Goa miners eye tie-ups with steel mills outside state

Fear the govt-appointed panel might recommend a Karnataka-like ban on iron ore exports.

After Karnataka banned iron ore mining, focus has now shifted to Goa, where pollution-related issues have dogged the mining sector and left miners looking for survival options, if exports were to be banned there too.

Small independent miners in Goa have started exploring the possibility of tie-ups with steel mills outside the state to supply iron ore, as they fear the Justice M P Shah Commission could recommend a ban on exports.

Justice Shah, heading the commission set up by the Centre, is set to submit the final recommendations by the end of this month. Shah had earlier said a ban on iron ore exports could be recommended as an interim measure. Now, another member of the commission, Justice R A Mehta, has said: “Ban on exports is one of the options being considered to curb illegal iron ore trade.”

The news has led to a panic among 125 (90 operational and 32 non-functioning) mines in the state. As a result, miners have started exploring survival options. Many miners Business Standard spoke to were evaluating options to ensure a continuous sale of iron ore.

“After information gathered from various members of the industry, including experts of the Confederation of Indian Industry, we believe the Centre is willing to incentivise the steel industry and confine mineral excavation licences only to end users. So, independent miners are left only with three options,” said Haresh Melwani, CEO of H L Nathurmal & Co, a Goa-based iron ore miner and exporter.

First, independent iron ore miners may tie up with steel mills where they ensure selling ore to mills and enter equity-swap deals with them. Mines sell their equities and, in return, get share in mills’ equity. Here, the catch is that steel mills would like to buy stake at throwaway prices which many miners would not like.

Second, mining companies would have to enter into forward integration, which would be difficult in a capital-intensive industry like steel. But, even if they manage to raise funds, the uncertainty will continue due to lack of experience in the cyclic steel business.

Third, miners would have to exit the business they have been in for generations. Since a majority of them inherited their business from their forefathers, exiting the business would put millions of livelihood at stake, said Melwani.

Pelletisation has been kept outside the purview of mineral processing. This means, independent iron ore miners may set up pelletisation units to keep their mining activities going.

The first round of inspection by the Justice Shah pointed out to several anomalies by mining lease operators. The second round of inspection, however, is currently in progress.

Meanwhile, in an affidavit filed before the Goa Bench of Bombay High Court, the Mines and Geology department has said they are contemplating the possibility of installing Radio Frequency Identification (RFID) tags on the trucks and at vital points including jetties, where ore is unloaded in the ship. The department accused the state government of ignoring the illegal mining trade conceded before the Court that mineral ore transportation is huge to the tune of 48 million tonnes as in 2010-11 which takes place within a radius of 30 km.