Tata Steel targets 10 million tonnes of domestic iron ore sales this year as captive curbs ease
Tata Steel Ltd is stepping up sales of iron ore to the domestic market, targeting 10 million tonnes this fiscal year from about 2 million tonnes in the previous one, as it looks to monetize surplus mining capacity while ensuring adequate supplies for its expanding steelmaking operations.
India’s largest steelmaker, which has invested in expanding its iron ore production and processing capacity over the past three to four years, said it was on track to achieve the higher sales target. The move follows regulatory changes that removed restrictions on selling iron ore from captive mines, allowing steel producers to supply the domestic market.
With current annual iron ore production exceeding 48 million tonnes, the steelmaker has ample surplus after meeting its internal requirements. “We have iron ore in excess of about 48 million tonnes at this point of time. We are using the iron ore for 100% our own needs… once the regulatory bar has been taken out… we are also supplying to the Indian market,” Koushik Chatterjee, executive director and chief financial officer of Tata Steel, said in an interview with Mint.
Chatterjee said the additional supplies would also help address shortages faced by pellet manufacturers in Odisha, some of whose plants were not operating due to inadequate iron ore availability.
Last year’s sales were constrained by production and dispatch bottlenecks, which the company has since worked to resolve. Beyond this fiscal year’s 10-million-tonne target, Tata Steel expects commercial volumes to rise further over the next couple of years, depending on the surplus left after meeting its internal requirements.
“First priority is to consume what we need and what is in excess, we will sell,” said T.V. Narendran, managing director and chief executive at Tata Steel, adding that the company would not compromise supplies to its own steelmaking operations to increase merchant sales.
The increased iron ore sales are designed to support Tata Steel’s core steelmaking business rather than create an independent revenue stream. According to Chatterjee, the added earnings are a natural outcome of making surplus ore available to the domestic market.
The strategy is also part of a broader effort to prepare Tata Steel’s cost structure for the next decade, as existing captive mining leases expire after 2030 and raw material sourcing requirements shift. To reduce sole reliance on captive mines and improve blast furnace productivity, the company is evaluating flexible iron ore blends, including imports of higher-grade, low-alumina ore.
Indian iron ore is relatively cheaper but has higher alumina content, which can affect furnace efficiency and increase consumption costs. Tata Steel has started importing ore from Canada and is evaluating supplies from other sources, including Australia, to identify the most efficient mix.
Margin levers in India
Tata Steel is also targeting annual cost savings of ₹5,000-10,000 crore in India through operational efficiencies, improvements in coal consumption, leaner raw material blends, and lower maintenance costs.
The company achieved cost savings of about ₹11,000 crore across geographies in the previous fiscal year and has budgeted around ₹7,100 crore for the current year. The top executives clarified that these figures include savings across its global operations and should not be interpreted as an equivalent annual increase in earnings.
“In India, I would say going to 2030, there are multiple levers we are working on. One is cost takeout, and typically in India for us, anything from ₹7,000 crore to ₹10,000 crore a year is a standard target through KPI (key performance indicators) improvement,” Narendran said.
Beyond cost reduction, Tata Steel is working to boost realizations by increasing its share of value-added and downstream products. Its consumer-facing Tata Tiscon brand, for example, commands higher prices than comparable business-to-business offerings.
European headwinds persist
In Europe, however, the turnaround remains more challenging as the company grapples with regulatory uncertainty in the Netherlands and weak volumes in the UK.
At its Netherlands operations, Tata Steel is in talks with the government regarding the regulatory framework and conditions required to continue operating in the country. Narendran said the company wants clarity on whether it will retain its social licence to operate, while seeking regulations that allow it to compete with steelmakers elsewhere in Europe. These discussions come amid environmental concerns and legal proceedings involving the Dutch operations, with management noting it is premature to comment on an exit.
Meanwhile, the UK business is expected to approach breakeven by the fourth quarter, though that timeline hinges on a recovery in sales volumes. In the UK, Ebitda loss narrowed to £57 million in Q2FY27 from £66 million in a year earlier. The steelmaker is replacing its blast furnaces with an electric arc furnace (EAF) at Port Talbot under an agreement with the UK government. The commissioning of the EAF project will begin in FY29.
Tata Steel noted that earlier US and European trade restrictions flooded the UK market with imports, and a longer-than-expected import window created excess inventory. “Just now our expectation is that by Q4 we will be almost there,” Narendran said, cautioning that external factors could still affect the timeline.