- Around 16 mnt iron ore shortfall in FY25
- 40% underutilized beneficiation capacity is India
India is on a fast-track to growth in steel production, with ambitious targets set under the National Steel Policy and Viksit Bharat 2047. The government is targeting to reach 300 million tonnes (mnt) of crude steel capacity by FY30-31. However, this massive ramp-up raises a serious concern: Will there be enough iron ore to meet future demand?
India’s projected crude steel capacity & iron ore requirement
While the government has introduced progressive reforms to secure iron ore supply, industry stakeholders highlight a persistent shortage impacting the secondary steel sector, which largely lacks captive iron ore mines. According to industry estimates, there is an annual shortfall of approximately 16 mnt of iron ore. The shortage is attributed primarily to the continued export of low-grade iron ore fines, particularly in the Fe 55-58% range, which can be beneficiated for domestic use.
Based on an estimated ratio of 1.6 t of iron ore required per tonne of crude steel, India will need about 480 mnt of iron ore by FY’31 and 800 mnt by FY’47. In comparison, India’s current production stands at just 291 mnt (FY24-25), indicating a clear shortfall.
Export-import paradox: Why is India exporting iron ore?
In FY24-25, India exported 26.6 mnt of iron ore fines, 76% of which were low-grade (Fe<58%). At the same time, India imported 6.5 mnt iron ore. However, the country has 135 mnt of beneficiation capacity, out of which nearly 57 mnt (40%) remains underutilised.
A closer look at state-wise data reveals that Odisha alone accounts for 46.5 mnt of underutilised capacity. This is followed by Jharkhand with 30.8 mnt, Karnataka with 25.5 mnt, Chhattisgarh with 18.5 mnt, and West Bengal with 11.3 mnt. These five states, which are among the top iron ore producers, collectively account for the bulk of idle beneficiation capacity.
This underutilisation is particularly concerning given the ongoing exports of low-grade fines. While domestic beneficiation plants remain underused, India continues to export significant volumes of sub-Fe-58% iron ore fines—fines that could otherwise be processed and consumed locally. This not only results in the loss of value addition but also puts pressure on domestic raw material availability.
Iron ore shortfall
According to JPC data, for the production of 151 mnt crude steel in FY’25 India faced an iron ore shortfall of 16 mnt despite producing 291 mnt. The shortfall arose after exporting 24.5 mnt of iron ore fines while domestic demand stood at around 282 mnt.
Experts argue that retaining low-grade fines for domestic beneficiation could revive these underutilised assets, enhance value addition within the country, and address raw material shortages for secondary steelmakers.
Call for export duty
Currently, beneficiation of Fe55% and above iron ore fines remains economically unviable for many producers due to high operating costs. Associations propose that imposing an export duty on these grades would discourage exports, channel material to domestic plants, and make beneficiation financially viable.
A stakeholder said, “India must prioritize its domestic industry over exports of strategic mineral resources. Exporting low-grade fines while importing iron ore and running beneficiation plants below capacity undermines the self-reliance objectives of the steel sector.”
Industry recommendation for policy action
Prominent industry bodies have jointly requested the government export policy intervention on low-grade iron ore fines (Fe 55% and above). They have urged for immediate policy to safeguard domestic availability.
Their key recommendations include:
- Impose export duty on Fe55% and above fines to ensure retention of this grade within India.
- Encourage beneficiation by making domestic processing economically viable.
- Utilise idle beneficiation capacity to meet domestic raw material needs.
- Reduce imports by substituting with domestically upgraded fines.
- Support non-captive steel units, which are most affected by shortages.
They have further argued that this move would not only secure raw materials for the domestic market but also help India retain value addition within the country rather than exporting low-value raw material.
Conclusion
With steel demand projected to grow at 10% annually, timely intervention is critical to sustaining industry growth, meeting NSP 2030 targets, and protecting thousands of jobs in the secondary steel sector. Stakeholders have urged the Ministry of Steel and other concerned departments to consider policy intervention as an immediate step to secure India’s iron ore resources for domestic value addition.
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