India's iron ore beneficiation capacity poised to grow by 25% in FY'30

• Capacity to rise to 170 mnt by FY'30 from 136 mnt currently
  
  
• Odisha has highest share in beneficiation capacity followed by Jharkhand, Chhattisgarh
  
  
• Govt focuses on beneficiation to raise quality, combat emissions
  
  

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, according to data maintained with SteelMint.

Among the states, 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%.

Govt recommendations

The Ministry of Mines is putting great thrust on iron ore beneficiation. 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 resources. The committee has come up with the following recommendations and invited comments/sugggestions on it:

• 80% of the total mineral below 58% Fe grade produced in a year should be upgraded to 62% Fe grade and above.
  
  
• If a lessee (someone who has the right to use the land) falls short of the upgrading mandate, they will have to pay the state government an amount of royalty and premium. This payment will be based on the shortfall and the applicable iron ore grade.
  
  
• At the end of the year, a reconciliation of the total amounts will be allowed. If the lessee reaches their annual mandate, the previously paid amount for quarterly shortfalls will be adjusted against dues for the last quarter of that year.
  
  
• If a non-auctioned mine falls short of the upgrading mandate, they will have to pay an amount equal to four times the royalty on iron ore of grade 62-65% Fe. This is in addition to the actual royalty to be paid on the quantity of ore at the time of its removal or consumption.
  
  
• If a lessee fails to beneficiate 80% of low-grade material for two consecutive years and pay the required amount, their lease could be terminated. The state government may also take control of the low-grade material and dispose it.
  
  
• The new changes will allow the transfer of low-grade ore to neighboring mines or plants outside the lease area for beneficiation. This quantity will count towards the 80% mandate. To avoid confusion and loss to the state, the Centre plans to make the necessary changes to the rules.
  
  
• Lessees will be charged royalty and bid premium based on the grade and quantity of ore, regardless of the location of the beneficiation plant.
  
  
• A concession of 5% in the rate of royalty will be given for low-grade ore beneficiated through the wet process, and a 10% concession will be given for ore beneficiated through the dry process. This benefit applies to ore with less than 58% Fe content that has been upgraded to 62% Fe and above.
  
  
• Lessees who meet or exceed the upgrading mandate will receive additional marks in the star rating. The Centre may also impose a fine, in the form of an additional levy, two years after the notification of this beneficiation rule.
  
  

Feedback is also being sought on the beneficiation of existing stacks of low-grade ore and slimes, beyond the 20% limit, owned by existing lessees. This will be done through suitable statutory provisions. The Ministry plans to revisit this policy after 5 years to see if any changes are needed.

High-grade ore demand

The global steel industry today is deeply focussed on raw material quality to increase efficiency and yield, as well as reduce energy consumption and carbon emissions. Indian mills are focussing on beneficiating low-grade domestic ore typically with a high level of alumina and silica to 62% Fe grade or above. The share of 66% Fe and above ore in the global iron ore market is just 3%, as per recent industry studies.

The short-term objective is to increase material and process efficiencies in the BF iron-making process, while gradually transitioning to less CO2-intensive DRI production and EAF melting processes to reduce the industry's carbon footprint. DR iron-making processes require high-grade iron ore. It is imperative to improve the quality of domestic low-grade ore to sustain the huge expansion in steel-making capacity in India, especially in view of the deteriorating quality of domestic iron ore.

Production forecast

SteelMint estimates that India's iron ore production will increase 7% to 275 mnt in FY'24 from 257 mnt in FY'23. Most of India's major miners are in the process of ramping up production. An additional 20-26 mnt will come from them by the next fiscal, SteelMint notes. Production from Odisha, India's largest iron ore producing state, is expected to cross 150 mnt for the first time in the period under review.

6th Iron Ore & Pellet Summit

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