Sesa worried about regaining customers
promit mukherjee/dna, mumbai | 06 July 2013 17:21 IST
Despite stopping production in September 2012, iron ore major Sesa Goa is hopeful that the mining ban in Goa will be lifted soon. But the company fears that it will face difficulties in quickly regaining lost customers.
During the annual general meeting at Panaji on June 27, the company’s chairman Kuldip K Kaura said: “On resumption of mining and export from Goa, getting back the confidence of Sesa’s traditional customers would pose a few challenges; but these can be overcome quickly, considering Sesa’s brand reputation.”
Sesa’s problem is faced by several miners in Goa as well. Since the mining ban in the state, all of them have lost several customers, mainly Chinese, to iron ore miners elsewhere in the world.
In 2010-11, their heyday, miners in Goa produced up to 50 million tonne of iron ore per annum (MTPA).
Most of their output, however, was low-quality haematite with ferrous or iron content of less than 58%, which is unsuitable for Indian steel mills.
So, the entire output had to be exported to countries that had some use for it.
But, with mining banned in Goa since September, most of their customers have shifted to non-conventional markets such as Malaysia, Iran, Turkey and Thailand.
“It is a difficult situation as companies, including Chinese companies, have long-term volume contracts. So, even if the ban is lifted, it will be difficult to win back the customers immediately. You have to wait for their existing contracts to expire before you can pitch again to your older customers,” said an analyst with an international brokerage.
He said it is not very difficult as pricing is dynamic and is the same world over, but it will take at least six months or so for things to get normal.
Besides, during an earlier interaction with DNA, Prem Kumar, a commerce ministry veteran and advisor to a prominent iron ore trader of Goa, had said that even players in Goa are looking at entering the Middle Eastern market to sell their ore.
He had said while the Middle East is a new opportunity and can help offset the loss to some extent, the business loss to China is increasing by the day, as the Middle East requires the low-grade ore to make cement, where usage is much less than that of steel plants.
Owing to the mining ban in Goa and Karnataka, Sesa Goa posted iron ore production of 3.7 million tonne (mt) and sales of 3.1 mt in 2012-13, much lower than 16 mt and 13.8 mt respectively in 2011-12.
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