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Goa’s state government may have lifted the two year-old ban on mining in the state but miners are still facing the heat from a 30% export duty. Thus viability fears still persisit.
Their main grouse is that though the centre is focusing on implementing a new mining ordinance to auction mining permits, it is ignoring other major issues like taxation.
"Auction is fine but our main issues are with taxation and mining ban. Increasing the exports is the only way to give a fillip to this industry,” a senior executive of a large mining firm in Goa told Business Standard. He added the industry is demanding abolishing the export duty, particularly on low grade of iron ore, to make business viable again.
The government had imposed a blanket ban on all mining activities in Goa, India’s third-largest iron ore producer, in September 2012 on allegations of large-scale illegality. The Supreme Court had partially lifted the ban in April 2014 with a cap of 20 million tonne on output. The state government last week lifted the ban that had been impacting the government’s export earnings.
The iron ore produced in Goa is of low quality – less than 56 Fe grade. The entire output has to be exported in the absence of domestic demand for the low quality ore. The high export duty on iron ore was imposed when prices had sky-rocketed to over $190 per tonne in 2011. The prices have now plummeted to a five year low.
Currently, even the best grade of iron ore of above 63 Fe is fetching a price of $56 per tonne in the international market. The Goan ore is fetching not more than $35 per tonne. Goan miners claim they have to shell out over a half of the sale price as taxes and duties including 30% export duty, 15% royalty, 10% to Goa Permanent Ore Fund (as directed by Supreme Court).
India was the world’s third-largest exporter of iron ore until 2012 when the high 30% export duty was imposed. The high duty, along with the mining ban, impacted exports that came down to 15 MT last fiscal (2013-14) from a high of 117 MT in 2009-10. Thanks to the domestic shortage, steel companies have so far imported over 8 MT of the ore. India’s total ore imports are expected to reach 15 MT in the current fiscal.
