Minerals, metals to account for 4-5% of GDP: McKinsey

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Kolkata, May 2: The minerals and metals sector would account for 4-5% of India’s GDP by 2015, according to a study by international consultancy firm McKinsey.

India would witness high demand growth for steel, coal and alumina/aluminium in the coming years which would be ultimately translated into higher contribution to GDP by these sectors, the report said. The two sectors would provide direct employment to approximately two million by 2015.

A sectoral analysis by McKinsey revealed that domestic steel consumption was expected to grow at 8-11% from approximately 33 million tonne in 2003 to 80-110 million tonne by 2015.

Growth in steel consumption would be primarily driven by the four sectors - infrastructure, construction, manufacturing and automotive. McKinsey said a large portion of the growth was expected to come from sectors driven by consumer spending rather than those where government spending was involved.

Coal would also see a high growth in demand, particularly from thermal power generation, the McKinsey study said. Based on extrapolation, it said, India’s power generation capacity was expected to increase from 105,000 mw in 2002 to 254,000 mw by 2015. Even if 80% of capacity addition materialised, demand for coal would skyrocket in the coming years.

Consequently, consumption of coal in the power sector would grow from 255 million tonne in 2003 to 720 million tonne in 2015, assuming its share in power generation.

Besides power, steel was also a major consumer of coal. The study pointed out coal consumption by the steel sector was likely to grow from 20 million tonne in 2003 to 70 million tonne by 2015.

Primary constituents of aluminium demand were domestic and exports, McKinsey said.