Capacity Expansion & Low‑Carbon Drive Push India for High‑Grade Iron Ore

Low‑emission steel production raises higher requirements for high‑grade iron ore feedstock, triggering structural changes across global raw‑material markets.

According to a report released by the Institute for Energy Economics and Financial Analysis (IEEFA) on August 12, as India expands its steel capacity and accelerates low‑carbon transition, its iron‑ore challenge has shifted from securing sufficient supply volume to obtaining quality ore fit for decarbonised steelmaking. S&P Global Commodities at Sea (CAS) data dated August 13 shows India’s iron ore imports reached 9.5 million tonnes up to July 9, 2026. Brazil ranked as the top supplier with 5.1 million tonnes, followed by Norway 1.2 Mt, Oman 0.893 Mt, Malaysia 0.573 Mt, Australia 0.530 Mt, South Africa 0.352 Mt, Canada 0.335 Mt, Russia 0.302 Mt, Iran 0.140 Mt and Sierra Leone 0.056 Mt. India’s full‑year iron ore imports stood at 13 million tonnes in 2025, up 106 % year‑on‑year.

Targeting 300 Mt crude‑steel capacity by 2030, India faces surging demand for high‑grade iron ore. Its import mix is shifting: procurement from Brazil rises sharply while reliance on Australian iron ore weakens. Under India’s National Steel Policy 2025, crude‑steel capacity is planned to more than double to 400 Mt by FY 2035‑36. IEEFA notes India produced around 289 Mt iron ore in FY 2024‑25. Nevertheless, 66.5 % of domestic iron‑ore reserves are medium‑to‑low‑grade and require beneficiation for effective utilization.

India operates 27 beneficiation plants, most running well below designed capacity. To lift beneficiation capacity from current 136 Mt per annum to 170 Mt per annum by FY 2030, an estimated investment of INR 510 billion (USD 5.37 billion) is needed, alongside supportive policies such as reduced royalty for beneficiated low‑grade ore. Analysts point out India’s iron‑ore development focuses not only on output growth but also ore upgrading via beneficiation. With over 357 Mt of steel capacity under construction or in operation, imports of premium iron ore will keep growing.

Forecasts indicate further import growth. Australian government projections suggest India’s iron‑ore imports will jump from 3 Mt in 2025 to 50 Mt in 2031. Vale has identified India as a key strategic growth market. Industry observers warn of widening supply gaps: to produce 220 Mt crude steel in 2030, India will need roughly 500 Mt iron ore. Even if all planned mines come online, a potential shortfall of 40 Mt may remain.

Conventional blast furnaces can accept iron ore across a wide grade range. In contrast, Direct‑Reduced Iron (DRI) technology demands premium feedstock with approximately 67 % iron content and low impurities. Driven by global steel decarbonisation, iron‑ore seaborne trade is changing both in volume and quality. Brazil and Australia are investing in DR‑grade and green‑iron products, while Oman positions itself as a green‑iron‑ore hub. Indian purchasing decisions will weigh energy security and industrial competitiveness alongside cost. Brazil, endowed with abundant high‑grade deposits and expanding DR‑grade output, is well‑positioned to benefit from India’s low‑carbon steel shift.

Ore quality shapes steel‑making technology pathways. Heavy reliance on blast‑furnace‑basic‑oxygen‑furnace (BF‑BOF) grade imports will lock‑in BF‑BOF investments and prolong dependence on imported coking coal; India currently imports around 85 % of its coking coal. Global Energy Monitor data shows roughly 57 % of India’s steel capacity under construction adopts BF‑BOF routes. Adequate DR‑grade ore supply, by contrast, facilitates DRI expansion using natural gas, coal‑derived syngas and future green hydrogen, reshaping mill strategies.

Tata Steel has laid out post‑2030 raw‑material strategies centred on domestic mining rights, output expansion and supplementary ore imports. Jindal Steel runs one DRI plant in Oman with another under development. Faced with domestic raw‑material shortages, the group evaluates DRI imports.

India’s iron‑ore strategy has evidently shifted from quantity guarantee to quality assurance. Future procurement shall balance cost, energy security, industrial competitiveness and steel decarbonisation goals.

Zhuohua Insight: As a major growth engine of global steel output, India’s fierce competition for high‑grade iron ore reflects the scarcity of premium raw materials in the low‑carbon steel era. Raw‑material volatility passes through the whole special‑steel value chain, affecting delivery cycles and production costs. Decarbonisation upgrades of downstream steel plants also raise requirements for high‑purity, tightly‑controlled special‑steel grades. Zhuohua Steel keeps tracking global iron‑ore supply and steel‑making technology evolution. Supported by robust supply‑chain capabilities, we supply international industrial clients with qualified special steel complying with global military and industrial standards, helping partners mitigate risks brought by upstream raw‑market fluctuations.

Information Source: World Metals Report, based on IEEFA report