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The government of Goa’s sixth auction of low-grade iron ore stock, on Tuesday, got bids for only 40 per cent of the million tonnes on offer.
This was despite the auction being after six months and with hope of participation from steel mills and ore exporters. The response was similar to the fifth auction, on November 11 last year, which got bids only for 0.88 mt of the 2.29 mt offered.
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The government wishes to speed evacuation of stocks in mines; the recent Supreme Court guidelines stop owners from stocking minerals outside the area on lease. So, till the mines are fully evacuated, a majority would not be able to re-commence operations.
“The sixth auction was an attempt by the government to evacuate mine sites and re-commence mineral excavation, possibly by September (after the monsoon season). Miners are awaiting environment and other statutory clearances, which should be in place in the next few months,” said a senior official in the state department of mines and geology.
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According to the bid sheet, the 0.4 mt of ore which got bids were above 55 per cent iron content, easier for selling. The rest was below this grade and there are few takers for it, here or abroad. For the lower grade, the current price is uneconomical.
There are a little over 90 iron ore mining entities in Goa, most of which have got lease renewals from the state government. Environmental clearances have held them back from restart of mining.
The state government sold nearly five mt of ore in the past five auctions. It held around 14 mt at the time of mining suspension in 2013. From the latest response, clearing the inventory before re-commencing of excavation looks impossible.
“The timing of the auction was not the most appropriate. With the onset of monsoon in end-May or early June, the shipping season in Goa will come to an end. And, with markets being very volatile, it's too risky to bid for ore now for shipment after the monsoon, in October,” said Shivanand V Salgaocar, managing director of the VM Salgaocar group of companies and president of the Goa Mineral Ore Exporters Association.
Before the ban, Goa was India’s largest exporter of low-grade ore, with a little over 90 mt released annually to feed a large number of tiny steel mills in China. With the Chinese government's decision to discourage import of low-grade ore, selling of those below 55 per cent iron content has become difficult. Domestic steel mills do not purchase such low-grade ore due to high transportation cost.
In the latest auction, however, Vedanta (earlier known as Sesa Sterlite) purchased a little over 200,000 tonnes for captive consumption.
A senior company official said they awaited some statutory clearances before commencement of mining in Goa. “Iron ore excavation can start even in the monsoon season at our mines. But, all permissions need to be in place, which are not yet through,” he added.
