Think of the western Indian state of Goa and the images that normally come up is of a leisurely, idyllic lifestyle and not of half-starving people.
Yet, the latter is exactly what is happening, thanks to a virtual ban on iron-ore mining due to pending litigation in the Supreme Court.
A survey conducted by the prestigious Indian School of Mines says that mining closures have affected between 40%-90% households in the mining areas in the state where iron-ore output ranked only next to tourism in earnings.
Ironically, the appalling situation has arisen at a time international iron-ore prices have soared to a nine-month high, driven by China-fuelled buying on the Dalian Commodity Exchange.
Missed the bus on record-high global prices
Iron ore futures on China’s Dalian Commodity Exchange surged by almost 10% last Friday to an all-time high, crossing the 1,000 yuan ($152.95) per ton mark for the first time in history.
A combination of dwindling iron ore supply, surging steel demand and potential short-term disruptions caused by storms hitting Western Australia have led commodity analysts to raise concerns.
Until the curbs on Goa’s mining eight-nine years ago , the majority of the state’s iron-ore — which are primarily low grade — used to be shipped to China.
The curbs on mining were introduced primarily on environmental concerns, though these were eased briefly about three years ago before a fresh dispute over renewal of mine leases again brought operations to a halt.
Mining has been the mainstay for over 60,000 families in Goa. More than 25% of the families have been either directly or indirectly been dependent on the sector.
Once one of the most prosperous Indian states, mining-dependent families in Goa have cut down on their spending drastically on even food to survive the post mining-ban period, says the Indian School of Mines survey.
“Mining operations, being an important economic activity in the state of Goa, must commence sustainably,” says Professor Gurdeep Singh, under whose guidance the Indian School of Mines conducted the survey.
Goa has been battling a fiscal deficit crisis in the midst of the mining ban and has been piling up additional debt of over 10 billion rupees each year. Mining used to contribute over 15%-20 of the state’s GDP.
The income dent due to mining halt has been worsened by pandemic’s impact on tourism as a majority of visitors would fly in to the state.
“The report reflects the worst fears of the government and the industry that mining stoppage has not only exacerbated the precarious financial conditions of the state, but has already resulted in widespread adverse impact on the people who were dependent upon the mining industry,” says Glenn Kalvampara, secretary, Goa Mineral Ore Exporters Association.
Domestic steel producers battle ore shortage
The development comes even as a shortage of iron-ore has hit domestic steelmakers.Since March, iron-ore prices offered by state-run NMDC has increased by over 60%.
Indian steel prices have increased by 55% during the period primarily because of the price spike in iron-ore, the most critical ingredient in making the metal.
That comes as iron-ore extraction in the eastern state of Odisha has dropped by at least 20% year-on-year.
Mining auctions and restart of mines have been affected by haphazard procedures for approvals, which are likely to weigh on world’s second-largest steel producer India’s plans to double its output of the metal in a decade.