The mining industry, which is all set to resume operations in Goa, finds itself in a tight spot as it faces the twin problem of a huge tax load and softer iron ore prices in the global market.
The miners in the state have announced that the preparatory work for resuming mining activity will start from October.
The industry had been closed since September 2012 after authorities spotted large-scale irregularities.
“With lower prices and high taxation, it becomes challenging to move out ore and this needs rationalisation of taxes,” Goa Mineral Ore Exporters Association (GMOEA) Secretary Glenn Kalavampara told PTI.
“The price of 58 degree ore has fallen to $37-38 while taxation on it is over 70 per cent,” he said.
Higher taxes have adversely impacted the business, especially when the international market is showing no signs of revival, he said.
“Wherever there is double taxation, the government can reduce it till prices are stabilised,” Kalavampara suggested.
The office-bearer feels that the imposition of heavy export duty on iron ore is “an attempt to prohibit export of high grade ore”.
“Goa traditionally has been exporting low-grade ore. The export duty on low grade ore should be removed,” he said.
While the mining industry has got its leases renewed and paid the licence fees mostly, traditional mine owners feel that “it is not viable to resume business”.
“Mining in these circumstances is not viable. The prices (of ore) are expected to fall further. Sale of auctioned ore (which was e-auctioned by the state government) is also not possible,” said Ambar Timblo, MD of Fomento Resources, a leading mining firm in the state.
Timblo maintained that his firm is planning to restart operations. “But the decision on the actual date will be taken in the next month. So, the exact date of commencement of extraction is unclear at present,” he said.
Vedanta’s Sesa Iron Ore, which was the first company to announce its intention last month to mine again, has said the business leaves no profit after paying the taxes.
“The company looks at profit after taxes (PAT). Here there will be profit, but no PAT,” Sesa Iron Ore’s Vice-President, Corporate Affairs Aniruddha Joshi said.