Goa iron ore sale hits a soft patch, may hit mining
15 Sept 2015 5:11 AM IST
The ongoing iron ore auction in Goa is struggling to find takers due to the subdued global economic sentiment as well as weakness in prices, something which is expected to impact mining of the ore in the state.
According to industry sources, of the total of 3.5 mt of iron ore under the hammer in the past three auctions (7, 8 and 9), only 0.77 mt, or 22 per cent, was sold. Iron ore mining in Goa will commence next month after a gap of three years, with mining conglomerate Vedanta set to start operations at its Codli and Bicholim mines. Goa has around 15 million tonnes (mt) of iron ore that is being auctioned by the government. In the nine auctions so far, only 6.3-6.5 mt has been sold, which the industry attributes to
Competitive prices of the ore in global markets.
Goa mainly produces low grade iron ore (with iron content between 55-58 per cent), which is mainly exported. The price of 58 per cent ore has fallen to $37-38 while taxation on it is over 70 per cent.
There are a few takers for this as global prices of high-grade iron ore (Fe content over 60 per cent) are hovering below $50 per tonne, the industry said. “Goa has about 15 million tonnes of iron ore to be auctioned and it is not finding many buyers. Subdued global market <g data-gr-id="56">sentiment as well as low prices</g> are impacting the sale. “Also, since most of the iron is exported and with prices being on the higher side, this is again acting as a dampener,” CEO of Vedanta’s Iron Ore Business Kishore Kumar said. For miners, it is a double whammy, he said, adding that prices are not competitive due to the export duty and added to this is the weakening of the global prices.
“Besides, we have been urging the government to find a solution to allow miners to dump the waste outside the lease area. And another important issue is the 30 per cent export duty. To make the ore competitive, the government should think of slashing the duty,” Kumar suggested. He said miners have iron ore dumps at their barges and sites, for which there are not many takers due to the prices.
“How can such a situation help mining operations, which will start next month? Mining is a source of
livelihood for many here,” Kumar wondered.
The Goa government is conducting e-auctions through the Metal Scrap Trading Corporation (MSTC), which are being monitored by a Supreme Court-appointed committee. Goa’s Directorate of Mines and Geology has identified 15 mt of iron ore for auction.
Expressing a similar view, industry body Goa Mineral Ore Exporters Association (GMOEA) Executive
Director S Sridhar said: “It (auction) is not successful. Globally, buyers are getting better grades at competitive prices. So, why will they buy it from here (Goa)?” The auctions will be a success only when there is an incentive for it to be exported. The current status of duty as well as the prices in which the iron ore market is, there is not much incentive for people to buy and export it, he added.
“Clearing the auctioned cargo was expected to help early restart of mining operations, but it seems that lukewarm response to the auction will naturally delay the restart of mining in Goa as about 11 mt of iron ore is still lying at various mines and jetties,” industry sources said.
Goa’s leading miner Fomento Resources Managing Director Ambar Timblo said nobody will put their money in the sector at such a time when there is no clear indication on which way the prices will move in the global market and on top of that, there are issues related to prices on the domestic front.
Vedanta led Aluminium industry body meet Jaitley; seek import duty hike
Aluminium industry leaders met Finance Minister Arun Jaitley on Sunday and urged him to raise the import duty on the metal to check cheap imports from China, a scenario that can impact
investments worth Rs 1.2 lakh crore. The delegation from industry body Aluminium Association of
India was led by Vedanta Group CEO Tom Albanese, Hindalco Deputy Managing Director D Satish Pai and Nalco CMD T K Chand. “We are here to present aluminium industry’s case and the difficulty we are facing. Finance Minister gave us a patient hearing. He is aware of our situation and we are quite sure that he will take the right decision,” Pai said after the meeting. When asked if <g data-gr-id="166">industry</g> will cut capacity and workforce, he said this is an individual decision. Primary aluminium producers - Vedanta, Hindalco and Nalco - have invested around Rs 1.2 lakh crore to increase the production capacity from 2.1 million tonnes per annum (<g data-gr-id="170">mtpa</g>) to 4.1 <g data-gr-id="171">mtpa</g> by 2018-19 fiscal, industry sources said. The present situation on account of cheap imports from China is impacting investments and <g data-gr-id="163">government</g> needs to check this. Aluminium industry can contribute to India’s growth, but domestic production costs are rising while globally they are falling, they added.
Last month, Balco, part of Anil Agarwal-led Vedanta Ltd, had said that it has shut down its aluminium rolling business due to steep fall in the prices of the metal besides dumping from China and falling margins.
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