India: Odisha govt cracks down on lower-grade iron ore dispatches

• Dispatches below approved ore grades barred in Odisha
  
  
• Grade dilution and under-reporting practices targeted by DMG
  
  

As per the Odisha Directorate of Mines & Geology (DMG), stricter regulations on mineral dispatches have been introduced, under which no dispatch permissions shall be granted for ore grades falling below the benchmark specified in approved mining plans.

The directive, issued on 16 June 2026, has been aimed at curbing practices such as grade dilution, blending irregularities, misclassification, and under-reporting of mineral grades, which could affect royalty collection and other statutory payments.

Under the revised instructions, the annual average ore grade approved in the mining plan by the Indian Bureau of Mines (IBM) has been designated as the minimum permissible benchmark for mineral dispatches from mining leases.

Odisha currently has an approved EC limit of 278 mnt in FY'26. The state produced around 158 mnt of iron ore in the last FY contributing about 50% of India's total iron ore production. Field-level officials have been directed to intensify monitoring of production, dispatches, and stock positions so that discrepancies in reported quantities, suppression of production, and unaccounted extraction can be identified. It has also been clarified in the circular that dispatches involving ore grades lower than the approved annual average grade shall not be permitted under any circumstances.

"Iron ore dispatches in all circles have slowed since midnight and due to stricter proposed dispatch rules, upcoming dispatch permissions may face setback. Also any vehicle found carrying ore of different quality than the one approved in the annual mining plan may be put on hold. If it continues, there may be availability issue and prices may witness a rise", quoted a trader.

In cases where annual average grades have not been specified in mining plans, the weighted average grade derived from the Geological Report of the active mining face or bench has been directed to be considered as the reference benchmark for dispatch approvals.

A miner said, the DMG clarified the provisions regarding dispatch permissions for average sale grade material under approved mine planning. Previously, certain entities reportedly manipulated royalty based on the IBM prices against the reported grade iron ore. These practices are currently under government scrutiny. However, the existing dispatch permissions granted under earlier approvals remain unaffected by the notification.

Further, where blending has been permitted under approved mining plans, the final blended ore grade has been required to remain equal to or above the prescribed benchmark grade.

Following the state-level directive, instructions have also been issued by the Deputy Director of Mines, Joda Circle, asking mining lease holders not to apply for dispatch permits involving grades lower than those approved in their mining plans.

With the latest directive, scrutiny over ore dispatch approvals is expected to be increased, while monitoring of grade compliance across mining operations in Odisha is likely to be strengthened.