Govt notifies pricing norms for low-grade iron ore to boost production

The Centre has introduced a pricing mechanism for low-grade iron ore to make beneficiation viable, reduce royalty burden and ensure steady supply to the steel industry

The Centre has introduced a formal pricing mechanism for low-grade haematite iron ore, including Banded Haematite Quartzite (BHQ) and Banded Haematite Jasper (BHJ), in a move aimed at making beneficiation viable and unlocking large volumes of previously underutilised low-grade iron ore resources.

 

The Ministry of Mines, through an amendment to Mineral Concession Rules notified on April 10, has for the first time laid down a methodology to determine the Average Sale Price (ASP) of iron ore below the threshold grade of 45 per cent Fe. Until now, there was no separate pricing framework for such low-grade ore. The ASP of higher-grade ore (45-51 per cent Fe) was used for royalty and other levies, making processing economically unviable.

   

Under the revised rules, the ASP for iron ore with 35-45 per cent Fe content will be set at 75 per cent of the ASP of 45–51 per cent grade ore, while ore below 35 per cent Fe will be priced at 50 per cent of that benchmark.

 

The move is expected to reduce the royalty and premium burden on low-grade ore and incentivise its processing.

 

The amendment comes against the backdrop of significant quantities of low-grade iron ore present in the country which can be put to use. With advances in beneficiation technology, these resources can now be upgraded into usable feedstock for steelmaking, the mines ministry said in a statement on Tuesday.

 

The government said the move would help address concerns over depletion of high-grade iron ore and ensure a steady supply of raw materials to the steel industry. It also aligns with broader efforts to enhance mineral conservation and maintain self-sufficiency in iron ore.

 

In a related clarification, the rules specify that in case the processing of run-of-mine results in a decrease in its economic value, then royalty shall be chargeable on the lumps and fines after initial screening of unprocessed run-of-mine.

 

The term run-of-mine refers to raw, unprocessed or uncrushed material in its natural state obtained after blasting or digging from the mineralised zone of a lease area.

 

Raw unprocessed minerals are required to be processed to increase the concentration of the target mineral, remove impurities, and transform the material into a form that industries can use.

 

The present amendment in the rules clarifies that the economic value of minerals cannot be lowered in the name of processing of run-of-mine, the statement said.