# Iron ore: Extraction

Ancient seabeds turned into the world's biggest pits

Source page: https://www.materialinsights.org/commodities/iron_ore/extraction/

Ancient seabeds turned into the world's biggest pits What this tab covers How it is mined, drilled or grown, and processed into a tradeable form: the main methods compared, their unit economics, by-products, and the companies that do this work globally and in India.

Most iron ore comes from banded iron formations, ancient seabed sediments rich in hematite or magnetite. Australia's Pilbara and Brazil's Carajás and Minas Gerais host giant open pits. High-grade hematite needs only crushing and screening; Brazil's itabirite averages about 50% iron and its Pará hematite about 60% (Smil). Low-grade US taconite must be concentrated and pelletised first. Ore is sold as lump, fines or pellets, then sintered and smelted in blast furnaces or turned into direct-reduced iron. Iron ore is mined largely as a single product, with few by-products (Tilton & Guzmán).

Iron ore is mined almost entirely from huge open pits in banded iron formations. What differs is the grade. Direct-shipping hematite ores, like those of the Pilbara and Carajas at 60% Fe or more, need only crushing and screening into lump and fines, which is why their cash costs are so low. Lower-grade ores (taconite, magnetite and itabirite at 25-50% Fe) must be ground, concentrated and usually pelletised, which costs energy but yields premium high-grade products. Transport is the other big cost: the winners are deposits with dedicated railways and deep-water ports. India sits in the middle, with mid-grade hematite fines sold mostly to domestic mills.

#### Methods compared

| Method | Share of supply | Typical scale | Recovery / efficiency | By-products | Unit cost |
|---|---|---|---|---|---|
| **Direct-shipping hematite: open pit + crushing and screening (Pilbara, Carajas)** | Australia and Brazil supplied about 54% of world iron content in 2025 (860 of 1,600 Mt Fe, USGS) and 75% of 2024 export value (Comtrade) | Vale produced 336.1 Mt in 2025; the largest single systems run at 300 Mt/yr or more | near 100% of mined ore sold, as no concentration is needed | none | C1 cash cost: Fortescue hematite $16.29/wmt (Jun qtr 2025); BHP WAIO guidance $18.00-19.50/t for FY2025, actual in the upper half; Rio Tinto Pilbara unit cash cost $23.5/wmt FOB (2025). Realised prices 2025: Rio $90.0/dmt FOB, Vale fines $91.6/wmt; World Bank 62% Fe CFR China spot averaged $100.2/t in 2025 |
| **Low-grade ore: concentration + pelletising (taconite, magnetite, itabirite)** | all US output and much of Chinese, Canadian and Swedish output; China's ores average about 30% Fe | US: eight pits with pellet plants shipped about 40 Mt in 2025; Vale pellets 31.4 Mt (2025) | n/a | none (rare earths under study at some US mines) | US average unit value reported by mines $89/t (2025, USGS; a value, not a cost) |
| **Indian mid-grade hematite: mechanised and semi-mechanised open pits (Odisha, Chhattisgarh, Karnataka, Jharkhand)** | India about 12% of world iron content in 2025 (190 of 1,600 Mt Fe, USGS) | Odisha pellet plants include JSPL Barbil at 9 Mt/yr capacity and Essar Paradip at 6 Mt/yr (IBM 2022) | n/a | none; low-grade fines and slimes are stockpiled for beneficiation | NMDC list prices from 5 Apr 2026: Baila lump (65.5% Fe) Rs 5,300/t and fines (64% Fe) Rs 4,500/t, excluding royalty, levies and GST (a price, not a cost) |

#### How each method works
**Direct-shipping hematite: open pit + crushing and screening (Pilbara, Carajas)**

Ore is drilled, blasted and loaded by large shovels into autonomous trucks, crushed, screened into lump and fines and railed to port. Blending across many pits keeps product grade steady; Australian ores average about 62% Fe (Smil).

Lowest cost and huge scale; grades are slowly falling and impurities (phosphorus, alumina) widen discounts.
 Vale 4Q25 production report (SEC 6-K, 2026); Rio Tinto 2025 results; BHP Operational Review Jul 2025; Fortescue FY25 via Market Index; World Bank Pink Sheet; USGS MCS 2026; Smil (2016) **Low-grade ore: concentration + pelletising (taconite, magnetite, itabirite)**

Ore at 25-40% Fe is ground fine, concentrated magnetically or by flotation to about 65% Fe and rolled into pellets that are fired. US Lake Superior taconite, Canadian, Swedish and Chinese magnetite mines use this route, as do Brazilian itabirite plants.

High-grade product suited to DRI and low-carbon steel; energy-heavy and higher cost than direct-shipping ore.
 USGS MCS 2026, Iron Ore; Smil (2016); Vale 2026 **Indian mid-grade hematite: mechanised and semi-mechanised open pits (Odisha, Chhattisgarh, Karnataka, Jharkhand)**

Hematite is mined by public sector firms (NMDC, OMC, SAIL), captive mines of steelmakers and merchant miners, crushed and screened into lump and fines, with growing beneficiation and pelletising of low-grade fines. Odisha produced 136.7 Mt from 68 reporting mines in 2021-22.

Close to domestic mills with no ocean freight; lease auctions add high premiums to state royalties, and grades and rail logistics constrain growth.
 IBM Indian Minerals Yearbook 2022 (Odisha); USGS MCS 2026; NMDC price notice via Asianet Newsable, Apr 2026 Unit economics are indicative ranges from the sources named; costs vary widely by deposit, region and year.

#### Share produced as a by-product
 About 5% of primary supply comes as a by-product (Nassar, Graedel & Harper 2015, approximate).

#### Who does it: global

| Company | Country | Activity | Volume | Year | Source |
|---|---|---|---|---|---|
| **Vale** | Brazil | mining, pelletising | 336 Mt iron ore (plus 31.4 Mt pellets) | 2025 | [Vale 4Q25 production report (SEC Form 6-K/A)](https://www.sec.gov/Archives/edgar/data/917851/000129281426000247/vale20260205_6ka.htm) |
| **Rio Tinto** | UK/Australia | Pilbara mining, rail, ports; Simandou (Guinea) | 326 Mt Pilbara shipments (100% basis); production 327.3 Mt | 2025 | [Rio Tinto 2025 full-year results (SEC 6-K, Feb 2026)](https://www.sec.gov/Archives/edgar/data/863064/000162828026009503/ye25-pressreleasex19feb.htm) |
| **BHP** | Australia | Western Australia Iron Ore mining; 50% of Samarco | 290 Mt WAIO production (100% basis; BHP share 256.6 Mt) | FY2025 (to June 2025) | [BHP Operational Review, 18 Jul 2025](https://www.investegate.co.uk/announcement/rns/bhp-group-limited-npv-di---bhp/quarterly-activities-report/8985657) |
| **Fortescue** | Australia | Pilbara hematite and Iron Bridge magnetite | 198 Mt shipments | FY2025 (to June 2025) | [Fortescue FY25 results via Market Index, Aug 2025](https://www.marketindex.com.au/news/fortescue-reports-record-fy25-iron-ore-shipments-shares-rally-on-strong-fy26) |
| **Anglo American (Kumba, Minas-Rio)** | UK/South Africa/Brazil | mining | not published | n/a | Not found in sources consulted |
| **Ansteel Mining** | China | domestic magnetite mining | not published | n/a | Named among top 10 producers in 2014 (Smil, citing Mining-technology.com); volume not retrieved |

#### Who does it: India

| Company | Country | Activity | Volume | Year | Source |
|---|---|---|---|---|---|
| **NMDC** | India | merchant mining (Chhattisgarh, Karnataka); sets monthly domestic list prices | 53.16 Mt production (sales 50.24 Mt) | FY2026 | [NMDC FY26 results via FilingReader, Sep 2026](https://filingreader.com/news-wire/mumbai/2026-09-06/nmdc-crosses-50-million-tonnes-in-record-fiscal-performance) |
| **Odisha Mining Corporation** | India | state merchant mining, Odisha | not published | n/a | Not found in sources consulted |
| **SAIL** | India | captive mines for its steel plants | not published | n/a | Not found in sources consulted |
| **Tata Steel** | India | captive mines (Joda, Noamundi, Khondbond) | not published | n/a | Not found in sources consulted |
| **Jindal Steel & Power** | India | pelletising (Barbil) and mining | 9 Mt/yr pellet plant capacity, Barbil | 2022 | [IBM Indian Minerals Yearbook 2022, Odisha](https://ibm.gov.in/writereaddata/files/173253530167446405cd4d320_Odisha_IMYB_2022.pdf) |

India is the world's third-largest ore producer by usable tonnage (about 310 Mt in 2025, USGS) and mostly feeds its own mills, with exports limited. Odisha alone produced 136.7 Mt in 2021-22 and holds 34% of India's hematite resources (IBM). Output comes from NMDC, OMC, captive mines of SAIL, Tata Steel, JSW, AM/NS and JSPL, and merchant miners such as Rungta and Serajuddin. NMDC, the largest merchant miner, produced a record 53.16 Mt in FY2026; tonnages for OMC and captive mines were not found.

## Other sections

- [Summary](https://www.materialinsights.org/commodities/iron_ore/index.md)
- [Overview](https://www.materialinsights.org/commodities/iron_ore/overview/index.md)
- [Correlation](https://www.materialinsights.org/commodities/iron_ore/correlation/index.md)
- [Production](https://www.materialinsights.org/commodities/iron_ore/production/index.md)
- [Stocks](https://www.materialinsights.org/commodities/iron_ore/stocks/index.md)
- [Cycles](https://www.materialinsights.org/commodities/iron_ore/cycles/index.md)
- [Trading](https://www.materialinsights.org/commodities/iron_ore/trading/index.md)
- [Movement](https://www.materialinsights.org/commodities/iron_ore/movement/index.md)
- [Criticality](https://www.materialinsights.org/commodities/iron_ore/criticality/index.md)
- [Characteristics](https://www.materialinsights.org/commodities/iron_ore/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/commodities/iron_ore/emissions/index.md)
- [Relationships](https://www.materialinsights.org/commodities/iron_ore/links/index.md)