Monsoons are over, but storm clouds over mining clearly not in Goa

07 November 2016

The monsoons are well and truly over. But the storm clouds over the resumption of mining are clearly not. As against claims made by Chief Minister Laxmikant Parsekar that 40 to 45 iron ore mining leases may commence operations this season, mining companies appear to be hesitant to resume operations owing to various factors like ore production cap, taxation, slag market value, reduction of the seven-month season to four months and making the business unfeasible.

During his Independence Day speech, Parsekar had said, “The mining business in the State has resumed after a gap of three and half years. After the monsoon season it will pick up the pace and will start with full force.” Operations are far from starting in full swing, with the monsoons now over.

After the Supreme Court lifted the two-year-long ban on mining operations in the State in April 2014, the industry lost another 20 months due to procedural delays at the Centre and State. Until December 2015, the industry had failed to pick up and bring back the smiles on the faces of those dependent on this business.

Once the largest contributor to Goa’s economy, the mining industry is now scouting for a market, after their traditional buyer China began importing ore from Australia and South Africa. A three-year hiatus in production resulted in a shift in iron ore consumption patterns by Chinese steel mills, leading to Goan miners having to search from new buyers for their ore.

Directorate of Mines and Geology (DMG) renewed 89 iron ore leases, of which 72 were granted Environment Clearances by the Union Ministry for Environment and Forest (MoEF). The Goa State Pollution Control Board (GSPCB) granted consent to operate  62 of these leases with an extraction capacity of 15.2 million tonnes. As per the Apex Court, the total ore production limit for the State has been fixed at 20 million tonnes.

In 2015-16, only 15 leases undertook fresh production with a total of four million tonnes of ore extracted. Vedanta Resources was the highest producer that season.

Now, with DMG granting extensions to around eight leases for fresh production under the Mines and Minerals Development Regulation (MMDR) Act 2015, the production cap on pro rata basis has to be redrafted.

“Till date there is no clarity on distribution of 20 million tonnes cap considering that eight more leases have been given renewal extension. The government will have to draft a fresh allocation plan, keeping in view the fact that those leases that were allocated production limits, have not produced any ore, with the State facing revenue loss,” mine owner Harish Melvani said.

He added that the government has not brought out any notification on whether dumping of iron ore rejects outside lease areas would be permitted.

Besides, Goan miners are facing tough competition from Australia and South Africa in their bid to recapture the China market, as the two countries have a production capacity that is hundred times that of Goa.

Industry players are, however, looking for an improvement in the ore price this month. “The price of ore in the international market will improve by November-end and we will be able to sell our ore to China. But the market won’t last for long. Australia and South Africa will capture it by January thereby bringing an end to our season by the first week of February,” another mine owner said.

Source – Herald Goa