Tata Steel, India’s second-largest steelmaker, aims to source half of its iron ore requirements from captive mines after 2030, down from 100% now, as steep premiums in mine auctions make relying only on leased blocks economically unviable—prompting the company to consider open-market purchases and imports to secure ore.
“We will certainly look for at least 50% captive so that the operations are stable, but between 50 and 100 will probably depend on the economics,” Tata Steel chief executive officer T.V. Narendran told Mint on the sidelines of a business event on Saturday, 21 February.
The shift comes ahead of the expiry of its leases in Jharkhand and Odisha by FY2030 under the amended Mines and Minerals (Development and Regulation) Act, which mandates auctions for allocation of mineral blocks—which will raise costs at India’s oldest steelmakers, as also its peers.
The steelmaker will look to buy iron ore from the open market post 2030 when its long term leases of captive iron ore mines end. Narendran’s comments suggest that Tata Steel may either rebid for some of its current mines when leases expire or look at bidding for other mines whose leases end in the coming years.
In FY25, Tata Steel met 100% of its 40.5 million tonnes of domestic iron ore requirement through six legacy mines which helped it produce 21.8 million tonnes of .
However, a higher dependence on market purchases and imports is expected to raise input costs, potentially squeezing margins for the company after 2030. The sourcing strategy by Narendran, who took over in 2013 as the chief executive of Indian operations and later elevated to global CEO in late 2017, aims to counter that.
“So, obviously, the cost of ore will go up for us as we buy more from the market,” Narendran said, adding that cost-cutting measures taken over the past few years will help offset the impact. The company is drawing confidence from its coal transition. “Twenty years back, 80% of our coal was our own. Today, only 15% of our coal is our own,” he said.
“Our newer plants in Kalinganagar [in Odisha] don’t have the legacy cost that we have in Jamshedpur. We are investing significantly in downstream capacities, high value-added products, high quality products. So, we will negate the impact,” said the CEO.
Sourcing beyond Canada
Tata Steel is also widening its overseas sourcing strategy beyond Canada, where it owns mines, reflecting a shift in global iron ore trade. Narendran said more countries now view India as an export destination for ore.
“There are already many global suppliers I know who are looking at India and seeing that there is an opportunity because traditionally India was not an opportunity for importing (iron) ore. But we are already seeing that India is already importing 9-10 million tons of ore this year… that opportunity will continue to grow,” he said.
India’s iron ore imports climbed to a seven-year high in 2025, as shortages of high-grade domestic ore, softer international prices, and logistical challenges pushed steelmakers to look overseas, Mint . India imported 12.2 million tonnes of iron ore in calendar year 2025, nearly double the previous year, according to commodities market intelligence firm BigMint.
Brazil and Oman were the largest suppliers.
With an eye to secure iron ore supplies after 2030, Tata Steel joined hands with Lloyds Metals & Energy in December last year to explore iron ore mining opportunities in Maharashtra. Later in January, it also tapped into its Canadian subsidiary, Tata Steel Minerals Canada, for a test shipment of high quality iron ore for its domestic operations, Mint had reported earlier.
“Maharashtra, Canada, all these are options post 2030,” Narendran had told Mint in an earlier interview. This, he said, was in addition to the mines it has acquired in India under the new auction regime.
The Canadian mines in Labrador and Northern Quebec regions has 3 million tonnes per annum (mtpa) capacity, but it can be increased to 10 mtpa as it has sufficient reserves, he said.
Post-FY 2031 costs escalation
Tata Steel’s total iron ore requirement by FY2031 will be about 46.7 million tonnes per year, according to a report by Kotak Institutional Securities last October. “The expiry of captive mines in FY2030, according to the MMDR Act would significantly increase Tata’s raw material costs from FY2031,” the note read.
The company also holds non-auction mines acquired through the purchases of Usha Martin and NINL, including the Vijaya II and Koida blocks. Tata Steel also has two iron ore mines in Odisha’s Kalamang West and Gandhalpada, which it won through auctions at bid premiums of 100.1% and 141.3%, respectively. Bid premium refers to the extra amount that a company offers to pay the government over and above the base price or royalty for every tonne of ore they extract.
Tata Steel will commission its scrap-based facility of 0.8 million tonne plant in Ludhiana next month as it steps up its recycling play. “The broader ambition is clear: we want about 10% of the steel that we produce in India to be made through recycling,” Narendran said.
More such plants are on the drawing board. “We will set up similar plants in the West and in the South… We are still looking at various options because the whole economics of this plant depends on sourcing all the scrap from within 200-300 kilometers and selling all the steel within 200-300 (km).”
But, for now, the economics at scrap-based plants remain tighter than the blast furnace route. “The cost of producing steel through this route will be higher than making it through blast furnaces because today there is no carbon advantage. But we optimize on logistics costs.”