Changing Times for Mining and Steel Sector in India Post COVID 19

The impact of coronavirus pandemic on economic growth of India will depend on how the outbreak evolves in the coming weeks and how as citizens, we respond to it. Although the magnitudes are uncertain, the pandemic is likely to derail the near-term outlook by interrupting daily activity, putting further downward pressure on commodity prices, disrupting tightly linked regional supply chains, reducing travel and tourist arrivals, and decreasing demand for exports from the country.

There are trade-offs between the health benefits of policies to slow down the spread of the disease and the economic costs of these actions. During these difficult times, it is important for policy makers to act decisively to save lives and invest in their public health systems; but also minimize the economic cost by strengthening the safety net for the most vulnerable; supporting the private sector through short-term credit, tax breaks, or subsidies; and being prepared to lower interest rates and inject liquidity to restore financial stability and boost confidence.

With the debate on lives vs livelihoods amidst the challenging lockdown slowly subsiding and meandering towards a new normal from “Jaan Hai to Jahan Hai” to “Jaan Bhi aur Jahan Bhi”, the onus is now on the Industry to understand the situation and work towards better times. The Mining Industry in India, being the primary supplier of raw materials to the manufacturing sector, has a critical role to play for leading the resurgence of the economy post the lockdown.

Fight of human civilisations with infectious diseases is not new. Every time, human civilisations have become victorious and that’s the reason that we are still alive. This time also, we will win by following right strategies, but this will culminate in behaviour changes, newer Standard Operating Procedures (SOPs) and different business models.

When we think of the new normal, things that are paramount in these times are social distancing and sanitising. Applying these mandates across the spectrum of the mining and steel sector gives rise to both challenges and opportunities. For the players dealing with minor minerals and operating small scale operations which are more labour intensive, the challenge is of maintaining the scale of operations with lesser manpower abiding by requirements of this challenging time. But this provides an opportunity to adopt mechanisation of these operations as easy answer to the scale challenge. On the other hand, the mechanised operations of larger mines where generally solitary HEMM Operator is entrusted with a machine, the challenge would be to maintain proper sanitization of the working places and ensuring social distancing during transportation of employees.

Big mines and steel companies have since beginning followed concept of township around area of operation and this will be a boon where people visiting the plants are known, influx of visitors are less, testing and monitoring are easier.

Overall, while we can clearly see that the trend will be towards more and more mechanisation with lesser dependence on manpower for operations, we also see that there would be requirement of frequently sanitized work places and for increased transportation requirements in lift, cage, man riding system with social distancing.

The opportunities for the mining and metal sector in these troubled times can be manifold as the Government is believed to be working on a mega package to revive the economy, and going by the trend it would certainly have the ‘magic pill’ of kick starting infrastructure investments to drive up the demands for the manufacturing sector. This would certainly create the necessary demands for minerals and mining would be certain to derive the benefits from this induced demand. The other silver lining for mining amidst the dark clouds of COVID is the opportunity of attaining global standards of hygienic environment and workplace resulting in higher individual productivity. Moreover, with distancing and norms for avoiding gathering in workplaces, the typical Indian attribute of whiling away time would also be arrested to a considerable extent which would also result in increased productivity and efficiency.

The answer to coming back to the track lies in ecosystem approach rather than plant or mine level. Infrastructure projects in covid free zone with certain conditions and precautions can start to boost activities at plant level. Special attention to migrant workers holds the key for logistics and construction activities. Similarly post lockdown, though in person meetings will reduce, many individuals will prefer individual mode of transport rather than public transport despite regular sanitising the public transport system. There lies an opportunity of right vehicles meeting emission standards for propelling the auto sector. More collaborative approach between steel makers, downstream industries, construction & infrastructure companies auto sector and other constituents of ecosystem will help in overcoming the challenges.

The other benefit that the mining and steel sector would most likely derive is going to be digital monitoring and supervision. With technology and equipment not being the constraint, the only factor holding this back was the attitude and to some extent the statutes. With the emergent need of the situation, technology influx and digital penetration, a combination of analytics and IoT would be the way of life in mining and steel making. This crisis may prove to be the catalyst to spur ‘digital mining’ and digital manufacturing in steel sector in India. Hence the need of the times is to go back to the basics of continuously re-skilling people to remain relevant for the times.

Overall, this situation provides the actual launchpad for the Indian Mining and steel Industry to zoom into the future of more mechanised, sanitized and digitalised operation, post COVID 19. All that is required is a sense of discipline from the mining & steel sector and right incentives from Government to ensure liquidity in the sector, facilitating indigenisation of equipment, protecting it from cheaper imports and incentivising exports.

The author is Co-Chair, FICCI Mining Committee and Chief Regulatory Affairs, Tata Steel