Goa ban on dumps may hit iron ore supply

In a blow to independent steel mills in India, the Goa government has restricted sale and of dumps from minesites and public places.

The Directorate of Mines & Geology has asked miners not to work, handle or sell the dumps till a system is put in place to supervise, monitor and move any such quantity removed, handled or transported.

This will be a major blow to both miners and steel mills which procure iron ore from the state, as the restriction would reduce beneficiation of sub-grade ore (less than 35 per cent of iron content), said Haresh Melwani, CEO of H L Nathurmal & Co, a miner and exporter.

Around 90 miners in Goa produce around 40 million tonnes per annum of iron ore. Since most of the ore mined in the state is of below 55 per cent of iron content (which until recently was not procured by domestic steel mills), the overall quantity was exported to China. But, the recent ban of iron ore mining and exports by the Karnataka government opened doors for steel mills to procure it from Goa. The plan, however, would fail with the latest decision by the state government.

Independent steel producers without support of iron ore mining leases generally procure steelmaking raw materials from small miners in the area. The Indian Bureau of Mines, under the Union mines ministry, has set 35 per cent of iron content as the minimum cut-off for use in steel mills. Below 35 per cent iron content ore is dumped either in mine sites or public places for beneficiation later. These are converted to higher grade for either export or use in local steel mills.

The notice further said, “It has been brought to the notice of the government by various agencies that there is handling of mining dumps by the lease holders/traders on a large scale. Therefore, it has become necessary to inquire into the source of the extraction vis-a-vis the payment of royalty, since there is a possibility leading to illegal extraction/non-payment of royalties on such extractions in certain cases.”

The government had earlier directed the mining leaseholders in the state to furnish details of dumps, including origin, sale and purchase, alongwith furnishing the undertaking for payment of royalty as and when these dumps are removed for sale or exported.

Meanwhile, 400 traders across the state have been trading in dumps. Generally, they buy it at an average $9 a tonne to beneficate and sale it at 12-15 times higher.

Around 100 of them operate on short-term basis. Since the investigation started a couple of weeks ago, such operators have already shut shops. Consequently, the state government has withdrawn mandatory registration of dumps in the state, a miner said.

A majority of steel mills led by Jindal Steel’s Vijaynagar plant, has already announced an increased cut in steel production due to lack of iron ore. Iron ore output in the country is estimated at 225 million tonnes annually, of which around 100 million tonnes is exported. But, 50 per cent of the mining output has been hampered due to the recent SC order on closure due to illegal mining.

The M B Shah Commission, probing illegal mining in Goa, will not restrict the inquiry to 90 operational mines, but will also probe whether the non-operative mines are being used to extract the ore illegally.