Rains take ore prices up

The late resumption of iron ore mining in Goan mines this year due to heavy rains has taken ore prices up to $100-110 a tonne today, a rise of $20-30 from a month ago.

Goan mines halt activities during the rainy season from June and resume operations in early September. But, this year, mines have not yet started to function because of extended rains and water logging, resulting in a huge shortage in supply.

Goan iron ore is low grade, with 55-59 per cent of Fe content, and exported mainly to China. Since domestic steel mills do not lift low grade iron ore due to the availability of high grade ore, mining companies in Goa export ore to China (almost 75 per cent of the around 32.2 million tonnes), Turkey, Japan, South Korea, the UAE, Oman, the Netherlands, Belgium and Rumania.

Iron ore production in the state has almost doubled from 15.7 million tonnes in 2001-02 to 30.7 million tonnes in 2006, with lumps accounting for about 20 per cent. During the 2006-07 financial year, Goa produced 6.2 million tonnes of lumps and 24.7 million tonnes of fines.

With demand rising in China, partly because of traffic congestions from Australia and Brazil, the country is increasingly turning towards India. "Chinese importers are ready to pay a premium of $10 per tonne of Indian iron ore, and are currently quoting a price in the range of $120-130 a tonne," said Raj Bhandare, the director of Maxx Resources, an exporter from Goa.

As new contracts were being signed by overseas importers, prices in the domestic market were also nearing the level of exports, he added.

Exports from Goa had come to a complete halt over the past few months because of the non-availability of iron ore locally and the lack of supplies from Bellary Hospet, a regular supplier for exports. But it was likely to resume very soon, said Bhandare.

"Exporters have failed to cash in on the demand abroad by sourcing the ore elsewhere from the country because of poor road, rail and rakes infrastructure," said R K Sharma, secretary general, Federation of Indian Mineral Industries (FIMI), the premier mineral movement tracking body in India.

Pointing to iron ore resources in the eastern states, including Orissa, Sharma said that neither the local nor the Central governments were making any efforts to upgrade the infrastructure facility. "But the mining industry has now come forward to build roads on their own. The package will be announced very soon," he said.

Meanwhile, India's iron ore exports are likely to decline 20 per cent in the second quarter of the current fiscal from 22.03 million tonnes in the first quarter of this year.

Last year, Goan ports accounted for nearly 43 per cent of the total iron ore exports from the country. About 40.5 million tonnes out of the total 93 million tonnes produced were exported, largely through Mormugao and Panjim Ports. Of this, 30.9 million tonnes was of Goan origin while 9.6 million tonnes was from other states.