“Iron ore was cheap but it will not be cheap going forward because of imposition of so many taxes and unmindful royalties from the state governments. So, slowly we will find that the raw material which was much cheaper may become a costlier component going forward,” Panda said.
SAIL relies on captive mines for sourcing the raw material.
He was speaking at the Indian Steel Market Conference organised here by mjunction, an ecommerce joint venture between Tata Steel and SAIL that provides digital marketplace services for commodities.
Outlining the challenges facing the steel industry as the country expands steel-making capacity to 300 million tonne in near future, Panda said India was increasing mining capacity to make more iron ore available for steel production but the cost of the raw material was changing.
Iron ore miners are currently charged a uniform ad valorem royalty rate of 15 per cent of the average sale price (ASP) of the ore across the country. Proceeds of this go to the state government where the mine is located. The actual amount of royalty paid per tonne varies from state-to-state because the calculation is based on the ASP declared for each region.
Additionally, miners pay an extra 10 percent of their royalty to the District Mineral Foundation (DMF) for local area development in case of auctioned mines and 30 per cent in case of non-actioned mines. Further, miners are required to contribute 2 percent of the royalty paid to the National Mineral Exploration Trust.
Panda had flagged the burden of these levies in an earlier occasion as well. Speaking as Director (finance) of the company during its Q1 FY2025-26 earnings call in July last year, he had said SAIL's other expenses were higher during the quarter “primarily because of the iron ore royalty.” He also said royalty payments vary with movements in Indian Bureau of Mines (IBM) notified prices and those figures were higher during the quarter.
During the nine months (April 2025 to December 2025) of 2025-26, SAIL fulfilled its entire iron ore demand for its Steel Plants by generating 25.93 Million Tonnes (MT) of iron ore from its captive mines.
Panda said the industry would also have to deal with decarbonisation as steelmaking capacity expands, referring to carbon levies under the Carbon Border Adjustment Mechanism (CBAM) being imposed by European countries, among other challenges.
“Those challenges are going to be the real challenges going forward for all of us,” he said, adding the industry would need better operational practices, newer technologies, lower fuel consumption and raw materials that generate less pollution to address the challenge.
Panda said steel scrap would play an increasingly important role in steelmaking but its wider use would require technology upgradation. Referring to electric arc furnace (EAF)-based steelmaking, he said it would become increasingly important because of its role in decarbonisation, but it could not currently replace the conventional blast furnace-basic oxygen furnace (BF-BOF) route for entire production.
He also said that power remained a major cost component for EAF-based steelmaking. “One of the major components in EAF is power. So, power is also going to become cheaper going forward because we have various options. That is one area in which everybody will be depending on renewable, round-the-clock power,” he said.
India’s steel consumption is growing at around 7-8 per cent annually and the country’s steelmaking capacity, currently approaching 200 million tonnes, could exceed 300 million tonnes in the coming years, Panda said.
 "Ashok Kumar Panda Chairman and Managing Director, SAIL")