While the plight of precious metal mining in the 3rd largest gold producer in the world has been well-documented here, as on ongoing strike in various South African mines has crippled precious metal supply, so far the mining shut down had not spread outside the continent of Africa (excluding the occasional Bolivian and Venezuelan mine nationalization). Today, however, even more mining capacity was taken offline, as India's Goa, the country's second largest iron ore producer, announced it was temporarily ceasing all mining activity "after an expert panel formed by the central government found "serious illegalities and irregularities" in mining operations." While no gold production has been impacted yet, this move, which likely has political overtones, will likely shift to other extractors soon, as more production capacity is taken offline, for either labor or kickback reasons. And as reported previously, demand by the now largest importer of gold in the world China, refuses to decline with supply, which has clear implications for the equilibrium price. It remains to be seen if Goa going dark will push iron-ore prices higher. It is quite likely that the collapse in Chinese iron-ore demand offline is far greater than anything Goa will remove from the market and as such will hardly push iron prices higher.
Goa has not banned movement of iron ore already produced and stored at ports or in transit, the statement said. The state will form a verification and clearance committee to scrutinize operations before giving approval to resume mining, R K Verma, principal secretary at mines and geology, said in a statement.
Goa is India's second-biggest iron ore producer. It produces more than 50 million tonnes of iron ore annually and exports almost all of it, making it the top exporter. Sesa Goa Ltd (SESA.NS), an Indian unit of London-listed Vedanta Resources Plc, gets most of its iron ore from mines based in Goa.
The mining-suspension order came a week after the Supreme Court partially allowed mining in the neighbouring Karnataka following a ban of more than a year.
India used to be the world's No. 3 iron ore exporter, with most of its product heading to China. But a clampdown on illegal mining in 2010, and New Delhi's measures to keep output for domestic steel mills, slashed exports in half.