India's iron ore output rises marginally in H1FY'26 even as govt moots reforms to boost production

• Production in Odisha drops 13% y-o-y in Apr-Sep'25
  
  
• Weak OMC, JSW volumes weigh on Odisha output
  
  
• NMDC records nearly 30% surge in production in H1
  
  

Morning Brief: India's iron ore production edged up marginally on the year to over 135 million tonnes (mnt) in April-September 2025 (H1FY'26) after declining 2% in the first five months of the ongoing fiscal, as per provisional data with BigMint. The slight y-o-y uptick can be largely attributed to strong performance by leading miners, particularly NMDC.

However, considering the robust growth in crude steel production at an annual rate of over 12%, the 0.07% y-o-y uptick in production in H1, as per provisional data, poses the threat of supply shortage in the domestic market.

Notably, imports surged to 6.1 mnt from just 1.43 mnt last year, mainly due to specific grade requirements and regional supply imbalances

State-wise output

Iron ore production in Odisha dropped sharply by 13% y-o-y in H1. Odisha is India's leading iron ore producing state, with a share of roughly 54-55% of total production.

However, among the other major producers, Chhattisgarh and Karnataka recorded increases in production by over 22% and 8% respectively due mainly to NMDC's strong show.

Maharashtra, on the other hand, continued to show sharp growth of over 30% y-o-y due to rapid expansion in capacity by major miners such as Lloyds Metals & Energy.

Highlights of H1FY'26

Weak OMC, JSW production weighs on Odisha output: JSW Steel's iron ore production is likely to dropped 24% y-o-y in H1. The decline in Odisha production is partly due to JSW's surrender of the Jajang mine. Moreover, delay in operationalisation of auctioned mines due to forest clearances, etc. is affecting the company's overall production.

OMC, too, recorded a 13% y-o-y decline in iron ore output in H1 on elevated iron ore inventories with OMC at the beginning of the fiscal year, which prompted the miner to adjust its production strategies. April onwards, OMC's auctions fetched weak responses, with declines in offtake, bids, or prices, reflective of a downtrend in downstream segments. An early monsoon also disrupted mining activity.

The PSU is expected to raise production by an additional 4 mnt in FY26 to 40 mnt. The miner has witnessed a surge in capacity post transfer of non-operational auctioned mines - Guali and Jilling - following the mineral auctions in 2020.

NMDC records nearly 30% surge in production: NMDC's iron ore production, as per provisional data, increased by 28% y-o-y in H1 to over 22 mnt from 17 mnt in the year-ago period. It expects production in FY'26 to be at around 55.4 mnt which is 100% of its Environmental Clearance (EC). The company reported FY'25 production at 44 mnt, down 2% y-o-y against 45 mnt in FY'24.

Ore output drops while crude steel volumes rise: India's crude steel output rose by 12.4% y-o-y during April-September, however iron ore production during the period rose just 0.07%. Projections show that crude steel output in FY'26 is expected to reach around 167 mnt, an increase of 10% y-o-y. The downtrend in iron ore production, therefore, has raised serious concerns.

Disruption in demand-supply balance: India's iron ore demand increased by 8.2% y-o-y to 135 mnt in H1FY'26 from 124 mnt in H1FY'25, as per BigMint data, primarily driven by expanding steel and pellet capacities. However, production remained stable at around 135 mnt.

Despite stable iron ore production and lower exports, overall availability during the first six months stood at 133 mnt, compared with domestic consumption of 135 mnt -- resulting in a deficit of around 2-3 mnt. This indicates that the industry is currently drawing down existing inventory stocks to meet the strong consumption demand.

Outlook

While it is indeed a positive development that domestic iron ore production rebounded slightly in H1 after a drop of 2% y-o-y in 5MFY'26, the tight supply situation persists due largely to delay in operationalisation of auctioned mine blocks. Out of the 138 mines auctioned since the amendment of the MMDR Act 1957 in 2015, only 37 have started operations.

Signalling the implementation of long-awaited reforms, the Ministry of Mines has issued the Mineral (Auction) Second Amendment Rules, 2025, introducing stricter timelines, enhanced performance security mechanisms, and automatic online transparency measures to expedite the operationalisation of mineral blocks and strengthen accountability in India's mineral auction framework.

For the first time, specific milestone-based timelines have been introduced governing both mining leases and composite licences. Delays in completing milestones such as mining plan approval, environmental clearance, or lease execution will attract 1% appropriation per month from the performance security.

To incentivize early production, lease holders must commence production within five years from the issue of letter of intent (LoI). In case of auction of Mining Lease (ML), only 50% of auction premium will be payable for the quantity of mineral dispatched earlier than five years from the date of issue of LoI. For composite licences, only 50% of the quoted auction premium will be payable on minerals produced within the first seven years of the LoI.

BigMint notes these reform measures are expected to boost production in H2FY'26.