Goa iron ore exports fail to resume, prospects bleak

16 October 2017

The new mining season re-started on October 1 but from initial showing, expectations are that exports by iron ore mining companies will be meagre. In the last one month, the benchmark price for ore has dropped to USD 60 from USD 70 per tonne in the international market. A major leaseholder said that “At these prices, I don’t think any mining company in Goa can make any profit. In fact everybody would make a loss. That is the primary reason why it is already mid-October and no mining company has started business.”

Last year in the month of October, Goa had exported close to 1.5 million tonne ore. But this year until now, there has been zero export out of Goa. The leaseholder said that “If global conditions do not improve, I doubt companies will be interested in production and exports.”

He said that the industry is also holding large inventory, primarily of low-grade 55-56 per cent FE content ore for which the market has disappeared.

According to industry sources, the international market will continue to stay bearish. The source said that “There are different forecasts made in the market but prediction overall is that prices will come down further in the next three-four months. Prices are expected to drop by another $10 per tonne from $60 per tonne due to over-supply,” said the source.

He explained that iron ore producing countries

like Australia and Brazil have increased production of high-grade ore because of which nobody is interested in low-grade ore produced by Goa.

Besides the inventory held by industry, the government also has 5.0 million tonne of un-auctioned ore. With the mining department fixing a cut-off price of Rs 500 per tonne, there are no takers for the un-auctioned ore either.

Companies said that other than weak international prices, they are also troubled by the absence of consent to operate for mines in the Sonshi cluster by the Goa State Pollution Control Board.

The pollution board, during its board meeting on September 27, had decided to renew consent to operate to seven mines in the cluster (with reduced extraction). However, it is not yet accepting applications for renewal.

In 2016-17, iron ore production was up to its maximum extraction limit of 20 million tonne and 14.7 million tonne was exported. The government earned substantially from royalty with income soaring to INR 310 crore from INR 88 crore in 2015-16.

The major increase in royalty earnings came during the last quarter of the financial year with the government pushing for mining companies to increase production.

Source : Nav Hind Times