Iron Ore Exports to Start Flowing Out of India’s Goa State Soon?

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It’s said to be the first step in the direction of a carefully monitored resumption in iron ore mining in India’s top exporting state of Goa.

A committee of experts set up by the Supreme Court of India for assessing the macro-environmental impact has submitted its interim report to the court. The committee has suggested that mining in Goa may be permitted, but with an annual cap of 20 million tons once the state sets up an adequate regulatory and monitoring mechanism.

The committee, which analyzed various data from different sources, has said that mining at the rate of 20 to 27.5 million tons per year appeared sustainable, but felt capping it at 20 mtpa for now would be adequate. This was almost half of Goa’s peak iron ore output of 56 mtpa.

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In its 11-point recommendation, the six-member committee said, “It may not be desirable to start fresh extraction without adequate regulatory and technological measures that ensure restoration of degraded landscapes and ecosystems and minimize future damage to the environment.”

If the court agrees to the recommendation, and does cap Goa’s export at 20 mtpa, and lifts the nearly 18-month-old mining ban, it would mean mining of less than half of that state’s peak output, and curbing potential shipments to key buyer China. What is more, analysts believe that even with 20 mtpa, the additional supply of ore from Goa could further pressure iron ore prices in a global market expected to be in surplus this year.

The Supreme Court of India had on Oct. 5, 2012, banned mining of iron ore and its exports, acting on a Public Interest Litigation filed by Goa Foundation, a non-governmental organization (NGO).

At that time, the states of Goa and Karnataka were producing almost half of India’s output of iron ore. Goa had accounted for about half of India’s iron-ore exports, but according to an experts panel, lost an estimated US $5.8 billion because of illegal mining, following which the ban was imposed.

Ore exports from Goa had dropped to zero from 43.27 mtpa in 2011. Goa used to export 70 percent of India’s iron ore. Due to the ban, India – which was once the third-largest exporter of ore – had dropped to No. 10.

According to a report in The Times of India, the experts panel had told the court that such monitoring should continue for mining activity until the scientific study of the committee was completed, which could take probably a year.

It was only recently that the Supreme Court had allowed a relaxation in its earlier mining ban order by allowing the state government to conduct e-auction of iron ore, extracted prior to the ban.

Anticipating resumption in mining soon, the Goan provincial government has already started making its own moves. Last Wednesday, it announced that it would construct a dedicated mining transport corridor for transportation of ore from pitheads to stockyards and port.

While it is generally expected that the mining ban may be lifted in the first week of April, the actual mining operation would only start sometime in October this year.

FREE Download: The Monthly MMI® Report – covering Steel/Iron Ore markets.

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