The Anil Agarwal-owned Vedanta Ltd restarted iron ore mining in Goa on Monday, nearly three years ago after a ban was imposed on the activity.
The company, which began mining operations at its Codli and Bicholim mines, the first company to do so after the Supreme Court lifted the ban partially, expects to achieve its annual cap of 5.5 million tonnes by this fiscal year-end.
Vedanta has received Indian Bureau of Mines approval for its five mining plans and is awaiting clearance for another 15 plans. Final clearances for other mines are expected by this month-end.
After the monsoon, Vedanta plans to resume full-scale mining to achieve the annual production limit of 5.5 million tonnes, it said in a statement.
Others gearing up Apart from Vedanta, other miners in Goa, such as VM Salgaocar, Fomento Resources, Pandurang Timblo Industrias and Chowgule Group, are gearing up to restart mining and waiting for the monsoon to get over. The State government had permitted 98 mines to restart production.
Shivanand Salgaocar, President, Goa Mineral Ore Exporters’ Association, said all the miners who have received approval from the government want the rains to recede before restarting work.
“We hope the iron ore prices do not fall below the current level, to make mining viable,” he added. On the operational side, he said, the government should take steps to auction 2.5 million tonnes of iron ore inventory lying at jetties to make way for fresh iron ore that will start flowing for export.
Background In 2012, the government imposed a blanket ban on mining activities in Goa, the country’s third-largest iron ore producer, due to alleged illegal mining. The Supreme Court partially lifted the ban in April 2014 with an annual production cap of 20 million tonnes. In January, the State government lifted its ban completely and paved way for the companies to reopen mining.
Urging the government to resolve the issue of dumping of ore outside lease areas to make mining viable, Vedanta CEO (Iron Ore Business) Kishore Kumar said that with the sharp fall in iron ore prices, the company needs Government support to make the economics work for all.
The iron ore produced in Goa is of low quality (with iron content of less than 56 per cent). Since there is no demand for low quality iron ore in India, the company exports it largely to China.
In a conference call, Vedanta CEO Tom Albanese, said that despite the fall in prices, the company expects a positive cash flow from its Goa iron ore business.
The company expects the prices to be below $45 a tonne and is in talks with the government over issues such as export duty and various levies.
Exuding confidence “There is a huge increase in expenses and we may not see profits from Goa like before. However, we are confident of managing the business in trying times. We need to work hard to regain our position in these very difficult market conditions,” he said.
“This needs close cooperation between the industry, government and all stakeholders to ensure we can reopen on a competitive basis,” said Albanese.
Earlier, the government reduced the export duty on low-quality ore to 10 per cent from 30 per cent, mainly to facilitate mining companies in Goa to compete in global markets.
The recent depreciation of the rupee against the dollar may also help the company.