As the Union Ministry of Mines suggests a policy for the upgradation of low grade iron ore into a
higher one, mining companies express their doubts on the same
A committee set up by the Union Ministry of Mines has recommended steps for beneficiation and upgradation of low-grade iron ore into higher grade ones.
The recommendation states that at least 80 per cent of the low-grade ore (with iron content of less than 58 per cent) produced in a year be upgraded to higher grade ore (of 62 per cent iron content), failing which steep fines and mine lease termination have been suggested.
The committee’s finding show that 121 million tonnes of iron ore of different grade are “lying unused” at different mine pitheads, about 55 per cent of which are fines with less than 58 per cent FE content. Nearly 17 per cent of total iron ore produced in India is of low grade.
In India, steel mills are known to use premium iron-ore grade of 62 per cent and above; while ores of lower grade, i.e. FE content 58 and below, are preferred for exports. The committee has recommended penalty for failure to adhere to the mandate too.
However, post imposition of export duty, sale of lower grade iron ore has been badly hit. The committee submitted its report around May and in a letter written on August 12, the ministry sought industry comments on some of the
committee recommendations.
Comments have been sought from industry bodies like the Federation of Indian Mineral Industries (FIMI), the Indian Steel Association, FICCI, CII, Pellet Manufacturers Association of India and ASSOCHAM.
Lessees are to be assessed on a quarterly basis and if they fall short (of 80 per cent beneficiation clause), they shall pay the State government an amount of royalty and premium “as applicable to iron ore lumps or fines of 62-65 per
cent grade”. The penalty will be to the shortfall amount.
Reconciliation will be done at the end of the year, and if the lessee reaches their annual mandate then their previously paid penalties because of the quarterly shortfall “will be adjusted against dues for the last quarter of that year”.
It added that the Centre may levy a fine – in the form of a levy of an additional amount for attended beneficiation – after two years of notification of the rule.
In case of non-auctioned mines, such shortfall will attract a penalty “equal to the four times royalty” to be paid on iron ore of grade 62-65 per cent FE. This will be paid, in addition to the actual royalty to be paid.
Mine lease can be terminated for failure to beneficiate 80 per cent of low-grade material for two consecutive years and not paying the royalty applicable on 62-65 per cent for the differential amount. The lease will be terminated only after allowing the lessee a reasonable opportunity of being heard
The committee has also suggested transfer of low-grade ore to neighbouring mines to be beneficiated or to a plant outside lease. “The quantity being removed from the mine will count under the 80 per cent mandate” and will “avoid double imposition of royalty or loss of revenue to the State”.
Lessees will be charged royalty, bid premium, on the grade and quantity of ore throughout. The beneficiation plant can be located either inside or outside the lease area.
“A concession of 5 per cent in the rate of royalty on the quantity of low-grade ore beneficiated through the wet process and 10 per cent concession on the rate of royalty on the quantity of low-grade ore beneficiated through dry process may be given on 20 per cent of the annual production of iron ore of all grades,” it said.
Will this policy force mining companies to reconsider auctions?
As the State government is busy in finding ways and means to restart mining, the Centre’s move to make it mandatory for lease holders to beneficiate 80% of the ore produced in a year from low grade to high grade may force companies to rethink before they participate in any auctions. Beneficiation is any process that improves the economic value of the ore. Goa has mostly produced low-grade iron ore and most of it was exported to Japan and China.
The Union government has requested players to submit their objections and suggestions if any, before 31st August 2022.
Regarding the above proposal, Glen Kalavampara, Secretary, Goa Mineral Ore Exporter’s Association (GMOEA) said that their members will need to discuss and deliberate jointly with other experts from the industry outside the state on probabilities there, and to see how upgradation of grades is feasible without causing environmental concerns.
Recently, Chief Minister Dr. Pramod Sawant petitioned Prime Minister, Narendra Modi to reduce the export duty on low-grade iron ore. The Union government had increased export duty on iron ore below 58 grade from zero to 50%.
Miner’s Dilemma
With frequent changes in policy taking place in the mining industry, Goa’s iron ore mining companies are unhappy over the notice of the Mines Ministry that recommends mandatory upgrading of ore through the process of beneficiation.
Much as the notice applies to all iron ore producing states, according to the Goan mining industry, it will impact the state the most owing to its situation of excavating only low grade ore of Fe grade ranging between 28% and 57%.
A senior from the mining industry stated that he doubted whether the proposal will be good for the state. “Goa does not have steel manufacturing companies, so it is not clear how the proposal will benefit the local mining companies. Prima facie, it looks difficult for a leaseholder in the state to operate with such kind of preconditions,” he said.
Goa’s mining companies have disclosed that even after the beneficiation, the ore produced in the state is not likely to be of 62% Fe grade as predicted by the Centre. Further, the compulsory upgrading will lead to low recovery and high percentage of wastage.
GMOEA has said that the notice has come as a big surprise. “If the purpose is towards boosting research and development, then it is a step in the right direction, but how much it will work is a different issue,” said the exporters’ body.
According to GMOEA, value addition at all levels needs to be encouraged but beneficiation will be a challenge for ore below 50% Fe grade. It added that Goa has been a pioneer in the beneficiation process. In a bid to keep iron ore within the country, the Mines Ministry constituted the committee to recommend specific steps to ensure utilisation of low and lean grade ore.
INCENTIVISE UPGRADING OF LOW-GRADE IRON ORE: CII GOA
Swati Salgaocar, Chairperson, Confederation of Indian Industry (CII) Goa stated that value addition for all low-grade
iron ore mining companies to upgrade their ore to a higher Fe content grade must be incentivised.
Salgaocar pointed out that Goa’s mining industry has been using beneficiation plants for several decades to render its low grades marketable. 
“The intention behind the proposal of the Centre is value addition. Various factors like technology, commercial viability, energy costs involved, additional environmental safeguards and lastly feasibility must be carefully analyzed for value addition,” she stated.
“The need is for enhanced R&D in the mining industry in the long run where there is a practical potential,” she added. Salgaocar mentioned that CII at the national level is in communication with its members and shall be collating inputs from various sectors, before submitting its feedback to the government.
