“Out of the 21 (mining) leases granted to us by the government, 10 are operational have been ramped up since August 2015. Post-October, we will have to ramp up the remaining ones,” Sesa Goa Iron Ore’s CEO Kishore Kumar told PTI in an interview ahead of Vedanta’s AGM on June 29, in Goa.
The environment clearance limit for the company is 5.5 million tonnes spread over all the leases, he said.
“It will be important for us to get our small leases also back in operation to achieve the limit. During the last financial year, our extraction was close to 3.2 million tonnes.”
The mining industry in Goa had come to a standstill for more than two-and-a-half years following a Supreme Court order to curb illegalities.
Subsequently, the industry was in fear that it will lose trust of its buyers. Kumar said the trust of the steel mills, who were buyers for Goa’s low-grade iron ore was getting partially restored.
“Goan ore being low-grade, it has a lower price. Also, it has got some value in terms of phosphorous material. It does help in a way in terms of marketing this product to China and we will continue to have that edge of cheap raw material for Chinese steel mills.
“Since the price of steel and iron ore has been slipping over the last six quarters, the advantage remains that margins will remain squeezed for steel mills and they will look out of cheaper row material,” he added.
The CEO further said, “We are in a cyclical commodity business. We are going through a rough patch at the moment. Not only us, but the entire world is going through a rough patch in terms of commodity prices being low.”
Kumar also pointed out that Sesa had to take steps to ramp up volumes. “That would be logical step in getting our business model right. Demand is there in the market,” he said while noting that China remained a big market for iron ore from India.
“There is large demand in China for low-grade ore. High grades obviously find its place to Japanese and Korean steel mills and that will continue.”
“The trust (of buyers) has partially come back. Goa as a producer of iron ore is limping back to put its position in the global map,” he said, adding that other Australian companies had successfully ramped up the market share in China at the cost of Indian iron ore.
Kumar felt that a challenge remains that India continues to have an export duty of 30 per cent on grades above 58 per cent when the country is self-sufficiently stocked in iron ore.
He said the only way India could be liberated from a low price regime was to allow very little fiscal controls on the business in terms of export duty and taxes. “The request to the government is to have an economy where there are less trade barriers to do business and the best way we can get our country’s position right is by scaling up volumes rapidly both from east and west coasts.”