India's iron ore demand is set to rise dramatically in the coming years, driven by increased steel production, market participants highlighted at Mjunction's Indian Steel Market Conference in Bhubaneswar this week, attended by Kallanish.

Current projections show a significant shift, with demand expected to increase from today’s 194 million tonnes to 350mt by the 2031 fiscal year (FY31), which will put immense pressure on domestic iron ore supply.

"The Indian Bureau of Mines (IBM) has set a 45% cutoff grade for usable iron ore, limiting higher-grade supply to just 260mt this year. Without technological advancements, a significant portion of material remains unusable," noted Odisha Mining Corporation general manager Vivek Nath.

He further pointed out that India could face a 22mt iron ore supply deficit by FY31, signalling its potential shift from a surplus to a deficit country for high-grade iron ore.

This year's production is expected to hit 405mt, driven by newly auctioned and unbroken mines. However, regional imbalances persist, with eastern India enjoying a 57mt surplus while central and southern regions face a 20mt shortfall, leading to logistical challenges and higher costs for non-coastal steel plants.

Due to these grade and regional imbalances, along with high inland logistics costs, imports will be attractive for coastal steel plants in the medium to long term.

Although India is a net exporter of iron ore, it also imports high-grade ore, particularly from Australia, Brazil and South Africa.

In 2023, India imported approximately 5mt of iron ore, with imports standing at around 2.65mt between January and September 2024.

Experts have put forward measures to address the demand-supply gap, which include making iron ore beneficiation profitable, redirecting some ore from exports to domestic consumption, promoting mine exploration, expanding rail and road infrastructure, and expediting the mine auctioning process.

While challenges are looming, therefore, India's efforts towards more sustainable and efficient iron ore management will be crucial in maintaining supply stability and meeting its ambitious steel production goals.