How the steel industry will benefit from beneficiation of sub-grade iron ore

The domestic steel industry only consumes premium iron-ore grade of 62 per cent and above, which is why the inferior grade ores find place in export markets like China.

India, the fourth-largest producer of iron ore, has the majority of the mined raw material lying at the mine heads or dumps due to its low iron content. Given that the domestic steel industry only consumes premium iron ore with a grade of 62 percent and above, this sub-grade ore with lower iron content of 58 percent and below, is preferred for exports to markets like China that consume ore of up to 55 percent grade.

In a bid to maximise the use of lower-grade ore, the government is now drawing up plans for the beneficiation of such ore. How will the domestic steel industry benefit? MC explains.

What is beneficiation of iron ore and how is it done? 

Beneficiation of iron ore involves various processes to increase the iron content and reduce impurities, making it suitable for the steel industry. Techniques like crushing, grinding, magnetic separation, flotation and gravity separation are employed to achieve this. The benefits include improved ore quality, economic efficiency, better resource utilisation, and reduced environmental impact.

What is the iron ore consumption in India and how is it met?

India's iron ore consumption has been steadily rising over the past decade, driven by the rise in crude steel and sponge iron production. The country's iron ore consumption is slated to increase to 255-260 million tonnes by financial year 2024-25, as per market intelligence firm BigMint (formerly SteelMint). The production of iron ore stood at 277 million tonnes in FY24, a 7.4 percent growth over the previous year, according to data from the mines ministry.

Although the country has substantial iron ore reserves, primarily located in states like Odisha, Karnataka, Chhattisgarh, Jharkhand, and Goa, it also  imports the key steelmaking ingredient of a higher quality against the backdrop of higher crude steel production targets.

India's imports of iron ore hit a five-year high of 5.31 million tonnes in 2023-24 compared to around 2.3 million tonnes in FY23, a huge on-year increase of about 131 percent, as per latest data available with BigMint.

How will improving sub-grade ore help the industry?

Beneficiation of sub-grade iron ore will help the Indian steel industry by maximising resource utilisation, reducing costs, enhancing supply security and thereby boosting production capacity. Domestic steel players won't be as dependent as they were on imports once sufficient higher-grade ores are available for use.

The process will also discourage exports of the raw material, depriving  Chinese steelmakers access to Indian iron ore supplies and help the Indian steel makers to get a better cost advantage.

What has the government done so far to boost the use of low-grade iron ore?

The ministries of steel, environment and mines are working on a policy to encourage upgrading of low-grade iron ore. The policy is expected to come into force within the next three months.

According to reports, in 2022, the mines ministry recommended steps for beneficiation. The recommendation said at least 80 percent of the low-grade ore (with less than 58 percent iron content) produced annually should be upgraded to higher-grade ore (with 62 percent iron content). It also proposed fines and potential termination of mine leases if the target was not met.