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Despite a sharp cut in export duty on low-grade iron ore, shipment from Goa is unlikely to resume for the time being.
Goa's ore is low-grade but there has also been a continuous fall in the price of high-grade ore in global markets. The Union finance minister on Thursday announced a sharp cut in the export duty on low-grade ore from the existing 30 per cent to 10 per cent. On high-grade lumps, the 30 per cent duty continues.
Mining of ore in Goa was banned in late 2012, due to allegations of large-scale illegality; it was lifted only some months earlier, though there are other hurdles.
There will be difficulty in resumption of mining for now. First, in the monsoon period between June and September, mineral exploration in Goa stops due to waterlogging at mine sites and transportation routes. Second, “miners and mineral exporters are in the process of setting up benefication plants to convert low-grade ore into high-grade pellets. Since falling ore prices make export from India unviable, Goan miners are looking to supply high-grade material to ore-starved domestic steel mills,” said Haresh Melwani, chief executive officer of HL Nathurmal & Co., a Goa-based mining and exporting company.
According to ministry sources, around 16 pelletisation projects are in various stages of environment clearances with the state government. These projects would cumulatively consume the entire 25 million tonnes of iron ore fixed by the Centre as the production ceiling for the state in a year. These projects cumulatively entail an investment of Rs 160 crore.
“The cut in export duty will go a long way in making exports of low-grade ore viable. Goan leaseholders are in the process of obtaining other statutory clearances like approval of the mining scheme by the India Bureau of Mines, consent from the State Pollution Control Board, etc,” said Shivanand Salgaoncar, managing director of the Salgaoncar group, one of Goa’s largest iron ore miners and exporters.
Ore prices have fallen 15 per cent so far this year on weak global demand, to trade currently at $56 a tonne. Global mining companies such as Rio Tinto, BHP Billiton and Vale have over three-four years invested billions of dollars in technology upgradation to reduce the cost of production. According to an estimate, their usual cost of mining works out to $20 a tonne. Which means, even if iron ore falls to this level, these global giants would continue to make profits.
Consequently, ore miners in Goa are also waiting for the price to recover for commencing operations. “Miners would be able to start mining by the end of September, after the end of the monsoon season,” said Salgaoncar.
