Vedanta Ltd expects its iron ore exports from the state of Goa to be much higher than its permitted mining capacity of 5.5 million tonnes in the fiscal year to March, as it bids for ore in government-run auctions.
The country’s biggest private miner has resumed operations in Goa following a three-year gap after court action against illegal mineral extraction closed mining in the country’s top iron ore exporting state.
Vedanta, a unit of metals tycoon Anil Agarwal’s Vedanta Resources, is in the process of shipping 88,000 tonnes of the steelmaking ingredient to China, with other customers there eager for cargoes, said a company spokesman. That could stoke a global iron ore glut that has hit prices hard.
Vedanta bought the iron ore being shipped to China in state auctions in the past month and hopes to purchase more, the spokesman said by phone on Tuesday. He declined to be identified due to the sensitivity of the matter.
Goa still has about 5 million tonnes of already-mined iron ore to be sold in auctions. Most Indian steel companies either do not have the technology to use low-grade iron ore competitively or are situated in locations that would make transportation from Goa expensive. That is pushing companies like Vedanta to seek foreign buyers in a weak market.
“Iron ore prices are in free fall,” Kishore Kumar, head of Vedanta’s iron ore business, said on Monday. “We also are faced with an arduous task of recovering our fixed costs and look forward to the complete utilization of our manpower and resources.”
The Supreme Court of India banned mining in Goa in 2012, freezing shipments that reached about 50 million tonnes in 2010/11. It lifted the ban in April last year and capped output at 20 million tonnes a year, but companies had to wait to get environmental clearance as well as dozens of other approvals.