In a strategic move to safeguard its future raw material supply, Tata Steel, India's second-largest steelmaker, has initiated a trial import of iron ore from its Canadian operations. This marks the first time the company is sourcing this critical raw material from its overseas subsidiary for use in its Indian plants.
A Proactive Hedge Against Looming Shortages
The decision is a direct response to a significant challenge on the horizon: the expiry of several of Tata Steel's captive iron ore mines in India around the year 2030. According to executives familiar with the development, the management has booked a bulk shipment of iron ore lumps from Tata Steel Minerals Canada (TSMC) as a test. "Management decided to test the shipment, if the company faces shortage around 2030 when the captive mines are due to expire, they will have an option to explore," one executive stated.
Currently, Tata Steel meets 100% of its iron ore needs in India from six captive mines located in Jharkhand's Noamundi and Odisha's Katamati, Joda East, Khondbond, Vijaya II, and Koidahas. The trial shipment, expected to arrive on India's east coast, consists of high-grade lumps with an iron content of about 64%, aluminium below 1%, and a size range of 10-40 mm.
Financial Implications and Strategic Diversification
The expiry of captive leases poses a substantial financial risk. A Kotak Institutional Equities report from December 2025 warned that the event could reverse iron ore security for private steel companies. For Tata Steel, analysts estimate a potential erosion of 30-40% of its steel operating margins post-FY2030, as raw material costs are expected to rise significantly.
In an official statement, a Tata Steel spokesperson explained, "This is a trial shipment from the Company’s mines in Canada. It will help us in better understanding the usage of such ores and offer options in future to use a combination of imported and domestic ores based on quality and value in use."
Tata Steel's Canadian subsidiary, in which it holds an 82% stake (with the Quebec government owning the remaining 18%), produced 3 million tonnes of iron ore in FY25, shipping 2.4 million tonnes. The trial also coincides with the restructuring of Tata Steel's European operations, which may free up more exportable volumes from Canada.
Broader Raw Material Strategy
Facing the auction landscape for new mines in India, Tata Steel has adopted a cautious stance. Managing Director T.V. Narendran emphasized last year that high bid premiums might make full captiveness uneconomical compared to market procurement. The company has already won two mines in Odisha at high premiums and is exploring partnerships, like a recent MoU with Lloyds Metals & Energy for Maharashtra.
Furthermore, Tata Steel is diversifying its supply chain for other key inputs. For coking coal, it has expanded sourcing to include the US, Mozambique, and Canada, securing long-term contracts to ensure supply security. This multi-pronged approach underscores the company's long-term planning to maintain competitiveness and operational stability beyond 2030.
