New Delhi: Vedanta Ltd on Monday commenced iron ore production from its mine in Goa, but on account of the subdued market conditions, the mining conglomerate pegs the prices of the mineral to be "much less than USD 45 per tonne".
The Anil Agarwal-led company today said it has received all approvals to restart mining at its Codli and Bicholim mines in Goa while announcing the reopening of Codli mine.
"Final clearances to other mines are expected to be granted by end of August. Post monsoon season, the company plans to fully resume mining and by the end of the current fiscal year, to utilise its full annual production allowance of 5.5 million tonnes," it said in a statement.
Vedanta has become the first company to restart iron ore mining in Goa, it added.
At present, iron ore production is capped at 20 million tonnes per annum in the state.
In a concall with reporters, Vedanta Ltd and Vedanta Resources CEO Tom Albanese said: "We need to work hard to regain market share in a very difficult market. This will take close cooperation between the industry, the government and all stakeholders to ensure we can reopen on a competitive basis."
On iron ore prices, he said: "Considering the conditions, we expect the prices to be much below USD 45 per tonne. The industry needs government help."
In a statement, Vedanta Resources also indicated that "even as India and in particular miners from Goa look to regain lost markets, iron ore markets/prices are weak and the international trade environment remains challenging. We continue to work with central and state government to improve competitiveness of Indian exports."
Albanese said that the company is confident to manage the business in "such trying times".
"These are tough times for the industry. There is huge increase in expenses and we are talking to the government over issues like export duty, various cess and District Mineral Foundation. We understand that we will not see profits from Goa like before," he added.
Vedanta needs to set an example that it can generate positive cash flows in such conditions and create an example of the standards that it can set in such a weak market, he added.
The London-based group said that Vedanta has been granted approval for total extraction of 5.5 million tonnes of which Codli is at capped at 3.1 million tonnes.
"Till date, five mining plans and schemes for company's mines have been cleared by Indian Bureau of Mines and we are awaiting clearance of further 15 plans. Over the balance monsoon period we anticipate receiving these approvals and expect a full scale resumption post monsoon," it said.
CEO of Vedanta's Iron Ore Business Kishore Kumar said: "I urge the government to note the current market scenario, with the steep downturn in prices and more importantly resolve the issue of dumping of ore outside lease areas for Goa mining to be viable."
Since the closure of mining operations in September 2012, prices have crashed to USD 32-33 per tonne for Goa grade of iron ore (average grade 58 per cent FE) from a peak of about USD 140 per tonne in 2012.
Prior to the suspension of mining in 2012, India was the third largest exporter of iron ore and Vedanta was the largest Indian exporter of low grade ore, it added.
The actual mining operations will begin post monsoon around the second half of September, when the rains stop.
On the reasons behind commencing operations despite the unviable low prices, a senior company official had said the firm has been paying salaries and wages to all its nearly 4,000 workforce for last three years, incurring around Rs 1 crore a day.
Goa government had temporarily banned iron ore mining in September 2012 pending verification of documents in the wake of Justice M B Shah Commission's report.
During the same month, Environment Ministry had put the environment clearance granted to the mining leases in Goa in abeyance.
In October 2012, Supreme Court had imposed a blanket ban on mining while hearing a petition. It lifted the ban in April last year, but with conditions.
