the goan I network
Panaji
The global iron ore prices have crashed considerably since February this year, with some sources saying that the fall in price can be as steep as 40 percent. This bleak scenario has made things extremely difficult for mining companies in Goa, most of which export iron ore of 56 grade or even less, which is low grade.
Speaking about the decline in ore prices, Glenn Kalavampara, secretary, Goa Mineral Ore Exporters Association (GMOEA), said, “In the last one year or so, coal price has shot up from $100 a tonne to $300 a tonne. Lesser grade ore needs more coal for manufacturing of steel. Due to this reason, steel manufacturers in China are shying away from low grade iron ore, which Goa exports.”
Kalavampara also highlighted that China is shutting down many small steel manufacturing units owing to environmental concerns, which has also impacted the demand for iron ore.
China is the largest consumer of iron-ore in the world, which it uses for manufacturing steel. Research also shows that roughly 50% of steel made in the world is manufactured in China. Clearly, any slowdown in Chinese steel industry will have an impact on the international iron ore prices.
Sources said that the price of 56-grade iron ore can be as low as $22 a tonne, at the moment. This is not good news for mining companies in the state, which have faced several issues ever since resumption of mining happened in August 2015, after a ban lasting around three years.
What makes situation even more worrisome is that Australia and Brazil have flooded international market with iron ore. Both these countries have expanded their iron ore mining capacities in the last few years.
Australia and Brazil, put together, make up for 75%-80% of entire seaborne iron ore trade in the world. Naturally, excess supply from these countries has badly affected ore prices. Compared to these countries, smaller mining companies in India stand little or no chance to impact the price.
Due to all these factors, demand for low grade iron ore has taken such a hit that it is near impossible to find buyer for iron ore of below than 55 grade.
Another factor, which has been of concern to mining companies in Goa is rupee appreciation. On February 1, the exchange rate was 67.4 rupees to a dollar. But, on, May 11, a dollar fetched 64.4 rupees.
As dollar is fetching fewer rupees, the dollar-denominated earnings of mining companies too have taken a hit.
Meanwhile, price of 62-grade iron ore has also crashed by more than 35% in the last two months. But, Goan mining companies hardly export ore of that high a grade, as most of their exports are of below 58 grade iron ore.
