing their research on certain factors. These include single-digit growth in coal-based power generation; increased traction from iron ore mining in 3 states – Chhattisgarh, Odisha and Jharkhand; announcement of the new steel policy; and revival in cement demand.

“On the back of these positives, we expect domestic coal volumes to see a 6.5 percent CAGR during FY18-20,” the sources said.

Even though the market expects coal production to see a 6.5 percent CAGR during FY2018-20, increase in the stripping ratio at the existing coalfields and commencement of 22-24 mines over FY2018-19 are the main reasons behind expecting an 11.8 percent CAGR push for the explosives sector over financial year 2018-20 from coal mining alone.

India produced 1.1 million tons (mt) of explosives in financial year 2016-17 and of the total volumes produced around 70 percent was supplied to Coal India (CIL). In fact, in order to grow their business, many explosives companies, in recent years, set up their plants close to CIL’s mines, the sources observed.

Further, an uptick in iron ore volumes and higher overburden expenses at existing mines are expected to lead to a 7.2 percent CAGR in explosive volumes from this sector in FY2018-20.