Iron Ore Rule Change 2026: Centre Unlocks Low-Grade Reserves, Boost for Steel Sector
The Ministry of Mines has notified amendments to mineral concession rules, introducing a pricing framework for low-grade hematite iron ore, including Banded Hematite Quartzite (BHQ) and Banded Hematite Jasper (BHJ), in a move aimed at improving resource utilisation and supporting steel sector demand.
The notification, issued on April 10, addresses a long-standing gap in the calculation of Average Sale Price (ASP) for iron ore below the threshold grade of 45% Fe, which was earlier treated as waste for pricing purposes.
New pricing mechanism
Under the revised rules:
- Iron ore with 35% to below 45% Fe will have an ASP pegged at 75% of the ASP of 45% to below 51% grade
- Ore with below 35% Fe will be priced at 50% of the same benchmark
Earlier, in the absence of a separate methodology, ASP for these grades was linked to higher-grade ore, inflating royalty and auction-linked payments and making benefaction uneconomical.
Industry impact
The move is expected to improve the viability of processing low-grade iron ore, particularly BHQ and BHJ deposits, which are abundant across India’s mineral-rich states.
With advancements in beneficiation technology, these low-grade ores can be upgraded into usable feedstock for steelmaking. However, distorted pricing had limited their commercial exploitation.
The revised framework aligns pricing with grade quality, potentially unlocking significant volumes of previously unviable resources.
Supply-side implications
The policy is likely to:
- Ease pressure on high-grade iron ore reserves
- Improve long-term raw material security for the steel sector
- Encourage investments in beneficiation and processing capacity
India has been focusing on ensuring steady iron ore supply to meet its expanding steel production targets, even as concerns persist over depletion of high-grade deposits.
Royalty clarity
The amendment also clarifies that royalty will apply to residual material and fines generated after processing, following initial assessment.
It further specifies that processing should not be used as a means to artificially reduce the economic value of ore, plugging potential revenue leakages.
Outlook
The revised rules mark a shift towards more granular pricing of mineral resources, reflecting grade differentials and evolving processing capabilities.
For mining companies, the change improves the economics of low-grade ore extraction. For the steel industry, it could translate into more stable and diversified raw material supply over the medium term.
