In a significant pre-budget recommendation, Vedanta's iron ore mining subsidiary, Sesa Goa, has formally requested the Indian government to introduce targeted policy measures and financial incentives to promote the beneficiation of low-grade iron ore. This appeal comes ahead of the Union Budget for the fiscal year 2026-27, with the company emphasizing that such support is crucial to make the processing economically viable and to foster expansion within the sector.
The Critical Need for Beneficiation
The low-grade iron ore beneficiation process involves enhancing the iron content of inferior-quality ores by eliminating impurities such as silica, alumina, and phosphorus. This transformation renders the ore suitable for steel production, a vital industry for India's infrastructure and manufacturing growth.
Unlocking India's Vast Reserves
India possesses an enormous inventory of low-grade iron ore, estimated at over 300 million tonnes currently stockpiled at mine heads. However, this resource remains largely underutilized due to the high upfront costs associated with establishing beneficiation plants and the necessary supporting infrastructure.
Navin Jaju, CEO of Sesa Goa, highlighted this issue during a recent interaction, stating, "There is a very urgent need to bring some kind of beneficial duty structure or incentive structure to beneficiate this material." He stressed that long-term investment is essential to upgrade low-grade ore into higher-grade feedstock for domestic steel production.
Economic and Strategic Implications
With India's steel demand projected to reach 300 million tonnes by 2030, unlocking these low-grade reserves through beneficiation could yield multiple benefits:
- Enhanced Domestic Supply Security: Reducing reliance on imports and ensuring a steady ore supply for the steel industry.
- Job Creation: Generating employment opportunities in mining, processing, and related sectors.
- Revenue Boost: Adding billions to government revenues through expanded mining activities and potential exports.
Addressing Policy Hurdles
Currently, India's domestic steel needs are met by higher-grade ore, but the low-grade stockpiles represent untapped potential. Key policy obstacles include export duties and regulatory delays that hinder progress. Jaju argued against export duties on low-grade ore, noting, "Export duty by far India does not need it... We have abundance of material."
He advocated for free pricing mechanisms and improved evacuation infrastructure to encourage sector growth, enabling exports while prioritizing domestic beneficiation. The industry has consistently raised this issue through various associations, calling for measures such as tax credits, subsidized financing, and relaxed policies to accelerate project implementation.
Supporting Atmanirbhar Bharat
Steel majors, who depend on consistent ore supply amidst global price volatility, view this initiative as pivotal for achieving self-reliance in metals under the Atmanirbhar Bharat vision. In the fiscal year 2025, India produced 289 million tonnes of iron ore, with exports reaching record highs. However, the current beneficiation capacity lags significantly, at under 20 percent of the potential.
Jaju urged the government to establish a time-bound framework in the upcoming Union Budget to incentivize beneficiation. Such a move could transform low-grade waste into a strategic asset, aligning with national economic goals and reinforcing India's position in the global steel market.
