Panaji, Feb 24 Goa’s iron ore export industry, which was badly hit due to global recession between September and December, is on a comeback trail in the present quarter, said Mr Shivanand Salgaoncar, President of Goa Mineral Ore Exporters’ Association (GMOEA). “When recession hit us, the scene was bad, but in the last two months or so, the situation has improved and there could be a marginal drop in terms of volume. It is the decline in international prices of the long-term contracts that is worrying us,” said Mr Salgaoncar. He pointed out that whereas the Chinese market is a spot market, it is the Japan and Korea, the traditional buyers of the Goan ore, that are still under the spell of recession.
Goan iron ore mining could continue for another around 20 years taking 50 Fe as the cut-off base, Mr Salgaoncar said in reply to a specific question. He pointed out that as far as Goa is concerned, over 80 per cent of its ore is low grade.
Reserves
He feels that the iron ore reserves may sustain for at least another 20 years considering the lower threshold iron ore available in the State.
“Goa’s iron ore grade is 58 per cent and below. Thanks to the Chinese market, the ore of still lower grade has value and is exported . The threshold value as per Indian Bureau of Mines is 55 Fe, but for us, iron ore with value of 52 Fe is a viable opportunity,” observed Mr Salgaoncar, who is also the Managing Director of Salgaoncar Brothers Ltd. Riding on a last quarter pick-up of iron ore volumes by Chinese steel companies, Goan iron ore exporters are confident that they would end the current financial year marginally below last year’s ore exports, but continue to be upset over the low contract prices in the international market.
Recession
Mr Salgaoncar said the recessionary trend, which continues to dog the Japanese steel mills, which have been traditional importers of Goan ore through long-term contracts, continues to worry Goan exporters. In worst scenario, the imports by Japan and Korea could be down by nearly 50 per cent of the usual intake, he said. Gross iron ore exports from Goa touched 40 million tonnes last year, including 33 million tonnes of Goan origin ore and the current year could end with the figures of 38 million tonnes and 30 million tonnes, respectively.
Explaining the economics of the low grade ore, he said that some of the Chinese steel mills had been taking Goan low grade ore and using it to blend it with high grade ore procured from Brazil.
Foreign markets
However, from the Goan exporters’ perspective, the Chinese market is spot while their traditional markets of Japan and Korea have long-term contracts. But considering the grip of world recession on some of these mills, the annual 8-10 million tonnes intake could be down by at least2-3 million tonnes, said Mr Salgaoncar.
“What really worries us is the unpredictability of the world iron ore trade at this juncture. We cannot be sure of what can happen in the next couple of months; it is a month-to-month kind of fluctuating situation,” Mr Salgaoncar said.
Source : Business Line