India’s iron ore advantage is shifting from securing sufficient volumes to securing higher-quality ore, as the country plans a major expansion in steelmaking capacity while reducing emissions and reliance on coking coal, according to the Institute for Energy Economics and Financial Analysis (IEEFA).
Under the proposed National Steel Policy 2025, India aims to more than double crude steel capacity to 400 mln tons by 2035-36. The country produced around 289 mln tons of iron ore in FY2024-25, but a large share of its remaining resources is medium- and low-grade ore requiring beneficiation.
An inter-ministerial committee found that 66.5pct of India’s iron ore reserves are medium- or low-grade. The country has 27 beneficiation plants, but they are operating below installed capacity. Expanding beneficiation capacity from around 136 mln tons per year to 170 mln tons per year by FY2030 could require about INR 510 bln (USD 5.35 bln) of investment.
IEEFA said upgrading domestic ore should remain the foundation of India’s raw material strategy, although growing steel capacity will also increase demand for premium imported ore. Lower-alumina material can provide better value in use, particularly for coastal steel plants, while higher-quality feedstock will become increasingly important as India develops direct reduced iron (DRI) capacity.
India’s potential iron ore import requirement is expected to increase significantly. The Australian government forecasts imports rising from around 3 mln tons in 2025 to 50 mln tons by 2031, while industry estimates suggest a potential supply gap as steel production expands.
The quality of imported ore will also influence India’s future steelmaking route. Higher-quality DR-grade feedstock could support greater use of DRI technology, while reliance on conventional blast furnace-grade ore could reinforce India’s dependence on BF-BOF production and imported coking coal, which currently accounts for around 85pct of India’s coking coal consumption.
IEEFA said India’s future iron ore sourcing decisions should therefore be assessed not only on cost, but also on ore quality, energy security, industrial competitiveness and steel decarbonization.
1 USD / 95.4 INR