With the price of iron ore hitting a low in the international market, there’s a new worry for miners in India. One of the earliest “victims” of this drop is the tourist State of Goa, where a decision to resume mining by early 2015 was recently made.
For now, fearing that there would be no takers for its low-grade iron ore fines because of the drop in international prices, the government of Goa has decided to postpone the e-auction of 2.18 million tons of iron ore fines for now.
About five million tons of this type of ore was sold in the first four rounds. The entire quantity of about 15 mt had to be sold in only three rounds, but poor response in the international market had extended the process.
A report in The Business Standard quoted Deputy Director, Department of Mining and Geology, Parag Nagarshekar saying the state government would conduct the e-auction “shortly.” Officials fear that with Indian export offers for high-grade iron-ore fines (Fe content 63.5 percent and above) falling below the US $90/ton mark to a range of $87/ton to $88/ton, local traders and exporters were not expected to respond and put in bids at the e-auction. What was also weighing down the fines was the 30 percent export duty imposed by the Government of India.
Goa’s low-grade fines were lifted at previous auctions mostly by traders for exports to China, but present economic conditions in China do not bode well for import of iron ore fines there. Chinese steel and iron ore prices fell further earlier this week, much of which was attributed to a slowdown in the real estate sector. Further, a tightened credit environment had made it difficult for steel mills there to continue producing.
Goa’s e-auction will now be held once market conditions improve and the government is confident of a positive response from exporters. The postponement though has come as a blow to the Goa Government’s plans to liquidate 15 mt of low-grade iron ore fines which were stockpiled at various mines when mining was halted in Goa about two years ago.
According to a report in The Australian ), iron ore prices had fallen to a two year low due to weak housing demand in China. The latter is the world’s largest consumer of the steelmaking ingredient.
Global price of the ore had gone below US $87 per metric ton, the first time since August 2012, from US $100 in May this year, the report said.
As reported by MetalMiner, India, the third-largest supplier of ore until some years ago, is all set to resume production following a prolonged closure of mines over illegal mining. The clamor from Indian miners now is for the government to reduce the “high” export duty on ore in order to make the pricing of the raw material more attractive internationally.
Goa accounts for about half of India’s iron-ore exports, and it will resume supplying the low-grade ore by the first quarter of next year globally. As of now, one of India’s leading steel companies, JSW Steel, has been picking up a steady supply of the low grade ore at the e-auctions, and that seems to be the only silver lining.