Iron ore supply takes center stage in India’s steel growth ambitions

India's ambition to increase steelmaking capacity to 300 million metric tons annually by 2030 is highlighting the importance of secure iron ore supply. Domestic iron ore is the foundation of India's steel expansion, but the mismatch between steel and iron ore growth, declining feed quality, and logistical bottlenecks are making imports more attractive.

JSW Steel's Puneet Jagatramka stated that the goal is to have 100% domestic sourcing, while Mohit Ratolikar, JSW Steel vice president, noted that imports could become competitive for port-proximate operations depending on market conditions. Indian steel industry's growth is around 6%-7%/year, while iron ore industry expansion is about 3%-3.5%.

Ratolikar estimated that 300 million mt of steel capacity could require 480-500 million mt of iron ore. The quality of Indian iron ore is deteriorating, with increasing alumina levels making it harder to achieve the required alumina-silica balance. Beneficiation is crucial to utilize India's abundant low-grade iron ore resources, but there are constraints in developing facilities, requiring government support.

Logistics also pose a significant challenge, as elevated costs can hinder the movement of ore from mines to steel plants. End users cited logistics as a major pain point, as production at mines may not be usable if logistical issues persist. While India's domestic iron ore reserves give the world's second-largest steel producer a competitive advantage, industry executives said imports could be used as a supplementary source to enhance cost efficiency and blend optimization.

Imports could account for around 10-15% of procurement in some scenarios, particularly if domestic quality does not meet requirements. Tata Steel recently booked a 20,000-mt iron ore shipment from Canada to assess the cost-effectiveness of sourcing such shipments. While NMDC assured ample availability of iron ore for end users, the inclusion of iron ore in India's Index of Core Industries reflects its strategic importance to growth.