India's Second Largest Iron-Ore Miner Halts All Activity
Today, however, even more mining capacity was taken
offline, as India's Goa, the country's second largest iron ore producer,
announced it was temporarily ceasing all mining activity "after an expert panel
formed by the central government found "serious illegalities and irregularities"
in mining operations." While no gold production has been impacted yet, this
move, which likely has political overtones, will likely shift to other
extractors soon, as more production capacity is taken offline, for either labor
or kickback reasons. And as reported previously, demand by the now largest
importer of gold in the world China, refuses to decline with supply, which has
clear implications for the equilibrium price. It remains to be seen if Goa going
dark will push iron-ore prices higher. It is quite likely that the collapse in
Chinese iron-ore demand offline is far greater than anything Goa will remove
from the market and as such will hardly push iron prices higher...
-Umesh
Shanmugam
From Reuters:
Goa has not banned movement of iron ore
already produced and stored at ports or in transit, the statement said. The
state will form a verification and clearance committee to scrutinize operations
before giving approval to resume mining, R K Verma, principal secretary at mines
and geology, said in a statement.
Goa is India's second-biggest iron ore
producer. It produces more than 50 million tonnes of iron ore annually and
exports almost all of it, making it the top exporter. Sesa Goa Ltd (SESA.NS), an
Indian unit of London-listed Vedanta Resources Plc, gets most of its iron ore
from mines based in Goa.
The mining-suspension order came a week
after the Supreme Court partially allowed mining in the neighbouring Karnataka
following a ban of more than a year.
India used to be the world's No. 3 iron
ore exporter, with most of its product heading to China. But a clampdown on
illegal mining in 2010, and New Delhi's measures to keep output for domestic
steel mills, slashed exports in half.
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