MUMBAI: With its iron ore mining leases in Jharkhand and Odisha set to expire by 2030, Tata Steel is preparing for a future that could see fewer permanent workers.
The company has slowed hiring of permanent blue-collar workers over the past two years and is sensitizing its existing workforce and unions to a potential transition, including the possibility of moving to a new mine owner.
“Tata Steel will see its number of permanent workers transition after 2030 as some of its captive iron ore mining leases come up for expiry,” Atrayee Sanyal, chief people officer at Tata Steel Group told Mint in an interview at the company’s headquarters in Bombay House in Mumbai.
At the end of FY25, Tata Steel’s permanent blue-collar workforce stood at 31,794, down by 585 workers compared to FY24, according to the company.
Sanyal outlined three possible scenarios for the workforce, depending on the outcome of mandatory auctions for the mines under the amended Mines and Minerals (Development and Regulation) Act. If Tata Steel retains the leases, there will be “no impact on workers”. If it fails to secure them, "the number of workers will transit with the mines" to the new leaseholder. In the third scenario, “where only some mines are retained, a portion of the workers will continue with the company”.
“We have also sensitized our unionized workforce to the situation, as there is a possibility that we may lose some mining leases and may not be able to retain all of them,” Sanyal said. “In preparation for this transition, we have limited hiring of permanent blue-collar workers over the past two years.”
Legacy leases
The workforce planning comes ahead of the expiry of Tata Steel’s leases on four iron ore mines in Jharkhand and Odisha by 2030, after which the blocks must be auctioned. The company currently meets its entire iron ore requirement from captive mines, procuring about 40.5 million tonnes in FY25 to produce 21.8 million tonnes of steel.
Post-2030, the country’s second-largest steelmaker plans to secure at least 50% of its raw material needs from captive sources, depending on auction outcomes and economics.
“We will certainly look for at least 50% captive so that the operations are stable, but between 50 and 100 will probably depend on the economics,” Tata Steel chief executive officer T.V. Narendran had told Mint earlier.
The company will weigh the bid premiums required to re-acquire the mines against open market iron ore prices in deciding how many to retain. Bid premium refers to the extra amount a company offers to pay the government over and above the base price or royalty for every tonne of ore it extracts.
Tata Steel joined hands with Lloyds Metals & Energy in December last year to explore iron ore mining opportunities in Maharashtra. Later in January, it also tapped into its Canadian subsidiary, Tata Steel Minerals Canada, for a test shipment of high quality iron ore for its domestic operations, Mint had reported earlier.
Tata Steel’s annual iron ore requirement by FY31 is projected to be 46.7 million tonnes, according to an 8 December report by Kotak Institutional Equities. “Majority of Tata’s operating iron ore leases will expire and we estimate a potential erosion of ~30-40% of its steel operating margins post-FY2030E,” Kotak analysts Sumangal Nevatia, Siddharth Mehrotra and Keshav Kumar wrote in the report.