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Boost to Sesa as Supreme Court lifts Goa mining ban

Tuesday, 22 April 2014 - 8:40am IST | Place: New DelhiMumbai | Agency: dna

Giving relief to iron ore miners, the Supreme Court on Monday lifted 18-month-long ban on mining the resource in Goa.

However, it capped the annual output at 20 million tonne (mt), which is almost 45% of Goa's peak ore production.

The court also said there cannot be a deemed renewal of lease after 2007 of the existing lease deeds emanating 1962 onward.

"The deemed mining leases of the lessees in Goa expired on November 22, 1987 and the maximum of 20 years renewal period of the deemed mining leases in Goa expired on November 22, 2007 and consequently mining by the lessees after that date was illegal," it said.

The Goa government had revived many of these dead leases. Thus, the exact number of mining leases that would get cancelled following the court order could not be ascertained immediately.

Before the ban about 90 mines were operating in Goa producing nearly 45 mt ore annually.

Goa Mineral Ore Exporters' Association executive director S Sridhar said it would be difficult to comment before studying the order in detail as there was confusion related to cancellation of mining leases.

Basant Poddar, vice-president of Federation of Indian Mineral Industries, said several dead leases which were not working since 1987 were renewed after 2003-04 following the spike in ore prices due to growing Chinese demand.

While the ban has been revoked, the miners would still need to get fresh environmental clearances to restart excavation and hence actual mining may only start by September.

Poddar said it is not very clear on how production cap would be implemented in case of each miner, but most likely they will have to curtail their production by 45%.

Shares of Sesa-Sterlite, one of the biggest miners in the state, rose 8% following the news. Before the ban the company had annual production of 14 mt. Analysts expect Sesa to produce 8 mt in fiscal 2016 after the ban is lifted.

"There will be no major impact on steel mills as production may only come online post monsoon. Sesa will definitely have an advantage as it will get a better raw material source for its pig iron plant. Finances will start to improve for all miners and traders. Livelihood will improve in Goa. But all this will happen once every miner's cap is also fixed and actual mining and sales come online, which should be by October 2014," Prakash Duvvuri, head of research, OreTeam Research, said.

If production starts by October then also out of 20 mtpa only 50% could be produced, he said, adding there will be plenty of transport restrictions, global markets slowdown and other issues to take care in this period.

The apex court also asked the state government to set up an expert panel and submit a report regarding capping of output and other issues within six months. The court directed the Ministry of Environment and Forests to identify eco-sensitive areas around national parks within six months and said there will be no grant of lease for mining around one km of national parks and wild-life sanctuaries.

The Goa government was directed to formulate a scheme within six months for utilising the funds generated by e-auction.

The bench said the workers on rolls of all mining firms will be paid 50% of their wages during the ban period for which they were out of work. Further, within six months, the expert panel will recommend how the extracted dumps are to be utilised, it said.

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