Goa 8th E-auction Likely to be Conducted in 3rd Week of Sept’15

In a conversation with SteelMint, a senior official from DMG (Department of Mines & Geology), Government of Goa shared some views on upcoming 8th iron ore e-auction and resumption of fresh iron ore mining operations in the state. Here are some excerpts of his comments.

Base price notification for 8th e-auction to be released shortly 

About 4.75 MnT iron ore is expected to be put under the hammer via 8th iron ore e-auction shortly. The notification for the base prices for the same is expected to be released within next 15 days.

Base prices for auction may not be reduced significantly

Cost of production, coupled with other charges (loading & transportation cost) and taxes (Goa Mineral Ore Permanant fund and 10% royalty on low grade iron ore), has burdened miners and badly impacted their business. Also, DMF (District Mineral Fund) would add up to the cost once notified. Thus, reduction in base prices might lead to a further increase in cost by the miners. At the same time, global iron ore market sentiments are also not so encouraging. Therefore, there are less chances of any significant reduction in base prices in the upcoming e-auction.

Fresh mining in Goa to start in Oct’15

Vedanta Ltd is all set to start fresh mining in Goa. Also, other miners namely, V.M. Salgaonkar, Chowgule & Company and Fomento Resources are also expected to resume mining operations in Oct’15. State’s iron ore production might remain around 3-5 MnT in this fiscal.

Iron ore export from Goa still not feasible

The current scenario of global iron ore prices appears to be gloomy with less signs of recovery. The landed cost of Indian iron ore fines (Fe 58%) to China is currently around USD 49/MT, CFR China, which is very low. Softer sentiments in international market and increased taxes have made exports unviable.

Extraction cost to be disbursed to lease holders, sister concerns or traders

As per the Supreme Court’s directions, Goa DMG has decided to disburse extraction cost to their respective lease holders, their sister concerns or traders, as the case may be. All the lease holders, their sister concerns and traders whose lots are auctioned have thus been called upon to submit their claims for extraction cost at the rate of INR 250/MT with lot wise and auction wise details.