Due to the limitations of mineral processing technology and techniques of mill operation, along with other factors, most mining enterprises have operated under a low returns-ratio of iron ore resources for a long time, and especially before the late 1970s. Thus, a great deal of iron gangue exists in China. Due to scientific and technological progress, the technology and equipment problems which stymied the recycling and reuse of iron gangue have mostly been solved. With the price of extracted iron ore rising strongly, the circumstances have been created for promoting the exploitation and utilization of iron gangue ore resources. When the price of iron ore is high, there is more economic value and feasibility to the exploitation and utilization of iron gangue. This paper outlines a model to evaluate the economic value of iron gangue exploitation and utilization, based on the theory used to calculate the economic grade of deposits, and processed by appropriate analogy and quantitative methods. We collected operating parameters of mining enterprises, and used these to forecast the future trends of extracted iron ore. On this basis, we show that 7% is the critical grade of iron-gangue ore for recycling and reuse. When the grade is higher than 7%, it has the necessary economic value for exploitation, and when the grade is lower than 7%, the iron-gangue ore is not worth exploiting. When the grade of iron-gangue ore is lower than 7%, and exploitation is forced, a huge amount of waste is created. Finally, this paper makes two policy recommendations. One is that when enterprises plan to exploit iron-gangue ore of grade higher than 7%, the government should provide tax incentives. Also, banks should give 50% lower or even 0% interest rates on loans to investors that will use the funds for basic construction related to the exploitation of iron-gangue ore.