The Indian government's ministry of mines is consulting with the mining industry as it pushes for mandatory beneficiation of low-grade iron ore.
The ministry, in a bid to ensure utilisation of low- and lean-grade iron ore resources, wants to mandate 80pc of total iron ore produced in a year by a mining leaseholder that is below 58pc Fe to be beneficiated to 62pc Fe and above.
The government imposed a 50pc export tax on all grades of iron ore in late May to increase the availability of the raw material. Low-grade iron ore of 58pc Fe and below prior to this was exported, as it is not used for steel production in the country.
Mining bodies have requested the government to remove the duties as it has halted all shipments. India exported 35.6mn t of iron ore in 2021, down by 31.5pc from the previous year as Chinese demand plummeted in the second half of the year on mandated steel cuts. Exports have dropped by 58pc to 12.4mn t during January-June this year.
The ministry is proposing a concession to mining firms of 5pc in the rate of royalty on the quantity of low-grade ore beneficiated through the wet process and 10pc on beneficiation through the dry process. Such concession may be allowed on 20pc quantity of the annual production of iron ore of all grades. But the benefit may be extended to low-grade iron ore below 58pc Fe that is upgraded to 62pc Fe and above.
The policy will be assessed on a quarterly basis. If producers fail to beneficiate 80pc of low-grade iron ore they will have to pay a royalty and premium applicable for 62-65pc Fe grade for the quantity not beneficiated. Any shortfall for non-auctioned mines will attract four times the royalty paid on 62-65pc Fe grade, in addition to the actual royalty paid on such quantity at the time of its removal and consumption.
If the leaseholder fails to maintain the minimum quantity of ore to be beneficiated as required for two successive years and fails to pay the royalty on the shortfall, the state government may terminate the lease and pre-empt such low-grade ore to dispose off it as deemed fit.
The ministry is considering the policy for an initial period of five years and is inviting suggestions and recommendations from the industry by 31 August.
India is estimated to have produced about 217mn t of iron ore in the 2021-22 fiscal year ending 31 March, according to the ministry. Odisha state accounted for 51pc of production, followed by Chhattisgarh at 18pc, Karnataka at 17pc and Jharkhand with 10pc. Goa largely produces low-grade iron ore.
