In a significant development for the Indian mining sector, the government has announced amendments to iron ore rules designed to boost the utilization of historically discarded low-grade ore. The Ministry of Mines confirmed the changes, outlining a new pricing framework to tackle wastage and stimulate the use of lower-grade materials.
The revised framework specifically provides guidance for pricing iron ore samples falling below the traditional 45 per cent iron (Fe) content threshold. This includes types such as Banded Haematite Quartzite (BHQ) and Banded Haematite Jasper (BHJ).
New Pricing Mechanism for Low-Grade Iron Ore
The amendment introduces a tiered and calculated pricing structure based on the ore’s iron content. For ore with an Fe content ranging from 35 per cent to below 45 per cent, the average selling price (ASP) is now fixed at 75 per cent of the benchmark ASP.Furthermore, the rules accommodate even lower grades. Ore with an Fe content below 35 per cent will now see its ASP pegged at 50 per cent of the same benchmark price.
The benchmark ASP, which serves as the basis for these calculations, is derived from the higher-quality grade ore falling between 45 per cent and below 51 per cent Fe content.
Boosting Economic Viability in Beneficiation
Prior to these amendments, a significant gap existed in the pricing system. There was no distinct pricing mechanism established for low-grade ores like BHQ and BHJ.According to the Ministry of Mines, the existing anomaly meant that the ASP of the higher-grade ore (45–51 per cent Fe) was applied uniformly to royalty and other levies. This effectively rendered the costly process of beneficiation economically unviable for many miners.
The new framework is designed explicitly to correct this anomaly. By setting clear, differential prices, the government aims to incentivize the scientific and optimal use of these low-grade resources.
Ensuring Transparency in Mining Operations
The government also addressed operational transparency within the new rules. The amendment clarified that if the processing of run-of-mine (ROM) ore results in a reduction of its economic value, royalty will be levied only on the resulting lumps and fines after an initial screening process.This clarification ensures that the economic value of the extracted minerals is accurately accounted for and cannot be artificially diminished simply by claiming a processing effort.
Strengthening India's Raw Material Supply Chain
Industry experts view this move as critical for national resource management. The government highlighted that bringing low-grade resources into usable material helps address concerns surrounding the potential depletion of higher-grade reserves.This systematic incorporation of previously difficult-to-use material is expected to ensure a steady and reliable raw material supply flow to India's crucial steel industry. Ultimately, the policy supports broader mineral conservation efforts while fueling industrial growth.
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