Renewal of mining lease fails to cheer up miners in Goa

By PTI | 11 Nov, 2014
NEW DELHI: Renewal of mining leases after a near two-year ban has failed to cheer up iron ore miners in Goa as production and other associate costs have outstripped plummeting global price of the steel-making raw material.

Miners in the state, which produces mainly low-grade iron ore and exports almost all of its output, felt that the key to solving the problem lies in reducing export duty of the raw material to zero from 30 per cent now.

"With the plummeting price of iron ore, it is certainly not a good idea to resume mining as we will have to put in one dollar from our own pocket for exporting one tonne of iron ore," said A N Joshi, Vice President (Corporate Affairs), Sesa Sterlite.

Apart from paying 30 per cent export duty, miners in the state are to pay 10 per cent of the sale value for Goa Iron Ore Permanent Fund and 15 per cent royalty. On the other hand, the current price of Goan ore is USD 50 a tonne. Joshi said.

"All these make exports unviable and without getting them to exports, our product has no takers. It is thus a necessary to bring the export duty down to zero. Otherwise, renewing of the leases has no practical sense," he said.

Not finding enough domestic buyers for its low-grade iron ore, iron ore miners in Goa used to export almost their near production to China, the world's largest steel making nation.

The mining ban in the state was imposed in September 2012 and after 18 months, the Supreme Court gave its permission to resume mining in the state with an annual cap of 20 million tonnes on excavation.

In a respite to iron ore mining firms, state government had in the last week renewed 13 mining leases including one to Anil Agarwal-led Sesa Sterlite. These miners can begin tapping the ore after getting the necessary clearances from agencies concerned.

Those who got the state's nod for renewal of the miners are V M Salgaocar & Bros, Sociedade de Fomento Industrial Pvt Ltd, Chowgule & Co, Rajaram Bandekar, G N Agarwal Mining, Smt Geetabala Manohar Naik Parulekar Mines, Smt Kunda Gharse Mines, Sesa Goa and M/s Letho Ferro.

Of the 13 renewals, Salgaocar has four mining leases renewed, Fomento two, while others got renewed one lease each.

Suggesting solution for rationalising iron ore export duty, which is the primary reason for India's declining share in the export markets, Joshi had earlier said," Government is free to levy higher export duty when global prices are higher. Similarly, it should consider charging less when the price of the input is on the lower side."

"If the price is between USD 70-80 per tonne, export duty can be five per cent. At the same time, it can go up to even 50 per cent when the price is over USD 200 per tonne in the overseas market," he had said.

The rise in export duty coupled with mining ban in major producing states badly impacted shipments by Indian miners. As a result, the country lost its prominence in iron ore export markets and is now regarded as a fringe player.

India had exported 117 million tonnes of iron ore in 2009-10, which fell to 14 million tonnes in 2013-14. In the current fiscal, the country is likely to become a net importer of the raw material.

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