The Ministry of Mines has amended the Mineral Concession Rules to make low-grade iron ore economically viable by introducing a revised pricing framework for royalty calculation.
Earlier, iron ore with less than 45% iron (Fe) content lacked a defined Average Sale Price (ASP). This led to royalties being charged based on higher-grade prices, making the beneficiation of low-grade materials such as Banded Haematite Quartzite (BHQ) and Banded Haematite Jasper (BHJ) commercially unviable.
The new rules introduce a graded discount system, setting prices at 75% of benchmark levels for 35–45% Fe ore and 50% for ore below 35%. By lowering the royalty burden, the reform aims to incentivise processing of previously discarded material and expand the usable resource base.
The amendment also clarifies that royalty must be paid on screened Run-of-Mine (ROM) ore, preventing undervaluation during processing.
The New Pricing Methodology
The Threshold: Iron ore below 45% Fe content was previously considered "waste." It is now an economically usable category.
Tier 1 (35% to <45% Fe): ASP is now fixed at 75% of the price of the 45%–51% Fe grade.
Tier 2 (<35% Fe): ASP is now fixed at 50% of the price of the 45%–51% Fe grade.
Incentive for Beneficiation: These lower prices for calculating royalties and auction premiums make it profitable to use technology to turn "waste" rock into high-grade steel feed.
Run-of-Mine (ROM) Clarity: Royalty must be paid on screened material; the economic value of the mineral cannot be lowered under the guise of "processing."
Resource Conservation: This move brings huge quantities of BHQ and BHJ into the national resource pool, promoting scientific and optimal mining.
What are "BHQ" and "BHJ"?
Banded Haematite Quartzite (BHQ) and Banded Haematite Jasper (BHJ) are the primary "host rocks" that contain iron ore, but they have very low iron concentrations.
Historically, they were discarded as waste because the cost of separating the iron from the silica was too high. With modern technology, these rocks can now be "beneficiated", i.e. cleaned and concentrated, to create high-grade iron ore. They represent a massive, untapped reserve that can keep India's steel plants running long after the pure, high-grade ore runs out.
Policy Relevance
Ensures Long-Term Mineral Security: By making low-grade ore usable, India reduces its reliance on high-grade reserves that are depleting rapidly, ensuring the steel industry stays self-sufficient.
Promotes Scientific Mining and Conservation: Encouraging the use of every bit of excavated material prevents "high-grading" (taking only the best and leaving the rest), leading to more sustainable mining practices.
Lowers the Cost of Beneficiation: Lowering the royalty burden on low-grade ore makes it financially attractive for companies to invest in expensive processing plants.
Prevents Revenue Leakage: The clarification on Run-of-Mine (ROM) prevents miners from misreporting the quality of their ore to pay lower royalties, ensuring the government gets its fair share.
Relevant Question for Policy Stakeholders: Could this model of "discounted ASP" for low-grade resources be applied to other minerals like Bauxite or Manganese to promote full-resource utilisation?
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