Modi’s push to resume Iron-Ore nining Stymied

GOA, India—A price slump in the global market for iron ore has thwarted a quick fix that could have given India’s economy a boost.

Until three years ago, India was the world’s third-largest exporter of iron ore. Mines in the picturesque western state of Goa supplied nearly half of those exports, employing more than 100,000 people, and generating more revenue for the local economy than even the tourists who flock to its famous sandy beaches.

But the previous Indian government halted iron-ore mining because of concerns about illegal operations and the environment. Prime Minister Narendra Modi’s government set about restarting mining, but by the time it cleared the final obstacle last month for a majority of the mines, prices had collapsed.

The price of iron ore similar to that mined in Goa has slumped to around $42 a ton at China’s Tianjin Port, from a high of $165 a ton in 2011, according to the Steel Index website.

“The [industry’s] economics don’t exist anymore,” says Ambar Timblo, managing director of Fomento Resources, one of Goa’s leading mining companies. He estimates Goa’s mining industry has lost nearly $20 billion in potential revenue since the state’s mines were suspended from operating.

Two things happened while India’s iron-ore industry was shut down. China’s demand slowed and the world’s two mining behemoths, Australia’s Rio Tinto PLC and BHP Billiton PLC, along with Brazil’s Vale S.A., boosted supply in a price war that may have permanently crippled India’s iron-ore industry.

The three companies, which together produce around 60% of the world’s iron-ore exports, are betting they will remain profitable because their size and technological advantages enable them to keep mining costs low. Rio, for example, ships a ton of iron ore from its vast mines in the Pilbara region of Western Australia to China at just above $30 a ton, including various government royalties, according to analysts.

Moreover, because Rio’s ore is higher quality than that mined in Goa, it sells for around $49 a ton.

Hellsangel wrote:So gleeful that you can't spell right, Comrade?

confuzzled dude wrote:

Hellsangel wrote:So gleeful that you can't spell right, Comrade?

I'm very sure that India is in safe hands with Modiji at the helm. Lord Narendra will spin this to India's favor and will fetch billions of dollars.