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Friday, January 20, 2012

Waste ore in Goa down in the dumps, again

Friday, Jan 20, 2012

Talk about an opportunity wasted, literally.

Not long back, heaps of low-grade iron ore refuse lying unused in vast mining tracts of Goa had found a throbbing market in China. But thanks to the government’s recent hike in export duty, the ore material has once again lost its utility value, whatever little there was. The finance ministry on January 2 raised the export duty on iron ore to a flat 30% from the 20% earlier.

The result? The iron ore waste export market, which was turning into a steady cash flow for the state, the Centre and owners of the ore, died even before it was born. Out of an accumulated waste of 800 million tonne (mt), close to 80 mt was commercially saleable and had become a big source of revenues in the form of royalty and other duties.

This has come to a grinding halt, said Ambar Timblo, managing director, Fomento Resources, one of the biggest privately held mining companies in Goa. “The hike in export duty has rendered these low-quality ores commercially unviable due to the low price they fetch.” “Even if we consider an annual sale of 10 mt of this ore at an export duty of 10%, this would mean a royalty of `220 crore and an export duty value of `300 crore,” Timblo said.

To be sure, whenever a new mine goes on stream, several thousand tonnes of earth get dug up to reach to the premium ore content. This dug-out matter lies near mine pit heads as heaps of dumps.The low content of ferrous — between 45% and 52% — makes the ore highly unsuitable for use in India. In fact, none of the iron ore mined in Goa ever manages to make its way to any Indian plant. That explains why a huge chunk —as high as 99%— of the mineral is exported from Goa.

To its credit, the state government had some business sense and a few months ago, allowed export of very low-quality ore that had no takers. It’s back to square one.

(sourced DNA)

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