Ministry of Mines Notifies Revised Pricing Framework for Low-Grade Iron Ore

In a significant policy move aimed at enhancing mineral efficiency and supporting India's steel sector, the Ministry of Mines has notified the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession (Third Amendment) Rules, 2026 on April 10, 2026. The amendment introduces a clear and structured methodology for calculating the Average Sale Price (ASP) of low-grade haematite iron ore, including Banded Haematite Quartzite (BHQ) and Banded Haematite Jasper (BHJ).

The reform addresses a long-standing gap in pricing policy, making the beneficiation of low-grade iron ore both economically viable and strategically important for India's resource sustainability.

Addressing a Critical Policy Gap

Until now, there was no defined mechanism to determine ASP for iron ore with iron (Fe) content below the threshold value of 45%, which is the benchmark below which mined material is typically classified as waste.

In practice, miners were required to pay royalties and premiums based on the ASP of higher-grade iron ore (45%–51% Fe), even when dealing with lower-grade material. This mismatch significantly increased operational costs and discouraged beneficiation efforts.

The newly notified rules correct this distortion by introducing a graded pricing formula aligned with ore quality, ensuring fair valuation and incentivizing utilization of low-grade resources.

New ASP Calculation Mechanism

Under the amended rules, the ASP for low-grade haematite iron ore will now be calculated as:

• 35% to below 45% Fe grade:→ 75% of the ASP of 45% to below 51% Fe grade

• Below 35% Fe grade:→ 50% of the ASP of 45% to below 51% Fe grade

This structured pricing approach ensures that royalty, auction premiums, and other levies are proportionate to the actual economic value of the mineral, making beneficiation commercially feasible.

Unlocking Vast Untapped Resources

India possesses significant reserves of low-grade iron ore, much of it in the form of BHQ and BHJ, which are the primary host rocks of iron ore deposits. Historically, these resources remained underutilized due to technological and economic constraints.

However, with advancements in mineral processing and beneficiation technologies, it is now possible to upgrade these low-grade ores into high-grade feedstock suitable for steel production.

By enabling their economic use, the amendment is expected to:

• Reduce dependence on high-grade ore reserves, which are depleting

• Ensure long-term raw material security for the steel industry

• Promote scientific and sustainable mining practices

Strengthening India's Steel Ecosystem

The policy change comes at a crucial time when India is aiming to expand its steel production capacity to meet infrastructure and manufacturing demands. Ensuring a steady and affordable supply of iron ore is central to achieving this goal.

Industry analysts suggest that the move could:

• Lower input costs for steel manufacturers

• Encourage investment in beneficiation plants and mining technology

• Improve resource efficiency and reduce waste generation

Promoting Conservation and Sustainable Mining

The amendment aligns with the government's broader vision of mineral conservation and optimal resource utilization. By bringing low-grade ores into the production cycle, the policy reduces wastage and supports a circular approach to mining.

It also reinforces India's goal of maintaining self-sufficiency in iron ore, a key strategic advantage for the domestic steel industry.

Clarity on Royalty for Run-of-Mine Processing

In addition to pricing reforms, the amendment introduces an important clarification regarding royalty calculations for run-of-mine (ROM) material—the raw, unprocessed ore extracted directly from mining sites.

The rules specify that:

• If processing of ROM results in a decrease in its economic value,

• Then royalty will be charged on lumps and fines after initial screening, rather than on downgraded processed output

This provision prevents misuse of processing methods to artificially reduce the declared value of minerals, ensuring transparency and safeguarding government revenue.

Policy Impact: A Win for Industry and Sustainability

The Third Amendment Rules, 2026 mark a balanced policy intervention, addressing both industry concerns and national resource priorities. By aligning pricing mechanisms with mineral quality and technological realities, the government has created a framework that:

• Encourages efficient resource utilization

• Supports economic viability of beneficiation

• Strengthens regulatory clarity and fairness

• Advances India's long-term mineral security

As India continues its trajectory toward becoming a global manufacturing and infrastructure hub, such reforms are expected to play a crucial role in ensuring sustainable and resilient supply chains for critical raw materials.