PPP bidders are unsure about mining and are refusing to dock at Mormugoa Port

While the state government is positive about the resumption of iron ore mining, the private sector does not share the government’s optimism. The Mormugao Port Authority (MPA) attempt to hire a private actor to operate Berth No. 9 for iron ore exports ended in deadlock with no bidders coming forward.

Goa’s track record of mining iron ore and the long time lag between auctioning mines and obtaining permits are weighing on investor sentiment, industry officials say.

The MPA had planned to rehabilitate Berth No 9 and three barge jetties through a public-private partnership with a planned investment of Rs 842 crore. A fully mechanized terminal with a capacity increase of 12 million tons per year was planned for handling iron ore exported from Goa.

According to sources, while JSW and Adani showed interest in berth #9, they withdrew at the last minute.

“There is uncertainty and who wants to invest when there is uncertainty,” said a senior MPA official. “Auctioning the mines is one thing, but when and how to start mining is the real question.”

Mining was another important industry of Goa and mining activities played an important role in generating revenue and jobs for the port and the state. In recent years, mining operations have faced regulatory issues and legal challenges that have resulted in mining halting twice in a decade.

In February 2018, the Supreme Court ordered mine leaseholders who had been granted the second extension to cease all mining operations effective March 16, 2018 pending the issuance of new mine leases and new environmental permits. Goa finally put the mining leases up for auction this year.

“Everyone assumes it will be at least a year before mining resumes. There are cheaper ways to load iron ore. So why would anyone invest anywhere near 1,000 crore rupees for a berth?” said New Era Shipping Ltd Managing Director Atul Jadhav.

Jadhav, a former president of the Goa Barge Owners Association, said the risk associated with Goa’s mining sector will keep investors away from Berth 9, at least until iron ore mining begins.

Before 2012, when iron ore mining was first halted, the mineral accounted for 80% of the cargo handled at the Port of Mormugao. Berth No. 9 has been largely unused since mining was stopped.

“The port cannot leave a facility idle for so long. We’ll see if we can diversify the cargo,” said a port official.

Another concern for the mining industry is the 30% drop in steel prices, meaning low-grade iron ore prices have also fallen. In view of the lower prices and the high investment requirements, it seems unlikely that a potential berth operator will quickly amortize the investment.

“Investor appetite will be there if there is volume,” said Glenn Kalavampara, secretary of the Goa Mineral Ore Exporters Association. “For large-scale investments, the potential, iron ore volume, taxes, logistics and ease of doing business are key when there is economic viability.”

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