Vedanta Ltd might resume iron ore exports to China from its Codli mines in Goa.
Vedanta Ltd, which recently received a nod for resumption of iron ore mining operations at its Codli mines in Goa, is into discussions for export to China. A delegation comprising of officials from two Chinese steel mills have arrived in Goa and are discussing over purchase of iron ore and it is anticipated that agreement will be signed next month.
The steel mills have been associated with Sesa Goa (before it was renamed as Vedanta) for last 25-30 years. Looking at the geographical distances, importing low grade iron ore from Goa would cost comparatively lesser to Chinese steel mills than importing from countries like Australia and Brazil. Steel mills in China are confident that Vedanta will resume mining operations post monsoon, in Oct’15. This might boost export of low grade iron ore from Goa which has suffered a setback owing to falling iron ore prices in global market.
Monthly average spot iron ore prices fell by 35% Y-o-Y in FY15. Exporters exhibited limited participation in the Goa e-auctions over declining iron ore prices in China. With spot iron ore prices slumping to a new 10-year low, iron ore export from Goa lost attraction. Prices for Fe 59/58% fines fell to a new 10-year low in mid of July’15 and were around USD 37/MT, CNF China. In the later half of the month, the prices recovered and are currently around USD 46/MT, CNF China for Fe 59/58% fines.
Only 0.61 MnT iron ore was exported from Goa in last fiscal. Iron ore exports from Goa have remained nil since Feb’15. With resumption of mining operations in Goa and improvement in global prices, there are chances that iron ore exports from Goa might pick up.
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