Budget 2026: Vedanta urges policy push for low-grade iron ore beneficiation

Vedantas iron ore arm Sesa Goa is asking the government to help the iron ore industry. They want this help before the Budget 2026. Sesa Goa thinks the government should make it easier for iron ore companies to make money from low-grade iron ore.

The company says India has a lot of low-grade iron ore that is not being used. If we can make this iron ore better it will help the steel industry in India. This will create jobs and the government will get more money. We will also not have to buy much iron ore from other countries. Sesa Goa and the iron ore industry will benefit from this. The iron ore industry needs help, from the government to make low-grade iron ore useful. This article tells us what Vedanta wants why Vedanta matters, in terms of technology and money what options the government has when it comes to the Budget what the risks and downsides are, including what can happen to the environment and people and what practical steps the people making policies and the industry can take next regarding Vedanta.

1) What Vedanta actually asked for is this: they wanted something but what was it that Vedanta asked for let me tell you it was something that Vedanta actually asked for.

Vedanta, through Sesa Goa is asking the government to include some things in the Budget 2026 for people who work with low-grade iron ore. They want the government to make it easier for them to process this iron ore by giving them some benefits and lowering the taxes they have to pay. The problem is that building a plant to process this iron ore costs a lot of money upfront. Vedanta thinks that if the government helps them out with things like taxes or cheaper transportation these projects will be worth investing in and they can use the iron ore that is just sitting there. Vedanta and other companies, in the industry also want the government to make things clear so that private investors will be willing to put in money for a time. Vedanta really wants to see some changes that will help them with the iron ore.

2) Let me give you a background: what is low-grade iron ore and why does the process of iron ore beneficiation matter when it comes to low-grade iron ore?

Iron ore is important because of its iron content. The amount of iron in iron ore is what determines its grade. If iron ore has an iron content, like sixty two percent or more it can be used directly in steel furnaces or blast furnaces. On the hand iron ore with a low iron content, usually less than fifty eight percent has a lot of impurities like silica and alumina and phosphorus and moisture. These impurities make it hard to use iron ore with iron content without first upgrading the iron ore. Iron ore, with iron content cannot be used in a way that makes economic sense without this upgrading process. Iron ore is a material and its iron content is what makes it valuable.

Beneficiation is a process that involves a lot of steps. These steps include crushing and screening and washing and magnetic separation and flotation and gravity separation. Sometimes beneficiation also includes pelletizing. The goal of beneficiation is to remove the stuff from the iron and make it better. This means the iron content is higher and it meets the standards that steelmakers need. Beneficiation takes waste or iron that is not very valuable and turns it into something that can be sold. This new iron is more valuable. Can be used to make other things, like sinter or pellet feed.

This is something that’s really important for India. India needs to think about this because it is going to affect India in a way. The fact that this is happening is a deal, for India. India has to consider what this means for India and how it will change things for India.

Indias domestic steel demand is going to go up fast. The country wants to make a lot of steel by 2030. Indias domestic steel demand will get a boost if they can use the low grade iron ore that they have. This will help India get raw materials from their own country. Indias domestic steel demand and production will really benefit from unlocking these low grade reserves.

A lot of mines have amounts of low-grade ore just sitting at the mineheads. This ore is not worth processing now because it is too expensive to do so without some help from the government or better equipment. Vedanta says that this ore can be a thing if we can make it cheaper to separate the good stuff from the bad. Vedanta thinks that if we can make this process more affordable then all this low-grade ore, from the mines can be used.

3) The scale of the opportunity (numbers and scope)

There are reports and statements, from the industry that say India has a lot of low-grade iron ore, around 300 million tonnes. If a big part of this iron ore is improved it will really help India have iron ore to use in the next few years. The good things that could happen to the economy include:

Additional feedstock for domestic steel plants (reducing pressure on high-grade ore imports),

Higher export volumes of processed iron-ore products (pellets/concentrates),

Increased domestic value-addition and tax/royalty revenue streams,

Local employment from beneficiation plants, logistics and downstream activity.

People have ideas about the exact numbers and that is because they do not all agree on what low-grade means or where they are looking. The policymakers will want to see information, about the geology before they decide to spend a lot of money on this.

4) Why is the beneficiation process not happening already. It is about the economics of beneficiation. The economics of beneficiation is a factor that determines whether it is viable or not. The cost of beneficiation is a consideration and the economics of beneficiation play a crucial role, in deciding if it is worth investing in the beneficiation process. The economics of beneficiation is what stops it from happening.

The core barrier is capital intensity and unit economics:

The cost of setting up things like beneficiation plants and pelletizing lines is really high at the beginning. These things cost a lot of money to build. For mines that’re far away from cities you also have to spend money on things like conveyors and roads to get the stuff out. Vedanta says that these big costs at the start are a problem if the government does not have a plan to help. The company needs to know that the government will support them before they spend all this money on things, like beneficiation plants and pelletizing lines.

The cost of running a mine is really important when we think about the price of the products we make from the ore. If we have quality ore it needs a lot more work to get something we can sell.

For example if the price of the processed products in our country or, in other countries is very low or if we have to pay a lot of taxes to export them then it does not make sense to invest in the mine because we will not make enough money from the products made from the low-grade ores.

Transport and evacuation bottlenecks are a problem. The thing is, a lot of these low-grade deposits are really away from the places where steel is made and from the ports and rail networks. This means it costs a lot to move things around. If it costs much it can make the whole project not worth doing. The only way to make it work is if the government helps out with the cost of using the roads and rails or if they give permission to use them for a lower price. This is the way that projects like these can actually happen with the low-grade deposits that are far, from steel clusters and port and rail networks.

Regulatory uncertainty is a problem. The rules about what we have to do when we export things are not clear. For example we do not know what taxes we have to pay when we export or which types of things we are not allowed to export. The rules about paying royalties are also not clear.. We have to get approvals for what we do to the environment. All these things make it risky for people to invest in things. So investors want to make money to make up for the risk. Regulatory uncertainty with duty regimes, like export duties and prohibitions, on certain grades and royalty frameworks or environmental approvals increase the risk and the return that investors need.

Market segmentation is really important for steel producers. Some of these steel producers like to get shipping ore, which is also known as DSO or they like high-grade fines. The demand for steel in our country also matters when it comes to the price we can get for the upgraded steel products. Steel producers need to think about what kind of steel people want to buy in our country and that affects the price of the upgraded products. Market segmentation for steel producers is about understanding what type of steel is in demand, like shipping ore or high-grade fines.

The thing is market forces have not been able to process a lot of low-grade ore. This is why Vedanta is asking for some changes in policies. They want these changes to help reduce the difference between what they need to break on a project and what they expect to get back, from it. Vedanta wants this difference to be smaller so that they can make money from their projects.

5) What things can the Budget do to make a change? The Budget has an options it can use. The Budget can use these options to make things happen. For example the Budget can use money to help the Budget work better. The main thing is what the Budget can do to help people. The Budget is important. The Budget needs to be used in a good way.

Vedanta is talking about the language and what the whole industry is saying. They think the Union Budget should think about some useful steps. These steps can be, about money, rules or making things easier to do. Here are some options. What might happen if we do them.

A. Fiscal incentives

When you get investment tax credits or accelerated depreciation for plants that make iron ore better and turn it into pellets this really helps. It lowers the cost of building these plants after you pay taxes. It also helps you get your money faster. The plants that make iron ore better and turn it into pellets are very important. So investment tax credits or accelerated depreciation, for these plants are a deal. They make it cheaper to build them. You get your money back quicker.

The government is giving production-linked incentives. These incentives are based on how stuff we make and then sell. We get incentives when we make a lot of things and export them as value-added products. The production-linked incentives are tied to the volume of output or the export of these value-added products.

They are giving money to businesses and factories through something called a mining or industry fund. This money is given to help these businesses like the ones that process things set up their own plants. They get this money either for free. They have to pay it back with very little extra added on which is a really good deal, for them. This is called a capital grant or a concessional loan. The goal is to help medium sized businesses, also known as SMEs get started with their own plants.

The government can give exemptions or rebates on Goods and Services Tax for the equipment used in beneficiation. This will really help reduce the cost of the equipment. People who buy beneficiation equipment will have to pay money at the start because of these exemptions or rebates, on Goods and Services Tax.

Reduced customs duty on specialized beneficiation machinery and spares.

The company Vedanta wants to make money from beneficiation. To do this they need help with costs. Fiscal incentives can reduce the costs that you pay at the start or, over the life of a project. This makes more projects worth investing in for the bank. Vedanta said they need a duty structure or incentive structure to make beneficiation a good business deal. This means they want incentives to make beneficiation more attractive.

B. Trade & duty measures

Nil / reduced export duty on beneficiated material (pellets/concentrates) to encourage production for export markets while ensuring domestic supply.

So the country can keep controls on exporting low-grade ore. This means companies have to add value to the low-grade ore in the country. The idea is to make things like low-grade ore into something useful, in the country where it is found.. This plan will not work if it is not possible for companies to process the low-grade ore in the country. If that happens it can cause problems. The low-grade ore export controls are meant to help the country make valuable things from the low-grade ore like low-grade ore.

People in the industry want to know the export rules and they want to know when things will happen. The industry really values stability because this means companies can sign contracts that will last for a time. This is important for the industry because it needs stability to make long-term plans and sign long-term contracts like export contracts which’re a big part of the industry. The industry needs to know that export rules will not change suddenly so it can plan for the future. That is why clarity on export rules and predictable timelines are very important, for the industry.

Some people who work with minerals have already said that they do not want to pay any tax when they export minerals that’re not very good quality. The Budget can now show that the government wants to charge tax in a way that helps people process these minerals in the country than just sending them out as they are. This way the minerals industry can benefit from the Budget. The Budget should help the minerals industry by making it easier for people to process low-grade minerals of just exporting them without doing anything to them.

C. Infrastructure support (non-fiscal)

Concessional rail freight for beneficiation feedstock or finished pellets, or dedicated rakes/sidings for mining clusters.

Port linkage investments — mechanised handling and storage to reduce losses and demurrage for pellet exports.

Evacuation corridors and industrial parks near mining belts with power, water and logistics common infrastructure to reduce per-project capex.

Infrastructure interventions really help to cut down the costs of running things. They are usually the main factor that makes remote projects possible. Vedanta said that we need to have evacuation infrastructure” in place along, with financial help.

D. Regulatory & process reforms

The government should give approvals for companies that have plants to make minerals cleaner and safer, for the environment. These companies must follow the rules to reduce bad air and water pollution. They will get permission to operate if they can prove they are doing a good job of keeping the environment clean. This is what we call an approval but it is not a free pass. It comes with conditions that the companies must follow to keep their environmental clearance.

We have standardized mineral definitions and we have testing protocols that’re the same everywhere. This way the industry and people who buy steel can trust that they are getting the quality they pay for because the minerals are certified to meet grades. The industry and steel buyers can rely on these certified mineral grades.

Longer mining/processing leases or clear re-allocation pathways to de-risk investments.

When people talk about predictability they mean that the rules are clear and do not change often. This helps investors because they know what to expect. As a result investors feel more safe. This reduces the extra money they want for taking a risk. It also makes it cheaper for companies to get money from investors. Regulatory predictability is really important for investors because it helps them make decisions. Regulatory predictability reduces the risk that investors take. This means they do not want as much money for investing. This also reduces the cost of financing, for companies that need to borrow money.

6) Budget mechanics: what a package that’s likely to happen could look like. The budget mechanics are very important. We need to think about what the budget mechanics could be. A likely package, for the budget mechanics is something we have to consider. The budget mechanics will tell us what a likely package could look like.

If the Finance Ministry wants a plan to help the Finance Ministry get things moving quickly a reasonable budget plan might include:

* things that the Finance Ministry thinks will really work

* steps that the Finance Ministry can take to make things happen

* ideas that the Finance Ministry believes will help the Finance Ministry achieve its goals

The Finance Ministry needs to think about what will really make a difference and include that, in the budget plan.

Capex incentive: 15–30% investment tax credit for beneficiation and pelletizing plant investment over the next 3–5 years (or accelerated depreciation for plant & machinery).

Logistics concession: Pilot scheme for concessional rail rakes (or 50% rebate on freight for first 3 years) for beneficiated product from designated clusters.

So we need to be clear about export duty. There should be no export duty on the quality pellets or concentrates that we make from iron ore.. We should keep the duty on the raw low grade ore that has not been processed. This will stop people from exporting the ore and instead they will process it first and then export the good quality pellets or concentrates. This is what we mean by export duty clarity, on pellets and concentrates and raw low-grade ore.

Special Purpose Investment Fund: A Rs-denominated fund (or low-interest loan window) for miners to co-finance beneficiation projects, administered by a public investment bank or National Mineral Development Corporation (NMDC)-led SPV.

GST / customs relief: Temporary GST relief on beneficiation equipment and reduced customs duty on imported specialized processing machines.

The government has to balance the money it will not get in the term with the benefits it will get in the medium term from things like higher royalty, corporate taxes and people having jobs. The government needs to figure out when it will break on the money it is not getting and include rules that will stop this from happening forever.

(Note: these are just ideas, for policies. The final decisions will be made during the Budget process. Based on what the different government departments think is important.)

7) What are the things about this for the economy and, for planning ahead and why the government might really like this idea of economic and strategic benefits

Supply security for steel is very important. This is because when we make iron better which is called beneficiation we have iron that we can use in our own country. This helps India make steel and sell it to the world. India wants to be a player in the steel market. When we have our iron we do not have to worry so much about prices going up and down in other countries. This makes Indias steel production stronger. Supply security, for steel is crucial for India to achieve its goal of being a steel producer.

When we sell pellets or concentrates of raw ores the value of what we are selling goes up. This means we get money for each tonne of pellets or concentrates we sell. The country also gets money from exports and more foreign currency comes in. Selling pellets or concentrates of raw ores is a good way to increase the value of minerals like iron ore. So selling pellets or concentrates is better than selling ores because it brings in more money and helps the country earn more foreign currency. Value-addition and exports of pellets or concentrates are very important, for the economy.

Jobs and regional development are very important. Beneficiation plants and other services like logistics and power will create jobs. Water treatment and downstream steel activity will also create jobs. These jobs will be in the mining districts. They will create jobs and indirect jobs in these areas. The beneficiation plants and these other services will help the development of the mining districts by creating jobs, for people who live there.

The government will get money from mining companies. This is because these companies will be mining more and making profit. As a result the government will get royalties and taxes from the mining companies. This extra money will help balance out the money the government had to give to the mining companies at the start. The government revenues, from mining will increase over time.

Industrial decarbonization is really important. We can make steel in a way if we use better materials like special pellets, that work well with new methods of making steel. For example we can use reduced iron and electric arc furnace to make steel. This is a thing for India because it wants to use cleaner energy. If we use power to make these pellets it will help India meet its energy goals. Industrial decarbonization is the key, to making this happen.

8) Environmental and social trade-offs — not automatic wins

So beneficiation seems like a good thing but there are some downsides that the people who make the Budget and the regulators have to deal with:

Water use is a deal. Many mining processes, like washing and flotation need a lot of water. This is a problem for places where water’s already scarce. It can cause trouble for people and the environment. Unless the mining plants can reuse water and not release any waste that is. Water recycling and zero discharge are important for mining regions that do not have a lot of water. Water use is something that needs to be considered when it comes to mining processes, like washing and flotation.

Tailings and solid waste from mining are a problem. When we try to upgrade the ore we get tailings and slimes that we have to throw safely. If we do not manage tailings properly it can hurt the environment for a long time. New ways of managing tailings, like paste fill and dry stacking cost money but they are safer and reduce the risk of something going wrong with the tailings.

Energy use and emissions: Beneficiation and pelletizing consume power (and sometimes thermal energy). If powered by fossil fuels, emissions increase. Coupling beneficiation with renewable electricity and efficient processes mitigates this.

When new plants come to a community they create jobs for people in the area. However these new plants also put a lot of pressure on the infrastructure and the land. The local community has to deal with this pressure.

To make things fair it is necessary to have land acquisition. This means that the people who own the land are treated fairly when they have to give it up.

New plants also need to have rehabilitation plans in place. This is important for the community.

Additionally community benefit sharing is essential for the community. This means that the local community gets some benefits, from the plants. The local community and the new plants are connected in this way.

New plants and the local community have to work to make sure everything runs smoothly.

The risk of mining expansion is a concern. If it becomes easier to make money from low-grade ore companies might start mining in areas that are very important for the environment. This could be a problem if the rules to protect the environment are not strong enough. Mining expansion could really hurt these areas. The easier economics of low-grade ore might make companies want to expand their mining operations which is a risk, for the environment.

The Budget has to make sure that incentives are connected to how a company takes care of the environment. For example only plants that use water wisely handle waste properly and do not pollute the air should get incentives. These plants should also help the community. This way we can stop companies from trying to outdo each other in a way that hurts the environment. The Budget must tie incentives to rules, like water-use and emissions standards and community development so that companies, like The Budget follow these rules.

9) International comparisons and lessons

Some countries have tried to help the mining industry by using money and building things to make beneficiation and processing minerals happen. They do this to get value from the minerals they have which is what beneficiation and downstream mineral processing of minerals is all, about.

Australia has always sent a lot of its quality ore to other countries. People have been talking about this for a time. The big question is whether Australia should try to do more with the ore before sending it or if it is better to just send the good stuff and let other countries deal with it.

Australia is really good at getting the ore out of the ground and getting it to where it needs to go. So the government is more focused on making it easy for people to buy and sell the ore, than giving out a lot of money to help the industry. Australia is still a player when it comes to ore.

In Brazil the big iron ore miner Vale put money into making pellets and improving the ports. When it makes sense big mining companies, like Vale often spend their money to make their products more valuable.

China: Used industrial policy to secure feedstock and invested heavily in pelletization and sintering to improve blast furnace efficiencies.

India can learn a thing or two from places. If India wants to make a change it should try giving people incentives that make sense and have a deadline. India should also spend money on infrastructure. Make sure the environment is protected. This way India can make things work without wasting a lot of money.

For example India can work with companies to build roads and ports. This is called a private partnership or PPP model. It has worked well in countries.

10) So I was thinking about the steel value chain. How it might respond to things. The steel value chain is a deal and it might respond in different ways. We have to consider the steel value chain and all the things that affect it. The steel value chain is really important. People who work with the steel value chain need to know how it might respond.

Big steel companies that can already handle types of materials may spend more money on DRI/EAF capacity if they can get good quality pellets at a lower price. This can help the steel industry reduce its carbon footprint and work, towards being more environmentally friendly. The steel industry is trying to cut down on carbon emissions. This move can be a part of that plan. Big steel companies and DRI/EAF capacity can play a role in this.

Small companies that help move things from one place to another. Miners who sell the things they mine might work together to build plants that make their products better. This way smaller intermediates and merchant miners can build plants to make their products better which is called beneficiation. By doing this smaller intermediates and merchant miners can get bigger. Spend less money on each tonne of product which is a good thing, for smaller intermediates and merchant miners.

Financial markets are really important. If the Budget gives us durable incentives then capital markets will be more likely to support big projects by giving them the money they need and banks will think these projects are not as risky. This means banks will charge interest rates for these projects. The Budget and financial markets like this are crucial for projects to get the money they need to happen. Financial markets and the Budget have an impact, on this.

Export markets are really important for India. If India can make quality pellets at a low cost India can sell more pellets in Asia.. India needs to think about how much pellets other countries want to buy and how much it costs to send pellets to other countries. This will decide if India can really sell a lot of pellets to countries. India and export markets, for pellets are closely linked.

Vedanta is showing that private companies are ready to invest money if the government makes things more certain. This is a sign, for the market if the Budget 2026 gives them the support they need. Vedantas move is a signal that private companies will invest if they feel safe to do.

11) Risks of poorly-designed incentives

Rent capture is a problem. If we do not have fair auctions and if we do not have clear rules, for who can participate then only a few companies will get the benefits. This means that the benefits of rent capture will not be shared by people, which is what we want to happen with broad beneficiation capacity. We want many people to benefit from rent capture, not a few companies.

The problem of leakage is that permanent tax concessions can really hurt our revenue and we might not even get any good from them in the long run.

Using sunset clauses and performance milestones can help reduce the risk of leakage.

This way we can make sure that fiscal leakage does not cause problems, for our revenue.

When people in charge of making decisions think that getting things done fast is more important than taking care of the environment Environmental backsliding can happen. This means that Environmental backsliding can cause a lot of harm to the environment. The damage, from backsliding could be very bad and we might not be able to fix it.

When a country gives much money to help its companies sell things to other countries it can cause problems. This is what we call market distortion. If a country does this it might make many things and sell them to other countries very cheaply. This can be bad for countries because they might not be able to sell their own things. As a result other countries might get upset and decide to fight with trade retaliation against the country that is selling too many things. Market distortion like this can cause a lot of trouble, for everyone involved in trade especially when it comes to export subsidies. Export subsidies are the money that a country gives to help its companies sell things to countries.

Budget designers should make sure they create plans that have deadlines and conditions. These plans should also have a way to track progress and take back money if the results are not good. The results they should look at are things, like how much work’s being done how many people are employed and how the environment is being affected. Budget designers should focus on the performance of the budget in terms of output, employment and environmental performance. They should build these things into the budget so they can see if it is really working.

12) Practical recommendations (a policy checklist for Budget 2026)

The Finance Ministry and the other ministries like Mines, Steel, Railways, Ports and Environment need a package that’s fair. This package could have things like:

* things that help the Finance Ministry

* things that help the Mines ministry

* things that help the Steel ministry

* things that help the Railways ministry

* things that help the Ports ministry

* things that help the Environment ministry

The Finance Ministry and the line ministries such as Mines, Steel, Railways, Ports and Environment should get a package that’s good, for all of them.

Short term (0–3 years):

Investment tax credit (15–25%) for beneficiation/pelletizing capex with a 3-year sunset.

We should not charge any export duty on pellets or concentrates. However for a while we need to keep the duty, on raw low-grade ore. This is because beneficiated pellets and concentrates are already processed and ready to use but raw low-grade ore still needs to be worked on.

Pilot concessional rail freight for designated mining clusters.

Conditional capital grants for community-owned beneficiation projects (to encourage local participation).

Medium term (3–7 years):

Create a Mineral Value-Addition Fund (public seed capital + private leverage) to finance larger projects via PPP.

Implement standardized environmental norms for beneficiation plants (water recycling targets, tailings dry stacking).

Invest in industrial corridors and port mechanization for mine clusters with aggregated capacity.

Safeguards:

Tie all incentives to environmental certification and to demonstrable increases in domestic value addition.

Use transparent allocation mechanisms (competitive bids/auctions) for any concessional rail slots or grants.

Include sunset clauses and milestone-based disbursements.

Such calibrated policy architecture balances industry stimulus with fiscal prudence and environmental protection.