Profits will dip as mining cake has shrunk: Vedanta official

Says there will be stiff competition for Goa which has lost out on market share

As Vedanta Ltd, formerly known as Sesa Sterlite, gets down to resuming mining operations in Goa after three years, the company's iron ore business CEO Kishore Kumar said the mining cake has shrunk.

"If you want to come into mining, each one of us has to believe that the cake has shrunk and each one will have lesser portion of the cake. The profit margins would be much lesser," Kumar told PTI before resumption in mining at its Codli mine site here.

Codli mine, which was Asia's biggest iron ore extraction site till 2012 before the state government suspended the leases, is getting ready for iron ore extraction, which can begin only when monsoon is over in the state.

Kumar said with the prevailing conditions, the market will all depend on quality, grade and prices of the ore.

"It's all about quality, grade and prices. Buyers will look at these three constantly... They will not be looking at only auctioned ore... There will be stiff competition for Goa which has lost out on market share. It will be challenge for Goa to sell its ore to Chinese mills, which I presume is an uphill task," he said.

"We have represented to all the stakeholders that entire price meltdown is a global phenomenon. Next 2-3 years, there will be surplus supply (of ore) in the market. Due to this, you can expect softness in pricing," said Kumar whose company has managed to get nod for five of its mining leases.

"In this situation, what you can only manage is the cost. So, our cost management whether in the taxation duty, or mining or logistics... Every bit of element has gone through meltdown. You have an opportunity, and also you have a challenge too," he said.