 "Goa iron ore sale hits a soft patch, may hit mining")
The ongoing iron ore auction in Goa is struggling to find takers due to the subdued global economic sentiment as well as weakness in prices, something which is expected to impact mining of the ore in the state.
According to industry sources, of the total of 3.5 MT of iron ore under the hammer in the past three auctions (7, 8 and 9), only 0.77 MT, or 22 per cent, was sold.
Iron ore mining in Goa will commence next month after a gap of three years, with mining conglomerate Vedanta set to start operations at its Codli and Bicholim mines.
Goa has around 15 million tonnes (MT) of iron ore that is being auctioned by the government. In the nine auctions so far, only 6.3-6.5 MT has been sold, which the industry attributes to competitive prices of the ore in global markets.
Goa mainly produces low grade iron ore (with iron content between 55-58 per cent), which is mainly exported. The price of 58 per cent ore has fallen to USD 37-38 while taxation on it is over 70 per cent. There are a few takers for this as global prices of high-grade iron ore (Fe content over 60 per cent) are hovering below USD 50 per tonne, the industry said.
"Goa has about 15 million tonnes of iron ore to be auctioned and it is not finding many buyers. Subdued global market sentiment as well as low prices are impacting the sale.
"Also, since most of the iron is exported and with prices being on the higher side, this is again acting as a dampener," CEO of Vedanta's Iron Ore Business Kishore Kumar told PTI.
For miners, it is a double whammy, he said, adding that prices are not competitive due to the export duty and added to this is the weakening of the global prices.
"Besides, we have been urging the government to find a solution to allow miners to dump the waste outside the lease area. And another important issue is the 30 per cent export duty. To make the ore competitive, the government should think of slashing the duty," Kumar suggested.
He said miners have iron ore dumps at their barges and sites, for which there are not many takers due to the prices.
"How can such a situation help mining operations, which will start next month? Mining is a source of livelihood for many here," Kumar wondered.
The Goa government is conducting e-auctions through the Metal Scrap Trading Corporation (MSTC), which are being monitored by a Supreme Court-appointed committee. Goa's Directorate of Mines and Geology has identified 15 MT of iron ore for auction.
Expressing a similar view, industry body Goa Mineral Ore Exporters Association (GMOEA) Executive Director S Sridhar said: "It (auction) is not successful. Globally, buyers are getting better grades at competitive prices. So, why will they buy it from here (Goa)?"
The auctions will be a success only when there is an incentive for it to be exported. The current status of duty as well as the prices in which the iron ore market is, there is not much incentive for people to buy and export it, he added.
