Grim picture of low ore prices and high taxes
THE GOAN NETWORK
PANAJI
In a crucial presentation made to labour union leaders, Vedanta highlighted that iron ore price in international market has collapsed, thereby further making the situation extremely difficult for them. The company revealed that the free-on-board price of 56-grade iron ore has fallen from $41 per tonne in August 2015 to $24 in this month. The price of 56-grade iron ore was $119 per tonne in January 2011, which shows that the price has fallen by a whopping 80 per cent since then.
The presentation further noted that given such tight market conditions, it is imperative to remove export duty and Goa Permanent Fund. Besides, it even said that mining cap should be increased to 37 million tonnes a year, which an expert committee has recommended.
In the last three years, tax rate on mining in Goa has increased considerably, due to which a large part of a mining company’s revenue goes to central and state government in the form of taxes. The presentation further said that tax forms only 2 per cent of ore’s price in Brazil and China. However, in Goa, an estimated 30-40 per cent of ore’s price goes in the form of taxes. At this rate, Goa faces highest tax rate on mining industry across the world.
Painting a very grim picture of implication of high taxes, the presentation further noted, “The present high mineral taxation regime will render +75% of the Goan mineral inventory/resources un-exploitable resulting in a huge loss to the nation and against all principles of mineral development & sustainable mining”
Vedanta is one of the few mining companies in Goa which has shown commitment towards resumption of mining. It re-started operations at Codli mines in August this year. However, the company has not had a smooth ride since then on account of several reasons including low prices and high taxes.
