Herald: With ore prices crashing, backing mining is flogging a half dead horse
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With ore prices crashing, backing mining is flogging a half dead horse

13 Sep 2017 04:40am IST
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13 Sep 2017 04:40am IST

The death knell of mining was not when mining stopped in Goa. The dirge is being sounded out for the mining trade now when it is becoming apparently evident that ore which has been e-auctioned and the ore which is still waiting to be e-auctioned, not to speak of fresh ore which will be mined, has nowhere to go.

Mining stakeholders need to read each others lips as they say these words. There are no takers for Goan ore at prices that make sense. Goa’s absence from the international mining trade has quite literally allowed mining giants in Australia, Africa and Brazil to get a strangle hold on International markets.

Goa, during the mining boom between 2010 to 2012 - when some mining giants were operating multiple leases - looked at 50 to million tonnes of exports. Now the mining cap for the entire state stands at 20 million tonnes.

As we have reported in this edition, prices of low grade iron ore in the international market have plummeted 50 percent from a recent peak of $94.5 per tonne. The Directorate of Mines and Geology (DMG) is worried about the sale of yet to be e-auctioned and already auctioned ore. Successful bidders who have won e-auctions are reluctant to lift the mineral because any attempt to export the ore would result in an immediate loss. 

The exporter, already hit with low international prices of ore is further burdened with payouts to the district mineral fund and Goa iron ore permanent fund, besides paying for the cost of mining and cess.

The figures are shocking. In May, a total of 3.24 million tonnes of ore was identified for sale. This corresponds to 32.4 lakh tonnes. Of this only 99,390 tonnes of ore, which is less than one lakh tons, got bid for.

The ore prices which stood at $94.5 per tonnes in February, has crashed to $45-$50 per tonnes.  And as our report states, the market for low grades is getting tough, as most steel mills are focusing on higher grades to increase productivity.

The situation is not likely to turn around.  Firstly, Goa has to listen to the voice of reason and pragmatism shown by a miniscule section of mine owners who have called upon the government to look at the value of dumped ore in the form of minor minerals.  There are treasures in existing dumps and the government must come out with a policy to exploit and win minor minerals which have immense value in the international market. Hence, the way forward, from the trade point of view, is to maximise the value of existing ore and get more by segregating hidden minerals.

However, all stakeholders including the government must seriously study, consult, deliberate and have a vision document on Goa’s mining scenario, keeping in mind the present ground level situation and the international market.  The big mining giants have the capacity to withstand any financial shock with their deep reserves. But the foot soldiers of this once grand army will be crushed under weight of circumstances, which have crippled mining in Goa. The truck owners and their allied support staff, the mechanics, the ancillary industry workers, who lived because mining lived, will not be able to take this blow. After three years of no work, they are living in hope of  full-fledged resumption. But if there is no ore to export, there will no trucks needed to transport them.

The process must begin to have a landscape where alternate forms of employment can be found.  The movement back to agriculture, hinterland tourism, village level art and craft and then of course adequate jobs in new projects, has to be a 24 hour, round the clock project.

Unknown to many, continuing to back mining as an industry, in the way it is managed now, to redeem Goa’s economy, is like flogging a half-dead horse.   

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