Challenges in the logistics sector in

mining

Rohit Chaturvedi, Head-Transport & Logsitics,

CRISIL Infrastructure Advisory

22 January 2011
 Structure of Presentation

1 Background

2 Overview of mining in India

3 Road Challenges

4 Rail Challenges

5 Port Challenges

2.
 Background

3.
 Context of the presentation

Need to
identify and Logistics
solve issues forms an
India, is poised for
in these important
rapid economic
sectors as component
growth and has a
they could of the value
growing demand for
potentially chain of
energy and minerals
impede these
growth sectors

4.
 Overview of Mining in India

5.
 Coal and Iron Ore are the highest mined in terms of volume…
2007-08
Coal drives the production of electricity in the country..
(Total: 802 million tonnes)
(Power Sector accounts of 74% of total consumption)
Others
17% 2007-08
(Total: 152000 MW)

Iron
Nuclear, 2% RES, 8%
Ore
26%
Coal
57%

Thermal, 65 Coal, 53%

54% of iron ore produced in the country is
%
exported
2007-08 Oil, 1%
(Total: 206 million tonnes) Hydro, 25% Gas, 11%

Import
46%
The majority of the remainder is used in the firing of
steel and cement plants..
Export
54%

6.
 Coal Deposits – Transported from Central India towards North, South and
West India primarily by road and rail…

Source: www.mapsofindia.com

The majority of the coal reserves are in the states of

Jharkhand, Chhattisgarh, Orissa, Assam, West Bengal, Maharashtra, and Andhra Pradesh.
There are also lignite deposits in Jammu & Kashmir, Rajasthan, Gujarat, and Tamil Nadu. Rail
is the primary mode of transport with over 49% of coal being transported by rail

7.
 Iron Ore Deposits – Transported primarily towards steel plants in Orissa, MP
and Jharkhand and Ports i.e. Goa, Mangalore, Haldia, Paradip, Vizag…

The majority of the iron

ore reserves are in the

states of

Goa, Karnataka, Orissa

and Bihar. Some of the

important districts

having deposits are

Chikkamagluru, Singhb

um, Sundargarh, Kenju

dhar, Mayurbhanj, Bast

ar and Chandrapur.
Source: www.mapsofindia.com

Source: infochangeindia.org

8.
 Logistics plays an important role in the mining industry…

MINISTRY OF MINES

POWER/STEEL

MATERIAL HANDLING (OVERBUDEN

ROAD
INTERNAL
PLANT

MINE PRODUCTION
TRANSPORTATION
TRADERS

RAIL

etc.)
(THROUGH PORT)

EXTERNAL
EXPORT

WATER

MINISTRY OF RAILWAYS

Each segment of the value chain for transportation i.e. Road Rail and Ports have
been analysed in key issues. Here we present a summary of key issues.
9.
 Port Transport Issues and Recommendations

10.
 Port Challenges

Low level of mechnization at the ports

Inadequate port capacity leading to congestion at the port

Lack of specialized berths at the ports to handle iron ore and coal

Inadequate cargo handling equipment

Poor road and rail linkages to the ports

11.
 Port Recommendations..

Augmentation of
port capacities by
increasing draft
and number of
berths for higher
capacity

Expedite the Modernization of

possibility of PPP Recommendation machinery and
in the for Port increased
development of mechnization i.e.
ports Allowing for
railway rakes to
go inside ports
for unloading

Improvement in rail-road
connectivity for ports

12.
 Rail Transport Issues and Recommendations

13.
 Key Challenges in Rail Transport

Inadequate rail capacity for both domestic steel plants and also for
exports

Lower haulage capacity leading to higher lead time

Policy of higher freight for goods by cross subsidizing freight earnings

for passenger traffic

Frequent changes in the rail freight of iron ore leading to constraints for
long term planning and fixing modal mix

Threat of exorbitant punitive charges for overloading leading to under

loading of rakes and thus causing losses to dead freight payment

Lack of rail connectivity to ports and long timelines for rail projects

14.
 Rail Recommendations..
Development of Increase in axle
mechanisms for load limits for
the accurate railways wagons
loading of rakes to allow more
to ensure safety loading

Recommendations
for rail
Elimination of Expediting rail
cross subsidy corridor
between connectivity and
passenger and implementation
freigh fares of port
connectivity
project on priority
Policy incentives to be
provided to allow for
organized players to enter
the logistics space

15.
 Road Transport Issues and Recommendations

16.
 Challenges in Road Transport

Narrow and congested highways

Poor surface quality of roads due to underfunding of road maintenance

Poor Quality of vehicles leading to lesser load bearing capacity

Lack of organized fleet owners leading to lower professionalism

Industry status not accorded to road transport operators

No access to low interest rate funds for investment leading to higher

freight costs

17.
 Road Recommendations..
Increased
Review of the government
numerous state focus on the
and local laws development of
roads

Recommendations
for road
Development of Impetus to be
new higher given to the
capacity carrying development of
road which would PPP projects in
allow for the road sector
development of
higher capacity
vehicles Policy incentives to be
provided to allow for
organized players to enter
the logistics space

18.
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