Supreme Court Impose Complete Ban On Mining Activities In Goa

After Karnataka, it is now the turn of Goa to face a complete ban on mining activity in the region. In its latest order, the Supreme Court has now suspended any transportation activity of iron ore in Goa and asked for a report into illegal mining in the state in the next four weeks. The order has come following a petition filed by the Goa Foundation, which had alleged that mining activity was still carried out under the garb of transporting ores.

On September 10, 2012 the Goa government imposed a complete ban on mining activities after it found irregularities in mining operations. However, the ban in the region has not impacted the domestic supply scenario as most of the ore is of lower quality 55-56Fe and there are very few domestic players who have the technology to use lower grade iron ore. Most of the iron ore is exported to China which is a major consumer of low grade iron ore.

Goa is the second-largest iron ore producing state. It produces more than 50 million tonnes of ore annually and exports all of them, making it the top exporter as well. India's total iron ore exports are mainly directed to China but these have nearly halted because of increase in the duty by the government aimed at maintaining the output for the domestic steel industry and efforts to stop illegal mining. The major impact of the ban will come on the iron ore exporting companies like Sesa Goa, one of the major exporters of the iron ore in the region.

Last year in August 2011, the Supreme Court ordered a complete ban in Karnataka due to illegal mining activity happening in the region. However, it recently lifted the ban on 18 mines which will resume operations in the coming months. This is expected to add 5 million tonnes per year in addition to the National Minerals Development Corporation's 12 million tonnes.

Internationally iron ore prices have fallen from USD 148/tonne in January 2012 to USD 98/tonne in August 2012. Currently, the price is hovering around USD 105-108 per tonne. However domestic iron ore prices remained high due to supply shortage after the ban was announced in the Karnataka iron ore mines.

After hiking the iron ore prices by 5-13 per cent, NMDC, India's largest producer of iron ore, has now cut its iron ore prices by 2-10 per cent for the October-December quarter. This will be positive news for the domestic steel companies as this will ease pressure on the margins front. The iron ore lumps prices have been reduced by 2 per cent and fines prices have been reduced by 10-11 per cent. There is no official announcement on the prices but is likely to be declared today. Last quarter (July - September) the prices were 6-40mm (Fe 65%) = Rs 6,190/t, 10-150mm (Fe 65%) = Rs 5,190/t Fines (Fe 65%) = Rs 3,030/t.