US-based think tank Institute for Energy Economics and Financial Analysis (IEEFA) outlines in its latest report 'India's looming iron-ore challenge' how the country may not have enough access to the right quality of ore for its ambitious steelmaking expansion plans.

IEEFA says how India sources imported iron-ore and how much domestic ore it upgrades could shape the country's steelmaking technology choices, as well as influence India's dependence on imported coking coal and the pace of steel decarbonisation.

Under India's proposed National Steel Policy 2025, the government aims to more than double crude steel production capacity to 400-million tonnes by 2035/36 while cutting the sector's emissions intensity and reliance on coking coal.

India produced about 289-million tonnes of iron-ore in the 2024/25 financial year, making it the world's fourth-largest producer, however, about 66.5% of India's remaining resources are medium- and low-grade ore that requires beneficiation.

Expanding the country's 27 beneficiation plants' capacity from 136-million tonnes a year to 170-million tonnes a year by 2030 will require about $5.7-billion of investment, alongside supportive policy such as reduced royalties for beneficiated low-grade ore.

Many Indian ores also carry high alumina levels. IEEFA says every 1% rise in alumina lifts coke consumption by 2.2% and cuts blast furnace productivity by 4%.

"India's iron-ore challenge is shifting from securing sufficient supply to securing the right quality of ore needed for an expanding and lower-emissions steel industry. As iron-ore imports become more important for the country, the type of ore it sources could influence technology choices and thereby the pace of steel decarbonisation and long-term dependence on imported coking coal," IEEFA report author Saumya Nautiyal elaborates.

With global suppliers increasingly producing premium direct reduction-grade feedstocks and green iron, India should evaluate future iron-ore sourcing through the lens of technology, energy security and industrial competitiveness, and not simply cost.

IEEFA stresses that upgrading domestic ore should be at the centre of India's strategy, but with more than 357-million tonnes of steelmaking capacity under development, imports of premium ore will also grow. Nautiyal says the grades that India chooses to import will shape steelmaking technologies it locks in and how exposed the sector stays to coking coal.

He points out how the higher grade iron-ore shift is already reshaping corporate strategy. On Tata Steel's fourth-quarter earnings call, CE T.V. Narendran set out a post-2030 raw material approach built on securing domestic mining leases, expanding production where ore is available, and evaluating imported ore to complement domestic supply. Tata Steel has already trialed imported Canadian iron-ore, with Narendran noting that lower-alumina ores can deliver better value in use, particularly for its expanding coastal plants.

Globally, demand growth is moving from a maturing China towards emerging producers, including Southeast Asia and India. Iron-ore giant Vale has identified India as a strategic growth market and the Australian government forecasts India's iron-ore imports rising from three-million tonnes in 2025 to 50-million tonnes by 2031.

The head of raw materials at Jindal Steel estimates that producing around 220-million tonnes of steel by 2030 would require roughly 500-million tonnes of iron-ore, leaving a potential 40-million tonne gap even after planned mine expansions.

Beyond Australia, Brazil is well positioned to benefit from India’s shift towards lower-emissions steelmaking, given its abundant high-grade iron ore resources and growing production of direct reduction-grade feedstocks, IEEFA report author Simon Nicholas points out.

"Quality, not just quantity, is at the heart of the shift. Blast furnaces can use a broad range of grades, but direct reduced iron (DRI) technologies need premium feedstocks of around 67% iron with fewer impurities, and demand for these is expected to grow.

"As the world moves towards lower-emissions steel, the global iron-ore trade is changing in both scale and quality," Nicholas states, adding that Brazil and Australia are investing in premium direct reduction-grade products and green iron, while Oman is positioning itself as a green iron hub.

"That gives India a real choice, and future sourcing decisions should be judged through the lens of energy security and industrial competitiveness, not cost alone."

IEEFA warns that if conventional blast furnace-grade ore dominates future imports, it could entrench investment in blast furnace-basic oxygen furnace steelmaking and extend India's dependence on imported coking coal, of which the country already imports around 85%.

Global Energy Monitor estimates that about 57% of India's announced capacity under development remains blast furnace-based. Greater availability of premium direct reduction-grade feedstocks, by contrast, could support a gradual expansion of DRI using natural gas, coal-derived syngas, and, over time, green hydrogen.

Jindal Steel already owns one DRI plant in Oman and is developing another, and has said it is considering importing DRI because of a shortage of available metallics in India.