New Delhi: India’s plan to expand crude steel capacity to 400 million tonnes by 2035–36 under the proposed National Steel Policy 2025 is forcing a reappraisal of the country’s raw‑material needs, with quality becoming as important as quantity, an independent analysis by IEEFA has said.
From volume to quality: a technological inflection point
The report notes that while India produced around 289 Mt of iron ore in FY2025 — keeping it among the world’s largest producers — a growing share of remaining reserves is medium‑ and low‑grade. Many domestic ores also carry relatively high alumina (aluminium oxide) levels. High alumina matters because it degrades blast furnace productivity and increases energy and coke consumption, undermining gains from capacity additions.
IEEFA cites an Indian study that quantified the impact: every 1 percentage point rise in alumina increases coke consumption by 2.2% and reduces productivity by 4%. That makes beneficiation — processes that upgrade ore quality by removing impurities — and pelletisation critical to future steelmaking plans, particularly as India seeks lower emissions intensity and reduced dependence on coking coal.
Industry adjustment and the role of imports
With more than 357 Mt per annum of steelmaking capacity under development, securing access to premium ore is an urgent strategic question for steel companies. The IEEFA analysis argues that policy needs to recognise the difference between resource endowment and resource suitability for modern steel routes.
Public reporting of corporate strategy show an industry already shifting. During Tata Steel’s FY2026 fourth‑quarter earnings commentary, Chief Executive Officer T.V. Narendran described a post‑2030 raw material approach built on three pillars: securing domestic mining leases, expanding production where quality ore exists, and evaluating imported iron ore to complement domestic supply.
- Domestic beneficiation and pelletisation will be required to convert medium/low‑grade ore into feedstock compatible with higher‑efficiency furnaces and reduced coke use.
- Targeted imports of higher‑grade ore could be used to balance blended feed mixes and maintain productivity during the transition.
- Mine leasing and geological mapping will influence which regions attract investment for value‑added processing rather than raw extraction.
Technology choices will shape emissions and costs
The steel sector is at a crossroads where technology selection — from traditional blast furnaces to emerging electric‑arc furnaces and hydrogen‑based reduction routes — influences the quality of iron ore required. Lower‑grade ore typically demands more thermal energy, higher coke use and additional processing steps, each adding cost and emissions.
IEEFA’s framing shifts the debate: India still has abundant iron resources, but to meet both scale and climate goals it must improve the upstream quality of feedstock. That will require investment in beneficiation plants and pellet plants, and changes in how mining leases and incentives are structured so that on‑site processing becomes commercially viable.
| Data point | Figure |
|---|---|
| India iron ore production (FY2025) | 289 Mt |
| Steelmaking capacity under development | 357 Mt |
| National Steel Policy 2025 target | 400 Mt by 2035–36 |
Investment and policy choices will determine whether India relies more on domestic beneficiation and pelletisation or opts for higher imports of premium ore to meet the immediate demand of new capacity.
There are practical trade‑offs. Beneficiation plants and pelletisation units require capital, water and energy, and they must be sited where logistics support value‑added processing. Imports, by contrast, provide short‑term flexibility but can increase foreign exchange exposure and potentially shift supply‑chain emissions overseas.
For policymakers, the IEEFA analysis suggests a balanced strategy: aggressively develop domestic beneficiation capacity where ore deposits permit, align mining lease policies to reward on‑site upgrading, and use imports strategically to fill quality gaps while domestic capability scales up.
As India builds one of the world’s largest steel industries, the technical quality of iron ore — not just its quantity — will be a central determinant of cost, competitiveness and the country’s ability to decarbonise steelmaking.
