PANAJI
In further bad news for the already-struggling mining industry in Goa, overall iron ore exports from the State declined by a whopping 76 per cent for the October-November 2017 period. Companies in Goa are also struggling to export ore because their largest customer -- China -- is choosing to buy high grade ore.
As per Goa Mineral Ore Exporters Association (GMOEA) data, total iron ore exports from Goa were just 0.68 million tonnes in October-November 2017, which was 76 per cent less than 2.84 million tonnes recorded in October-November 2016. This shows that 2017 has turned out to be the most difficult year for the industry ever since iron ore mining resumed in the State in 2015 after a ban.
Explaining the situation, Glenn Kalavampara, secretary GMOEA said, "the demand for ore with less than 58 per cent iron content in international market is declining rapidly. Most iron ore produced in Goa is less than 58-grade. Now, beneficiation of low grade ore by 1 or 2 per cent may happen so that it finds buyers".
Other sources revealed that there is a strong push towards anti-pollution in China, which has resulted in huge demand for high grade ore.
Lower grade iron ore requires more coal than higher grade ore for processing it into steel. Therefore, China is shunning low grade ore owing to environmental concerns.
Vijay Kumar, head, Iron Ore Goa for Sesa Goa, said, "China now has the policy of curbing pollution but they want to maintain steel output. In such a situation, if you have a blast furnace, you want to use it most productively by using high-grade iron ore".
The environmental push in China has widened the gap between the price of low grade and high grade iron ore. The landed cost of 58 grade iron ore in China is around half that of 62 grade ore. This shows the extent of decline in the demand of 58 grade ore.
Kalavampara said, "Mining companies in Goa may process ore to improve its grade. However, the export duty stands at 30 per cent for ore of 58 grade ore and above. The duty is, however, nil on exports of less than 58 grade ore."
Not only mining companies will have to incur expenditure on improving the grade of ore, they will also have to pay a high export duty of 30 per cent. Due to this reason, the industry is not finding it viable to process ore to improve its iron content.
The idea behind 30 per cent duty on exports of ore of 58 grade and above is to discourage its exports and ensure that it is used by domestic steel manufacturers. This logic holds good in other parts of India, but not in Goa.
There are hardly any steel plants in the vicinity of mines in Goa. Sources informed that cost of transporting iron ore from Goa to nearby steel plants is prohibitive. Therefore, Goan iron ore will always find it difficult to find takers among Indian steel manufacturers.
Kumar further informed, "The Indian steel industry's iron ore demand is being met. But still, huge stockpiles of ore are lying unsold in many States."
The situation for mining companies in Goa is clearly peculiar. Kalavampara said, "We urge the central government to consider making export duty non-applicable on iron ore with upto 60 per cent iron content."
If that happens, local industry will get leeway to process ore to improve its iron content and sell it to consumers in China.
