When mining operations in Goa is resumed, more than one hundred thousand miners will be able to get back to work, though they are not usefully employed in the mining operations
Indian iron ore mining industry is expected to produce 130 million tonnes this fiscal, as against the estimated demand pattern of 140 million tonnes, resulting in imports of over 10 million tonnes due to weaker output from Karnataka, Odisha and Jharkhand. It may be recalled that the domestic output. Domestic output has fallen due to restrictions imposed by Supreme Court to curb illegal mining.
Iron ore with 63% iron content has fallen steeply, in the international market from $175 to $55 per tonne and the price of Goa ore, which has 56% content has dropped to about $35 per tonne. Goa iron ore quality has been found acceptable only in China, and to some extent in Japan, who have managed to make a product mix with high grade ores from both Australia and Brazil to produce steel. However, as of now, the demand from China has also gone down, due to general economy slowdown in that country.
In 2012, Goa government had brought the mining operations to a standstill and this has now been revoked, pending the lifting of ban imposed by Ministry of Environment and Forests. Leading miners like Sesa Sterlite expect to start their mining operations in about two weeks from now, once they get the MoEF clearance and clarity on dumping waste ‘outside the lease area’, as this is small.
In order to permit dumping of mining waste outside, as the lease area is small, it would be essential for the government to amend the Mines and Mineral (Development & Regulation) Act.
It may be remembered that the Supreme Court had declared dumping of waste outside the lease area as illegal.
In spite of the poor international price, which has fallen steeply, the exporters of iron ore have to overcome other obstacles before any further development in this area can take place. The exporter has to pay 30% export duty, 15% royalty and a 10% to the Goa Development Fund. According to Aniruddh Joshi, Vice President, Corporate Affairs, Sesa Sterlite (Iron ore Business), the central government has to remove the export duty, as a start.
Unlike the Chinese steel makers, Indian steel industry has not been able to come terms with reaching a proper mix of our own poor grade iron ore and high grade ores to make steel in the country!
When mining operations in Goa is resumed, more than one hundred thousand miners will be able to get back to work, who, Joshi is reported to have said are being paid more than Rs1 crore per day, though they are not usefully employed in the mining operations! As for Sesa Sterlite, having received the MoEF clearance, from Karnataka, they would be able to continue their work on 2.9 million tonnes ore from that state.
The state government in Goa has released the Mining Lease Policy, which avoids auctions for fear of attracting the "mining mafia" and delays in resumption of mining operations. The only problem that the Goa State Mines and Geology department appear to have faced is the furore caused by the renewal of leases, which includes a mine owned by a Pakistani national, Baddrudin Mavani, who appear to have given the power of attorney in favour of Radha S Timblo. So far, 88 mining leases have been processed, and this department, it is reported, has collected the relative stamp fees for the same.
In any case, it will be a couple of months before opportunities may come up for export of these low grade ores from Goa. In the meantime, Indian iron ore lumps with 62% iron content are now reported to be priced at Rs4,200-Rs4,500, depending upon demand, while international price is said to be Rs3,600. Miners like state owned NMDC are working round the clock to meet the demand but they cannot increase the production overnight.
It is hoped that, in line with the relaxation given by the Supreme Court, Karnataka miners would be able to increase their production along with those in three other major producing areas. In the meantime, it would be a good move if export duty is waived in case of low grade iron ore from Goa and steel makers be persuaded to investigate the methods, by which our own mills can use them to the maximum extent possible, so as to reduce the large scale imports of high grade iron ore year after year.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)