Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 73
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 74
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
Notice (8): Undefined variable: urlPrefix [APP/Template/Layout/printlayout.ctp, line 8]latest-news-updates/tough-road-ahead-for-goa039s-iron-ore-miners-ishita-ayan-dutt-24902.html"/> LATEST NEWS UPDATES | Tough road ahead for Goa's iron ore miners-Ishita Ayan Dutt | Im4change.org
Resource centre on India's rural distress
 
 

Tough road ahead for Goa's iron ore miners-Ishita Ayan Dutt
-The Business Standard


SC may have lifted the ban on mining in the state but it will be a while before exports resume in right earnest

A lot was riding on Goa's iron ore mines till the Supreme Court clamped down on them in September 2012. As much as 40 million tonnes of iron ore was being mined every year. Fifteen thousand people worked in these mines. Another 80,000 operated the 25,000 trucks and 360 barges required to ferry the produce. The mines did exports of over $3 billion every year. Then the Shah Commission, set up to probe illegal mining of iron ore in the country, said unethical practices were rampant in the sector, the scam was of the order of Rs 35,000 crore and involved politicians, bureaucrats and businessmen. With the ban, the thriving Goan economy around iron ore came to a screeching halt. Last week, the Supreme Court lifted the ban, but with two caveats: one, there would be an annual production cap of 20 million tonnes; and two, there will be no deemed renewal of mining leases after 2007.

So will the sector return to its glorious days? At the moment, that looks unlikely. One, the cap on production is half of what the state produced before the ban. Two, in the last 18 months, the Chinese steel industry, the largest buyer of Goan iron ore, has cooled down substantially. As a result, prices are down 17-18 per cent. Three, the exporters have lost customers after the ban. It will take them serious time and effort to rebuild the market. "China is not waiting to lap up the material and it will be difficult to get back customers from Japan and Korea who want certainty in production," says P K Mukherjee, former executive director (iron ore business) of Sesa Sterlite, the largest iron ore producer in Goa.

Mining

Miners know operations are unlikely to resume in the near term. The problem is that most mines were operating under the principle of "deemed renewal". Under Section 24-A (6) of the Mineral Concession Rules, 1960, if a miner has applied for lease renewal a year before the expiry and the state government fails to process the application within the due date, the miner's lease is considered extended as deemed renewal. Now that the Supreme Court has invalidated all deemed renewals after 2007, the miners will have to apply afresh. In a country where lease renewals haven't happened for decades together, this sends out ominous signals.

Some are hopeful of early clearances. A spokesperson of Sesa Sterlite says the company has paid stamp duty to renew the lease for 10 million tonnes. "We expect operations to restart in the third quarter of the current financial year," says the spokesperson.

Rana Som, the former chairman and managing director of state-owned miner NMDC, reckons that as many as 80 per cent mines fall in the category of deemed renewal. "The impact will be huge on the Indian iron ore industry if the cancellation of deemed renewals for second and subsequent terms extends to the other states." There are apprehensions that this might happen. After the ruling on Goa, the Supreme Court has also hinted at a Goa-like ban in Odisha to allow the state government to sort out the legal issues.

At current prices, the viability of Goan iron ore is in doubt. The cost of production in Goa is $25-30 a tonne; add to it a 30 per cent export duty, 10 per cent royalty and $15-$20 transport cost - the final cost of $50-62 doesn't look very viable vis-à-vis the current price of $62 a tonne. Moreover, according to analysts, China is moving to higher grade iron ore. The iron content in Goan ore is about 46-48 per cent, though there are limited leases with 55-56 per cent iron. Som, however, feels that though the grade of Goan iron ore is low, it does not fall into the unacceptable category. But he admits that viability is a long way off.

The Supreme Court has asked for an expert committee to be set up which will submit a report within six months on how the mining dumps in Goa should be dealt with and another report within 12 months on the cap to be put on the annual excavation of iron ore in the state. The question being posed by the miners is, will the state government be able to stick to the timeline proposed by the Supreme Court? The doubt stems from the fact that of the 11.46 million tonnes of e-auction allowed by the Supreme Court in November, only 1.61 million tonnes have been auctioned in two tranches, while another 600,000 tonnes is slated for May. To put the figure in context, Sesa Sterlite was mining around 50,000 tonnes a day. After all, Karnataka, where the Supreme Court allowed operations of Category A and B mines, is yet to get back on its feet.