14 iron ore mines close, 78 others face closure in Goa

Fourteen of the 103 operating leased mines in Goa have been closed in the last one month and another 78 are facing threats of closure due to alleged violation of environmental norms.

The ministry of environment and forests had earlier issued notices to owners of these mines in which the latter were asked to submit official documentation and details of clearances submitted to the ministry while obtaining the “green signal”.

The development assumes significance as miners are delaying submitting documents to the ministry as the demand for iron ore from China has declined dramatically in the last one month resulting in a more than 30 per cent decline in prices. Goa contributes over 40 per cent of about 100 million tonnes of iron ore exports, mainly to China, annually.

Confirming the delay by miners to submit documents to the environment ministry, Glenn Kalavampara, Secretary of Goa Mineral Ore Exporters’ Association (GMOEA) said, “Mineowners are not in a hurry due to slowdown in mining activities during monsoon.” He, however, added that miners are successfully getting clearances as and when they submit documents to the ministry.

“All coastal activities including handling of ships remain closed during three months of monsoon due to high water level on Goan ports. Therefore, miners are waiting and watching the price movement in Chinese market,” said Haresh Melwani, CEO, H L Nathurmal & Co — a Goa-based miner and exporter of iron ore.

Meanwhile, iron ore prices have declined to $80 a tonne now from $115 a tonne about a month ago as China has stopped procuring steelmaking raw material completely. Since, India sells much of its iron ore to China on spot basis which offers comfort for local miners here to take immediate decision on whether to sell or hold their mine outputs at the prevailing price.

Indian miners would not be interested selling iron ore of 63.5 grade below $80 a tonne while Chinese steel mills would stay away from spot market for some more time to create pressure on miners to cut prices, Melwani added.

Meanwhile, China’s iron ore stockpiles of 72.15 million tonnes may not last long looking at the country’s ambitious steelmaking plan for 2009. According to data compiled by China Iron and Steel Association, the country’s crude steel production was running at an all time peak at 1.67 million tonnes in the first fortnight of August which will take the annual production of 610 million tonnes, a rise of 20 per cent from the actual production of 500 million tonnes in 2008. Therefore, the country will have to return to spot market or sign long term deal with the price agreed by global supplier i.e. Rio Tinto, BHP and Vale, said Melwani.

Goa produces largely low grade of iron ore which domestic steel mills do not consume as high grade ore is adequately available closed to steelmaking facilities. Transporting of iron ore from Goa to steel mills elsewhere will not be viable because of high charges. Also, large steel mills, barring a few, have captive high grade mines and hence, do not require low grade iron ore. Therefore, Goan miners depend only on export to China being geographically advantageous.