Goa iron ore cos feel the heat as prices hit 10-year low

As prices of lower grade iron ore hit a decade-low of $29 per tonne, Goan miners fear rates have not bottomed out yet and they expect a “bloodbath” in the next one year if counter measures are not taken.

Goa mainly produces low grade iron ore (with iron content between 55-58 per cent), which is mainly exported to countries such as China and Japan. “The price of USD 29 per tonne CFR for 57 per cent Fe (iron) content is almost the lowest in the past decade... the prices were this low way back in 2003-04,” industry body Goa Mineral Ore Export Association (GMOEA) President Shivanand V Salgaocar said.

“Right now the situation is challenging. All the mining companies are looking forward to steady operations, but the current situation of weak iron ore prices due to sluggish demand from the international steel sector combined with high taxes is making mining operations unviable,” he added. Salgaocar, who is the Managing Director of Goa’s leading mining company the V M Salgaocar Group, said the industry fears that prices of iron ore -- a key ingredient in making steel -- can still plummet. “And prices may have not yet bottomed out. Imagine, the price of iron ore with 62.5 per cent Fe content have breached the CFR China price $40 a tonne mark (It was ruling at $140 about 18 months ago) and there are industry projections that this may breach the $30/tonne mark.

“Considering the persistent high weakness in the prices globally, we can expect a bloodbath in the next one year as far as supplies and consequently prices are concerned,” he warned. 

Expressing similar fears, GMOEA Honorary Secretary Ambar Timblo said: “Globally, buyers are getting better grades at competitive prices. So, why will they buy it from here (Goa)? We need to make the industry competitive as the time is now or else, I fear, the exports will not happen.” 

A top official from a leading miner from Goa, who wished not to be named, said mining operations at this rate are unviable, if the taxes continue.