India pushes ahead with iron ore beneficiation policy to drive steel industry transition

• Declining raw material quality impedes emissions reduction efforts
  
  
• India's beneficiation capacity to rise rapidly by FY'30
  
  
• Total beneficiation concept needed for ore with Fe45% cut-off
  
  

Morning Brief: The brightest spot on the global steel map, India's crude steel production is expected to reach a level of 200-210 million tonnes (mnt) by FY'30 - a hike of 40-47% compared with FY'24, as per BigMint data. Naturally, such phenomenal growth in steel production will necessitate a surge in domestic iron ore consumption and production.

Our data shows that the country's iron ore production is expected to touch a level of ~390 mnt by FY'30 - an increase of roughly 40% compared with around 280 mnt in FY'24. However, the availability of higher grades of iron ore has come under a big question mark.

Grade depletion

In FY'24, the supply of iron ore above Fe65% shrunk by 20% y-o-y to 32 mnt. The supply of Fe62-65% iron ore increased markedly but only after a period of sharp decline over the last few fiscals.

The production of grades below Fe58% has been increasing rapidly over the last many fiscals. Data shows that production of iron ore below Fe58% increased from 17.08 mnt in FY'19 to nearly 54 mnt in FY'22, while maintaining near about the same level ever since.

This poses a serious challenge in production of higher grades of steel development of the DRI-dependent IF-EAF steel production route utilisation of domestic iron ore reserves to sustain fast-evolving growth in steel production containing/restricting/minimising the level of emissions from steel production.

Ore grade & low-carbon steel

The global steel industry today is focussed on raw material quality to increase efficiency and yield, as well as reduce energy consumption and carbon emissions. The share of Fe66% and above ore in the global seaborne market is just 3%, as per studies conducted by iron ore major Vale.

Besides, the level of carbon emissions in BF-BOF-based steel production in India is around 2.5-2.6 tCO2/tcs as against 1.8-1.9 tCO2/tcs globally, largely due to the high gangue content in domestic iron ore. Studies show that higher the iron content in feed, the lower is the slag volume generated in blast furnace, which increases the productivity and reduces the coke rate. One per cent increase in iron content improves BF productivity by 2% and reduces the coke consumption by 1%.

Further, at a time of rapidly increasing DRI production capacity in India, the swift deterioration in domestic iron ore quality poses a formidable challenge. Therefore, beneficiation is the need of the hour in order to increase usage of low-grade ore, and also optimise energy use in primary steel production.

Beneficiation policy

India's iron ore beneficiation capacity is likely to increase to 143 million tonnes (mnt) in FY'25 and then further to 170 mnt by FY'30 from current installed capacity of around 136 mnt. Odisha with the largest iron ore beneficiation capacity accounts for nearly 35% of the country's total capacity followed by Jharkhand with 23% and Chhattisgarh with 19%.

The Indian government is developing a policy for low-grade iron ore beneficiation to increase steel production by making best use of low-grade domestic ore. As per reports, the Steel Ministry is about to complete the policy shortly. On 31 August, 2022, the Ministry set up a committee to recommend a beneficiation policy to ensure better utilisation of low and lean grade iron ore. Some of the key recommendations are:

• 80% of total mineral below Fe58% grade produced in a year should be upgraded to Fe62% grade and above
  
  
• If a lessee fails, they will have to pay the state government an amount of royalty and premium based on the shortfall and the applicable iron ore grade.
  
  
• If a non-auctioned mine falls short of mandate, they will have to pay an amount equal to 4 times the royalty on iron ore of grade Fe62-65%.
  
  
• A 5% concession in royalty will be given for low-grade ore beneficiated through wet process, and 10% for dry process. This benefit applies to ore with less than Fe58% content that has been upgraded to Fe62% and above.
  
  

Way forward

Experts informed BigMint that the domestic industry needs to:

• implement total beneficiation concept for ROM ore to be produced at Fe45% cut-off
  
  
• use of available -10 mm stacked fines in non-captive sector and 0.150 mm slimes impounded in tailing ponds
  
  
• utilise low grade/sub-grade ore in-situ or stacked at mine sites
  
  
• beneficiate banded hematite jasper/quartzite, as well as magnetite
  
  
• further process sinter fines produced as classifier sands for reduction of alumina and better sinter productivity in the captive sector
  
  

7th Indian Iron Ore & Pellet Summit

What are the relative merits and loopholes in India's beneficiation policy? How are regulations reshaping the steel raw materials landscape and what will likely be their impact on the domestic steel industry's low-carbon transition? Hear experts discuss these critical issues threadbare during the session on Regulatory Frameworks and Policy Implications in the Indian Iron Ore Industry at BigMint's 7th Indian Iron Ore & Pellet Summit to be held in Gurgaon over 22-23 August 2024. Book your berth now