Govt Updates Low Grade Iron Ore Pricing to Reduce Waste and Increase Steel Supply

The Centre has notified an amendment to the Mineral Concession Rules on 10 April 2026, introducing a pricing mechanism for low-grade haematite iron ore, as per PTI reports.  

The framework applies to material below 45% iron (Fe) content, including Banded Haematite Quartzite (BHQ) and Banded Haematite Jasper (BHJ). 

This is the first time a method has been set to determine the Average Sale Price (ASP) for such grades. Earlier, no distinct pricing system existed for low-grade ore. 

Defined Structure for Pricing 

Under the revised rules, iron ore with Fe content between 35% and below 45% will be priced at 75% of the ASP of 45-51% grade ore. Ore with Fe content below 35% will be valued at 50% of the same benchmark. 

The threshold of 45% Fe is used to separate grades for pricing. The new structure replaces the earlier practice where higher-grade ASP was applied across categories. 

Change in Levy Calculations 

In the absence of a separate framework, royalties and premiums were previously calculated using higher-grade benchmarks. This increased the cost of low-grade ore and limited its commercial use. 

The revised pricing is expected to lower the effective levy burden on such material. This may allow processing of ore that was earlier not considered viable. 

Low-Grade Reserves and Processing Scope 

India has large volumes of low-grade iron ore, much of which remains unused. BHQ and BHJ formations are part of these deposits and have typically been treated as sub-threshold resources. 

With improvements in beneficiation processes, such material can be upgraded into usable feedstock for steel production. The pricing framework provides a basis for including these reserves in supply. 

Clarification on Run-of-Mine Material 

The amendment also sets out the treatment of run-of-mine (ROM) ore, referring to raw material extracted directly from mining areas.  

It states that if processing reduces the economic value, royalty will be charged on lumps and fines after initial screening of unprocessed ROM. 

The rules specify that processing should not be used to reduce the assessed value of minerals. 

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Conclusion 

The notification establishes a pricing method for low-grade iron ore linked to existing benchmarks. It provides clarity on valuation and may support the use of available reserves without changes to the broader royalty framework. 

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