Indian court halts iron ore mining in Goa
Singapore, 7 February (Argus) — India's Supreme Court has cancelled all iron ore mining leases in the coastal state of Goa, a major supplier of low-grade fines to China.
The court had allowed mining to resume in Goa in 2015 after it was suspended in 2012 as a court-appointed committee probed environmental damage in the state, known globally for its beaches, from excessive mining.
The Supreme Court said today that the Goa government erred in granting mining lease extensions to existing mine owners, instead of granting fresh leases when mining resumed. The government also did not insist on leaseholders undertaking a new round of environmental clearance, it said. Mines have been given until 15 March to wind up operations, after which no mining will be allowed in the state.
Goa's iron ore mines were operating with a production cap of 20mn t/yr, including an 8.5mn t/yr production quota allotted to diversified mining conglomerate Vedanta. Other major producers are Chowgule, Salgaocar and Fomento. Several of Goa's 89 mining leases have not started operations since 2015, as cfr China prices were too low to break even.
The state exported 9.61mn t iron ore in the financial year that ended 31 March 2017, the first full year of operations after exports resumed in October 2015.
It is unclear when production will resume in the state. Fresh allocations of mining leases, which are likely to be done through open auctions, will only follow after a special investigation team appointed by the court in 2014 submits a report on iron ore mining operations. The court has not insisted on auctions to grant leases, but a federal law makes it compulsory for mining leases to be issued through auctions unless the lease is granted to a state-owned company.
The absence of Goa from the international market will boost demand for Australian producer Fortescue's 56.7pc SSF fines, which competes directly with sub-58pc Goan ore. Demand for low-grade ore in the Chinese market has recovered slightly over the past few weeks as some mills blend 65pc IOCJ cargoes with low-grade fines. Goan ores will likely be offered into the market through April, as mines clear existing stocks and new production up to 15 March.