You are here: Home » Economy & Policy » Q&A
Business Standard

There is challenge to cut cost by raising efficiency bar: Sesa Goa CEO

Merchant producers of iron ore are at all times price-takers, not price-givers, says Kishore Kumar

Kunal Bose 

Kishore Kumar
Kishore Kumar, CEO of Sesa Goa

To prepare the Indian industry to meet the feedstock requirements of a 300-million tonne (mt) capacity projected for 2030, it is essential to speed up the process of auctioning new deposits, says Kishore Kumar, CEO of Sesa Goa, in an interview with Kunal Bose. Edited excerpts:
 
India is targeting a capacity of 300 million tonnes (mt) by 2030. In order to use that capacity, producers will need 480 mt of against the estimated production of 180 mt in 2016-17. How will the industry prepare to meet this big future local demand and also export fines and low grade ores?

 
Our resource base had grown from 22.1 billion tonnes (bt) in 2020 to 31.3 bt in 2013. This is despite our exploration being historically restricted to shallow depths and high grades. Deeper drilling and lower cut-offs of mineable ore will give a further boost to the resource base. We have in the past, between 2007-08 and 2010-11, produced well over 200 mt of
 
But to bring the industry to the level of supporting production at the level envisaged for 2030, it will be imperative to speed up the process of auctioning of new blocks of deposits. In our country, it takes anything between three and five years to open mines after going through the lengthy process of securing a large number of state- and central-level clearances. Land acquisition also remains a challenge.
 
Let there be a greater focus on exploration to make more and more deposits auction-ready. I shall very strongly recommend that at least six months ahead of leases that are to expire by March 2020, all preparations should be made for their further auctioning. That will ensure continuity in production. Once a mine is closed, it takes a long time to bring it back into production.
 
What is your reaction as a merchant miner to the ministry proposal to end the free pricing regime for so the feedstock is available to mills at “reasonable” prices?
 
Merchant producers of are at all times price-takers and not price-givers. For price determination, the best course of action is to leave it to global indexes run by agencies such as Platts and Metal Bulletin. Since the breakdown of annually negotiated world price in 2010, these indexes have become the primary physical market pricing reference for seaborne trade in the commodity.
 
Boom and bust will be there in every commodity. Since February, ore has swung between $94.86 and shades below $60 a tonne. Resource groups take big risks when they open new mines. Leave prices to be decided by market forces. That is for the good of all stakeholders.
 
Your group has a major presence in Goa and Karnataka. Shouldn’t there now be upward revision of the Supreme Court-ordered caps on production?
 
The expert committee set up by the court has recommended production cap for Goa now at 20 mt should first be revised to 30 mt and then to 37 mt once the corridor for transfer of ore from mines to the port without causing disturbances to environment and inconveniences to local communities is ready. As for Karnataka, the recommendation is to allow production to be raised first to 40 mt and then to 50 mt. Both the states have the capacity to do sustainable and environment-friendly at much higher levels than now.
 
Steelmakers in Japan, South Korea and in the West consider it wise to procure from merchant miners instead of owning mines. In contrast, Indian producers are too very keen to have captive mines. Where do you stand on this?
 
Steelmaking is a highly capital-intensive pursuit. Then there is the constant challenge of cost reduction by raising the efficiency bar. now also has to fend off competition from other metals and composites. It will, therefore, be wise for Indian groups to buy from merchant miners like their peers abroad and concentrate all their energies and resources on steelmaking. That way they will also be spared the criticism of only extracting high-quality ore from captive mines leaving the middlings unextracted. Mind you, all natural resources are community owned and their harnessing must be wastage-proof.
 
Irregularities such as impacting the environment, poaching into areas adjacent to licensed fields and slaughter are not uncommon here. How to end these?
 
The government introducing the surveillance system using space technology and remote sensing imagery makes it difficult, if not impossible, to do any irregular I think much in terms of fairness and sustainability in operation will be achieved if all extractive industries, including are asked to submit tax transparency, report yearly.

RECOMMENDED FOR YOU