 "Goa miners say re-starting mining operations unviable")
Goa, once India’s largest exporter of low-grade iron ore, feeding hundreds of tiny steel mills in China until 2009-10, has imported around 60,000 tonnes of the steel-making raw material from Australia.
And, another three vessels containing 40,000–50,000 tonnes each are in transit and are due soon to dock at Goa.
Sponge iron units in Goa that used to convert low-grade ore (i.e. fines with less than 58 per cent iron or Fe content) are starving since the ban on mining was imposed in 2013 to prevent illegal mineral excavation. Only some meagre imports were made by these. The ban was lifted early this year and mining licences renewed; however, a steep decline in the price of the ore has made unviable the resumption of mining. (SIZE AND SCALE OF GOA’S IRON ORE ECONOMY)
“For 58 per cent Fe, the ore price is currently $28 or Rs 1,800 a tonne, much below the cost of production. With overall levies of a massive 65 per cent, absolute realisation works out to less than Rs 700 a tonne, as against the cost of excavation, transportation, barge handling, port charges, etc, of total payment outgo at around Rs 1,500 a tonne. Thus, re-starting the mines makes no sense,” said a senior official with the department of geology.
For exporters, overall levies work out to 95 per cent, as there is also a 30 per cent export duty.
The state government is in a hurry. Of 96 mines which operated till the ban, it has renewed the licences of 72.
Yet, say miners, provisions in the recent Mines and Minerals Development and Regulation (MMDR) Amendment Bill, 2015, make resumption unviable.
“We are awaiting some statutory clearances and clarifications which should be in place in the next few months. But given the current market prices, combined with the taxes and levies, resumption of mining in the near future seems remote. The state is also saddled with an inventory of nine million tonnes which it is unable to auction in the absence of takers/bidders in these depressed conditions,” said Shivanand V Salgaocar, managing director of the VM Salgaocar group of companies and president of the Goa Mineral Ore Exporters Association (GMOEA).
Also, worsening the scenario, China has been discouraging import of low-grade ore. The price of ore (ex-China) is now $50 a tonne, from $135 a tonne in January 2014.
Even the steel industry in India says bringing ore from Goa is unviable for them. Ore-starved JSW Steel says transport of ore from Goa to even its nearest plant in Maharashtra is a big problem . “We do not have adequate (railway) rakes available. Coal is another raw material we need to transport from ports to our plants,” says Seshagiri Rao, its group chief financial officer.
“To make mining viable, the iron ore price has to rise by at least by $20 a tonne. Even if the government withdraws the 30 per cent export duty, mineral excavation in Goa will start only when the price firms up,” said Haresh Melwani, chief executive at HL Nathurmal & Co, a Goa-based ore miner and exporter.
And, another three vessels containing 40,000–50,000 tonnes each are in transit and are due soon to dock at Goa.
Sponge iron units in Goa that used to convert low-grade ore (i.e. fines with less than 58 per cent iron or Fe content) are starving since the ban on mining was imposed in 2013 to prevent illegal mineral excavation. Only some meagre imports were made by these. The ban was lifted early this year and mining licences renewed; however, a steep decline in the price of the ore has made unviable the resumption of mining. (SIZE AND SCALE OF GOA’S IRON ORE ECONOMY)
“For 58 per cent Fe, the ore price is currently $28 or Rs 1,800 a tonne, much below the cost of production. With overall levies of a massive 65 per cent, absolute realisation works out to less than Rs 700 a tonne, as against the cost of excavation, transportation, barge handling, port charges, etc, of total payment outgo at around Rs 1,500 a tonne. Thus, re-starting the mines makes no sense,” said a senior official with the department of geology.
For exporters, overall levies work out to 95 per cent, as there is also a 30 per cent export duty.
The state government is in a hurry. Of 96 mines which operated till the ban, it has renewed the licences of 72.
Yet, say miners, provisions in the recent Mines and Minerals Development and Regulation (MMDR) Amendment Bill, 2015, make resumption unviable.
“We are awaiting some statutory clearances and clarifications which should be in place in the next few months. But given the current market prices, combined with the taxes and levies, resumption of mining in the near future seems remote. The state is also saddled with an inventory of nine million tonnes which it is unable to auction in the absence of takers/bidders in these depressed conditions,” said Shivanand V Salgaocar, managing director of the VM Salgaocar group of companies and president of the Goa Mineral Ore Exporters Association (GMOEA).
Also, worsening the scenario, China has been discouraging import of low-grade ore. The price of ore (ex-China) is now $50 a tonne, from $135 a tonne in January 2014.
Even the steel industry in India says bringing ore from Goa is unviable for them. Ore-starved JSW Steel says transport of ore from Goa to even its nearest plant in Maharashtra is a big problem . “We do not have adequate (railway) rakes available. Coal is another raw material we need to transport from ports to our plants,” says Seshagiri Rao, its group chief financial officer.
“To make mining viable, the iron ore price has to rise by at least by $20 a tonne. Even if the government withdraws the 30 per cent export duty, mineral excavation in Goa will start only when the price firms up,” said Haresh Melwani, chief executive at HL Nathurmal & Co, a Goa-based ore miner and exporter.