India’s top iron ore port hit by Goa mining ban
Mormugao port on India’s west coast has been hit by the ban on iron ore mining in Goa with some 2,600 employees and about 4,000 pensioners facing an uncertain future, Live Mint reports.
“Our financial position position is very precarious,” said deputy chairman Biplav Kumar. “We are currently earning about Rs.10 crore per month without any iron ore”, the port’s chief commodity.
The port needs about Rs.15 crore a month for wages and pension liabilities, he said.
“We are running a deficit of about Rs.15 crore a month for general operating expenses including upkeep and maintenance of the port. At this rate, our cash surplus will be depleted in another three months,” Kumar said over the phone from Headland, Sada, in south Goa where the 125-year-old port is located. The port is one of 12 controlled by the Union government.
In its heyday, India’s top iron ore export port earned about Rs.40 crore per month from handling the steel-making commodity alone. Iron ore accounted for about 80% of the port’s volumes, with about 700 ships calling at the port to pick up cargo.
As exports to China boomed in 2010-11, Mormugao joined the elite club of ports in India that handled 50 million tones (mt) or more of cargo in a year. That was the peak period for Mormugao since it started commercial operations in 1888. The port loaded 50.02 mt of cargo in 2010-11, out of which 40.35 mt was iron ore. Mormugao’s cargo volume dropped to 39 mt in 2011-12, with iron ore accounting for 29.21 mt as a global slowdown cut demand.
Between April and October this year, the port loaded 13.4 mt of cargo, a decline of 32.9% from the 20 mt it handled a year ago. The cumulative iron ore loading during the seven months of the current fiscal was 7.4 mt, just half the 14.7 mt in the same period last year. The entire 7.4 mt was loaded in April and May. The port does not handle iron ore in June-August monsoon months. Since September, when loading normally resumes, no iron ore ships have called at the port.
In October, the Goa State Pollution Control Board directed the port to stop handling coal at two of its berths citing lack of proper pollution control measures. Coal was handled in a semi-mechanical manner at these two berths, leading to protests from local residents affected by pollution.
“Stoppage of coal handling was another blow,” Kumar said. The port handled 7.2 mt of coal in the year to March 2012 and was its second major commodity after iron ore.
“Nothing is moving here, no iron ore ships are coming to the port,” said A.J. Peters, president of the Mormugao Port and Railways Workers Union.
As the financial distress deepens, the port has prepared two schemes for employees to reduce its burden. It has drafted a so-called extraordinary leave scheme that allows employees to seek work outside the port for a maximum period of six years and return. This leave can be taken for a maximum period of two years at a stretch and extended further subject to the six-year cap. The leave period will not qualify for calculating pension.
The second is a special voluntary retirement scheme (VRS) for employees, in which the port will give 45 days’ salary for each completed year of service.
“Through these schemes, we are exploring the possibility of reducing our financial burden. We have forwarded the proposals to the shipping ministry for clearance,” deputy chairman Kumar said.
Mormugao’s fate is a classic example of the risks associated with a port that relies heavily on one commodity for its sustenance, said T.V. Shanbhag, a Mumbai-based independent shipping consultant.
“They may not have marketed the port properly,” Shanbhag said, adding that the absence of a proper hinterland (cargo originating area) and the lack of industrialization in Goa added to its woes.
Mormugao is now seeking to diversify its cargo mix to other commodities such as food grains, pharmaceuticals and granite. The government has persuaded state-run Food Corporation of India to export wheat through the port. The government has also allowed Mormugao to handle pharmaceutical export and import in containers for the 100-odd units located in the state.
For the first time in 20 years, granite originating from nearby Hubli in Karnataka are being shipped through the port.
“These are the small things we are trying to do. Then, again, this will not give us that much money compared to what we were earning from iron ore,” said Kumar. “Besides, there are challenges as well in getting new cargo. The condition of the roads connecting the port with its hinterland in southern Maharashtra and northern Karnataka is very bad. Unless that (is fixed), getting cargo by road is not a big possibility.”
The port currently has 11 cargo-handling berths, of which two are run by JSW Infrastructure Ltd, a private cargo handler. The port’s effort to privatize more berths such as berth 11 has been resisted by unions. Gammon Infrastructure Projects Ltd had last month emerged the highest bidder for operating the berth for handling imported coal on a 30-year contract. But the board of trustees had to defer a decision on Gammon’s bid on 30 November due to resistance from the unions.
“We are opposed to privatization. We are fighting that issue,” said labour leader Peters, who is also secretary of the All India Port and Dock Workers Federation.
“What will happen to employees once the berths are given to the private firms,” he said. “Mormugao port is going through very difficult times, and a solution to this can come only from the Supreme Court which is hearing the cases related to mining in India.”
