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Iron Ore

Context: Recently the opposition parties of Odisha accused the state government of colluding with the private miners to deliberately reflect the quality of iron ore as low grade causing massive loss to the State exchequer.

Category and Price calculation

• Ore containing 58% iron content and below is considered low grade and generally priced much lower than lumpy ore which fetches higher price.
• Miners bid for mines as per ASP (Average sale Price) published by the Indian Bureau of Mines from time to time.
• The lessee or the auction holder gives 15% of ASP as royalty to the State government, 2% to the Centre and the National Mineral Exploration Trust and 10% to the District Mineral Fund.

Iron ore

• Iron ore is a mineral that is extracted from the ground and contains iron in varying concentrations.
• It is the primary raw material used in the production of steel, one of the most widely used metals in the world.
• The iron ore is typically mined in large open-pit mines or underground mines, and then it undergoes a series of crushing, screening, and processing stages to remove impurities and increase its iron content.
• The final product is iron ore pellets, which are used in the production of steel.
• Iron ore is also used in the production of other industrial products, such as magnets, catalysts, and abrasives. It is even used in the production of some types of medicine, such as iron supplements.

Production in india

• The total production of iron ore in India increased during 2019-20 as compared to 2018- 19, but it decreased in 2020-21(P) as compared to 2019-20.
• The reason for decline in the production of iron ore was that the year 2020-21 was affected by the pandemic as well as large number of leases expiring on 31.03.2020.
• However, total production of iron ore in India increased by 27% during 2021-22 (April-January) as compared to the same period of the previous year. In the states of Andhra Pradesh, Goa and Maharashtra, the production of iron ore decreased during this period.
• The Government has taken various steps to increase production and availability of iron ore, which inter-alia include Mining and Mineral Policy reforms to ensure enhanced production, early auction & operationalization of expired mines, ease of doing business, seamless transfer of all valid rights & approvals, incentivizing for starting of mining operation & dispatch, transfer of mining leases, allowing captive mines to sell upto 50% of the minerals produced, enhancing exploration.