CEC may recommend restart of mining with riders: Sesa Goa

PK Mukherjee, MD,Sesa Goa, says that CEC will follow the process like stoppage of mining to undertake processes like Reclamation and Rehabilitation (R&R) plan, fixing of boundaries and prescribing proper quantity that can be mined from Goa.

Also read: No plans to hike price; will sell 50 mt in FY13: Coal India

Below is the edited transcript of his interview to CNBC-TV18.

Q: What is your view on the observations made by Central Empowered Committee (CEC)? What could they recommend - a complete ban like Karnataka or something different?

A: We met CEC on 21 November where they said that for Goa they will follow the same process that they used for Karnataka, which has been approved by the Supreme Court. CEC will follow the process like stoppage of mining to undertake processes like Reclamation and Rehabilitation (R&R) plan, fixing of boundaries and prescribing proper quantity that can be mined from Goa. A substantial reduction in quantity has been prescribed although the mines have not yet opening up.   

Q: Where is the current situation now? There is a ban on transportation as well. Should we understand that there is no production or any sell over the next few days and that is likely to continue for the next few weeks in both Goa and Karnataka?

A: Gradually, all Karnataka mines are supposed to open up. NMDC mine is operating and their quantities regularly come for the e-auction. It is a different matter that, people are not comfortable with the pricing so they are not getting appropriate response in the e-auctions.

There is no production as well as transportation activity in Goa, from 10th September after the Supreme Court's directive that until CEC submits it report, no production or transportation activities will take place. It is not clear when the report will be submitted. We are waiting for direction from the Supreme Court.

Q: What is your situation in Karnataka? Whether for the next few months’ production in Sesa Goa is basically working at nil?

A: Our mines have been categorized as 'Category B' mines, and there is recommendation from CEC that Category B mines should be allowed to operate subject to various undertakings and commitments already given including Reclamation and Rehabilitation plan implementation. We have complied with the guidelines and the Supreme Court in last hearing also stated that all the permissions from the state governments and others should be issued. Tomorrow, we are hopeful to get a positive order from the Supreme Court to start our mine and we are hopeful to start production by December.

Q: Earlier, Sesa Goa had set a target of 15 million tonnes for the year. We understand that those targets may not hold well right now, but given your expectations can you even leave us with some kind of a target that you maybe able to achieve this year?

A: At the moment there is no target, there is a standstill situation from mid-September. Whatever activity we have done up to the second quarter end it remains as flat, plus whatever we could do from Karnataka post production starts.

As far as Goa is concerned, our monthly run rate is about 1.5-2 million tonnes from Goa during the fair season and today we are in the midst of the fair season, so as and when we are allowed to start we will be able to achieve the run rate of 1.5-2 million tonnes per month and then the balance is arithmetic.

Incidentally, lot of inventory is lying in Goa not only for Sesa, but for others also because during monsoon everybody collates the inventory. A substantial inventory of low grade ore is lying and no one in the country touch it so it needs to be exported. Sesa Goa itself has 2.5 million tonne of processed material ready for sale and around 1 million tonne of un processed ore is lying in the min pit.

Q: How much iron ore import will impact your fixed cost for this quarter and till this issue is resolved?

A: Import is an option which we are very looking at purely from economics point of view. Today, our pig iron plant is trying to keep it alive by buying the ore on auction from Karnataka. Because of present situation mix of some iron ore from Goa has also stopped. The landed cost of iron ore from Karnataka in Goa after buying in e-auctio is extremely costly. After calculating the difference between landed cost and imported ore, imported ore works out to cheaper.