In Jan’18, few major merchant mines went out of operations owing to inability to submit the penalty amount by the deadline of 31st Dec’17.However with penalty payments been done by major merchant miners, ore supply within the state has improved since last month and it is expected to increase further in the coming months. Hence iron ore supply in India’s largest iron ore producing state is on the rise.
Key developments in Odisha iron ore mining :
1. In the hearing conducted on 23rd Feb’18, the Supreme Court permitted Serajuddin mines to resume operations following which it resumed sales. Serajuddin Mines is Odisha’s 2nd largest merchant with annual production of around 10 MnT.
2.On 15 Feb’18 the Apex Court allowed Essel Mining to resume operations from its Jilling (Langalota) and Koira mines which have combined EC limit of 10 MnT pa.
3. RP Sao, merchant miner of Odisha received “consent to operate” after being shut for a period of around 2 years. The operation remained suspended owing to delay in penalty amount over illegal mining case in the state. But with payment of compensation amount along with interest amount, the miner has received consent from the Apex Court. According to market sources report to SteelMint , it is expected that the miner may resume operations in another two weeks.
Miners will have to pay penalty amounts along with interest as per the Supreme Court verdict, otherwise they might fear losing mines.
| Mines Name | Capacity (MnT pa) | Developments |
| Serajuddin | 15.15 | Miner resumed iron ore sales in last week of Feb’18 after receiving consent from Supreme Court. Miner’s operations were suspended from 01 Jan’18 over fall in penalty amount payment |
| Essel Mining (Koira) | 4 | Miner resumed iron ore sales around 20 Feb’18 after receiving consent from Supreme Court. Miner’s operations were suspended from 01 Jan’18 over fall in penalty amount payment |
| Essel Mining (Jilling Langalota) | 6 | The mine was closed owing to pending clearances since past few years but later with penalty payments the miner has resumed operations and sales in Mar’18 |
| RP Sao | 5.7 | The miner was last heard offering material in 2015 and owing to delay in penalty payment amount over illegal mining case in the state, miner’s operations were suspended. But on 04 Apr’18, SC has allowed ‘consent to operate’ and miner is expected to resume sales shortly |
Odisha has EC limit of around 180 MnT pa iron ore and accounts for nearly 50% of India’s iron ore production. Out of the total EC limit of Odisha 27% share is of captive miners while rest 73% share accounts for merchant miners.
Goa ban will not have an impact on domestic iron ore prices
The Supreme Court of India on 7th Feb ’18 said that the 88 iron ore mine leases who were granted second renewal in violation in decisions and directions of this court may continue operations till 15 Mar’18 and were directed to stop all mining operations with effect from 16 Mar’18 until fresh mining leases are granted and fresh environmental clearances are granted.
Henceforth, all the mining operations have been suspended in Goa post 15th Mar’18. However, the Goa mining ban is not expected to bring much change in domestic iron ore prices due to its prominence in low grade material which is majorly exported to China. The Chinese government, with an aim to curb pollution, has extended steel production cuts ahead of winter heating season, rendering miners to utilize higher grade ore.
Will domestic iron ore prices come under pressure ?
Major merchant iron ore miners in Odisha had raised prices since Dec’17 expecting supply disruption in near future. Miners had raised iron ore prices upto INR 800/MT in Dec’17 and further by INR 500/MT in Jan’18.
Odisha iron ore prices have come under pressure over improved supply post resumption of Serajuddin and Essel mining. Few major merchant miners including Rungta Mines, Essel and KJS Ahluwalia have recently slashed iron ore prices upto INR 225/MT.
The resumption of RP Sao may enhance supply further rendering reduction in prices.
But the logistics constraint amid scarcity of rake availability persist may inhibit material transportation. Although the three mines ( Essel Mining, Serajuddin and RP Sao) bearing total production capacity of around 30 MnT pa may increase production further, but are enough logistics arrangements available to transport the ore to end users ?
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