New Delhi | March 17, 2015: The environment ministry on Tuesday revoked a three-year-old order that resulted in a ban on mining in Goa, paving the way for resumption of iron ore extraction in the coastal state.
The move comes amid a slump in commodity prices to a 12-year low, slackening demand and a global glut in iron ore, muting industry reaction to the possible resumption of mining and exports.
In 2012, then environment minister Jayanthi Natarajan had suspended environmental clearances for 93 mining leases in Goa after a commission headed by former Supreme Court justice M.B. Shah submitted a report highlighting rampant illegal extraction of the raw material in the state.
The move brought iron ore mining to a halt in the state, where irregularities in mining, inaction, abuse of law and regulations were estimated to have contributed to a Rs.35,000 crore mining scam.
“We have decided to lift the abeyance of mines in Goa by following all Supreme Court directives,” environment minister Prakash Javadekar said on Tuesday, adding that the suspension of mining in the state had resulted in unemployment and loss of income.
“We have cleared the last hurdle for resumption of mining. It is up to the (mining) industry now,” Javadekar said.
The Goa government will have to decide the ore extraction limits for individual miners so that total mining does not exceed the cap of 20 million tonnes (mt) set by the apex court for all output in Goa, Javadekar said.
In April 2014, the Supreme Court lifted the ban on mining but ruled that iron ore extraction would require clearances by the environment ministry and approval from the state government. The court set a cap of 20mt a year.
Goa chief minister Laxmikant Parsekar said the mining industry will resume operations immediately. He also said he would request the central government to abolish export duty on the ore with low ferrous content and reduce that on ore with high ferrous content.
The global iron ore surplus will more than double to a record this year as low-cost producers keep on expanding, according to a report last month by Australia and New Zealand Banking Group Ltd, which cut price forecasts as much as 30%. At a time when iron ore prices are languishing, miners are not in a position to export the raw material for steel, especially when they have to pay an export duty of 30%, said Ambar Timblo, managing director, Fomento Resources. Timblo said Goa iron ore is not consumed in India because of its low quality. “Since the only market available to the miners is the export market, you cannot just remove a suspension and expect the situation in Goa to improve,” he said.
Good quality iron ore is said to have around 62% ferrous content. The iron ore grade produced in Goa has a ferrous content of 55%.
Many companies may not be operationally ready to resume mining following the move by the environment ministry, said M.V.S. Seshagiri Rao, joint managing director and group chief financial officer at JSW Steel Ltd.
P.K. Mukherjee, a former chief executive officer at Sesa Goa Ltd, which is now the iron ore division of Sesa Sterlite Ltd, said, prices have fallen to a level at which no miner would produce iron ore, coupled with the taxes and duties that exports entail,
Also, Mukherjee added, the state has not succeeded in selling the inventory which was put up for e-auction a year back. Out of a total of 15mt put up for sale, only 5mt were sold.
“It is a completely wrong move and brings us back to square one. It will start the same story again...We will approach court again against it and we may have to rush because miners here are in hurry,” said activist Abhijit Prabhudesai of non-governmental organization Rainbow Warriors. No study has been undertaken to assess environmental impacts of mining. since clearances were suspended, he added.
Goa is India’s third-largest iron ore mining state and produced about 45-47mt of the mineral prior to 2012, when the Supreme Court upheld a ban imposed by the state government after activists made allegations of environmental degradation and illegal mining.
The state has around 95 iron ore mines that produce iron ore fines (powdery iron ore), sold mostly in China where steel mills have the technology to mix Goa’s cheap, low-grade fines with expensive high grade ores from Australia and Brazil to create a cheap blend for their blast furnaces.
(Source: http://www.livemint.com/)