Sesa Goa to go ahead with expansion, despite price fall

Largest iron ore exporter in the private sector, Sesa Goa, today said it would go ahead with its Rs 400 cr capacity expansion and infrastructure development programme though prices for some fines have halved in recent times over the previous year.     

"We are expanding our capacity by 25-30%. This is despite the fact that prices for some fines have halved in recent times.

We want to be consistent with the volume growth," Sesa Goa's Managing Director P K Mukherjee told reporters on the sidelines of a mining conference here.     

Sesa Goa, in which Anil Agarwal-led Vedanta Group Plc has majority stake, has embarked on an around Rs 200 cr capacity expansion programme and for creating infrastructure.     

Mukherjee said that the capacity programme was on track as the company was focusing on creating volume. During the last year ending March 2008, Sesa Goa had a total production of 12.4 mn tonne of iron ore, up by 14% over the previous fiscal.     

Iron ore prices, he said, had gone down to rock bottom which might cause a huge dent in the company's bottomline.     

"The price fall was inevitable, but the pace at which it has come down has shaken all. There will be an erosion in profitability," he said.     

"But, we were never in the red and will not come in the red this year also, as we are the lowest cost producer of the mineral," Mukherjee said.