INDIAN IRON ORE MARKET

Overview of Iron Ore in India

• Composition: Primarily consists of hematite (Fe₂O₃, 60–70% iron content) and magnetite (Fe₃O₄, 70–72% iron content). Hematite is more abundant and commercially exploited.

• Key Uses: Steel production (98% of usage), cement, pigments, and heavy media separation.

• Reserves: India holds ~7% of global iron ore reserves (approx. 34.5 billion tonnes), concentrated in Odisha, Chhattisgarh, Karnataka, Jharkhand, and Goa.

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Key Findings from the CCI Study

1. Production & Self-Sufficiency:

   • India is the 4th largest global producer (after Australia, Brazil, and China), contributing ~7% of global output.

   • Produced ~250 million tonnes (MT) in FY 2023–24, with self-sufficiency in meeting domestic demand.

   • Exported ~32 MT (2023–24), mainly to China (70%), Japan, and South Korea.

2. Market Structure:

   • Oligopolistic Trends: Top 5 producers account for ~80% of output. Key players include:

     • NMDC (National Mineral Development Corporation): Largest producer (45–50 MT annually).

     • Vedanta, Tata Steel, SAIL, JSW Steel, and state-owned Odisha Mining Corporation (OMC).

   • Regional Concentration: Odisha alone contributes ~50% of India’s iron ore output.

3. Pricing & Competition:

   • Prices influenced by global benchmarks (e.g., Platts Index) and domestic demand-supply gaps.

   • CCI flagged cartelization risks in certain regions due to concentrated supply chains.

   • Export Dependency: Volatility in global prices (e.g., China’s demand fluctuations) impacts domestic pricing.

4. Exports vs. Domestic Use:

   • Exports: Declined post-2022 due to export duties (50% on lumps and pellets) to prioritize domestic steelmakers.

   • Domestic Consumption: ~85% of production used by India’s steel industry (2nd largest crude steel producer globally).

Challenges Identified

1. Regulatory Hurdles:

   • Delays in mining leases and auctions under the MMDR Act (Mines and Minerals Development and Regulation).

   • Environmental clearances and forest rights issues (e.g., bans in Goa and Karnataka).

2. Infrastructure Bottlenecks:

   • Rail and port capacity constraints raise logistics costs (30–40% of total costs).

   • Poor last-mile connectivity to mines.

3. Quality & Technology:

   • Low adoption of beneficiation and pelletization (only 20% of ore is high-grade).

   • Dependence on imported coking coal for steelmaking limits cost efficiency.

4. Illegal Mining:

   • Estimated 10–15% of ore is illegally mined, distorting market prices.

Government Initiatives

1. Policy Reforms:

   • National Mineral Policy 2019: Promotes private investment, transparency in auctions, and sustainable mining.

   • 500 MT Steel Production Target by 2030: Requires doubling iron ore output.

2. Auction Regime:

   • 100+ mining blocks auctioned since 2015, boosting private sector participation (e.g., Adani, Jindal).

3. Export Duty Adjustments:

   • Duties lifted on low-grade iron ore (below 58% Fe) in 2023 to revive exports.

4. Infrastructure Development:

   • Dedicated Freight Corridors (DFCs) and Sagarmala ports to reduce logistics costs.

Future Outlook

• Demand Growth: Domestic steel consumption expected to rise at 6–7% CAGR (2024–30), driven by infrastructure, automotive, and construction sectors.

• Global Competition: India aims to rival Australia and Brazil in high-grade ore exports, leveraging cost advantages.

• Sustainability Push: Shift toward green steel (using hydrogen-based DRI) will require high-grade iron ore and tech upgrades.

Strategic Implications

• Economic Impact: Iron ore mining contributes ~2% to India’s GDP and employs ~1 million workers.

• Steel Industry Linkage: A robust iron ore market is critical for achieving India’s $5 trillion economy goal by 2027–28.

• Global Leverage: As China diversifies from Australian ore, India could capture a larger export market share.