Panaji: Sesa Iron Ore, a subsidiary of Vedanta Resources Inc, expects to make all its mines operational in Goa post monsoon.
“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.
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,” Mr Kumar said.
The mining industry in Goa had come to a standstill for more than two-and a half year following a Supreme Court order to curb illegalities.
Subsequently, the industry was in fear that it will lose trust of its buyers.
Mr Kumar said the trust of the steel mills, who are buyers for Goa’s low grade iron ore is resuming partially.
“Goan ore being low grade 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,” he said.
“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 cyclical commodity business. We are going through a rough patch at the moment.
Not only us, but entire world is going through a rough patch in terms of commodity prices being low,” he said.
“We have to do something in terms of ramping up the volumes. That would be logical step in getting our business model right. Demand is there in the market,” Mr Kumar said.
China remains to be a big market for iron ore from India, he noted.
“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,” he said.
“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 in the meantime other Australian companies have successful ramped up the market share in China at the cost of Indian iron ore.
“To that extent, 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 the iron ore,” Mr Kumar said.
He said the only way the country can be liberated from low price regime is to allow very little fiscal controls on the business in terms of export duty and taxes, which are quiet high today.
“The request from our perspective to the government is to have an economy where there are lesser 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,” he added.