Iron ore feud pits Indian miners against steel giants

The government is considering a uniform export duty on all grades of iron ore, a policy move intended to lower raw material costs for domestic steel producers and boost India’s manufacturing sector. A final decision could be announced as early as October, following monsoon season. While high-grade iron ore currently attracts a 30% export duty, low-grade ores are exported duty-free.

Miners oppose the proposed duty, stating that domestic steelmakers lack the technology to process low-grade ore, a claim the latter rejects. A senior executive from a top mine exporter, who asked not to be named, said the duty would cause a revenue loss of close to ₹16,200 crore for the mining industry.

Tech gap

“China’s steelmakers use low-grade iron ore because they have the technology to beneficiate it, whereas India’s steel industry does not,” the executive said. Beneficiation is the process of refining iron ore to higher quality which is suitable for steel production.

Queries emailed to steelmakers Tata Steel, JSW Steel, SAIL, AMNS India and miners Vedanta and Rungta remained unanswered.

The executive cited above also pointed out that most of India’s low-grade ore exports go to China. “Even if we stop exporting low-grade iron ore, it would account for just about 2% of China’s raw material mix,” the executive said. “China would easily replace it from other sources without affecting steel production. Imposing an export duty wouldn’t reduce China’s advantage but would mainly hurt Indian miners who rely on exports for revenue.”

Both the Federation of Indian Minerals Industry (FIMI) and the Goa Mineral Ore Exporters Association (GMOEA) have rushed to the government, requesting that low-grade ore be exempt from the duty. In a letter dated 28 August, FIMI argued that the ore is not used by the domestic steel industry. Similarly, GMOEA, in a 12 September letter, requested an exemption for Goan ores, which they say are not suitable for domestic steelmakers and whose export is crucial for the state’s economy. Mint has seen copies of both letters.

Ore tangle

FIMI also referenced a mines ministry committee recommendation from earlier this year, which suggested implementing a 5% export duty only after three years to support the development of beneficiation facilities. It also noted the government’s reversal of a 50% export duty on low-grade ore in November 2022, just six months after its imposition, due to adverse effects on domestic production and revenue.

However, an executive at a leading steel mill said, “The government’s objective is to ensure that iron ore remains readily available within India without any obstacles, and as a result, the iron ore market should remain competitive. This will help keep steel and related products affordable and competitive, ultimately driving India’s manufacturing growth.”

Steelmakers counter the miners’ claims, asserting that a duty is essential to curb exports and ensure a stable domestic supply of iron ore. They say the export of this low-grade iron ore – mainly to China – is resulting in low-priced steel being shipped back here.

“If cheap steel keeps coming in, who will invest in steelmaking in India?” the executive cited above wondered.

Local availability

The executive dismissed the argument about technological limitations, stating that Indian steelmakers now have beneficiation plants. Tata Steel Ltd, JSW Steel, Steel Authority of India Ltd and ArcelorMittal Nippon Steel India are among the companies that have invested in such facilities, the executive said.

“The government’s objective is to ensure that iron ore remains readily available within India without any obstacles,” the executive said. “This will help keep steel and related products affordable and competitive, ultimately driving India’s manufacturing growth.”

The executive emphasized that technology is not a barrier and can be acquired if needed. “If there is no delta benefit of setting up steel companies in India, then why should anybody set up steel companies in India? They can keep on buying iron ore, setting up in countries like Vietnam or anywhere else.”

According to market intelligence firm Big Mint, India produced 66.3 million tonnes of low-grade iron ore in the fiscal year 2025, exporting nearly 35% of it. The top three exporters were Rungta Mines, JSW Steel, and Vedanta.

Dhruv Goel, CEO of Big Mint, believes that a uniform export duty would cause a decline in export volumes and shrink miners’ margins by $15 to $20 per tonne. However, he sees a silver lining for the domestic market. “This could increase domestic availability of iron ore,” Goel said. “Lower exports could soften domestic prices, thereby easing premiums and royalty obligations for companies holding auctioned mines.”