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Sesa-Sterlite to gain as Supreme Court allows e-auction of mined ore in Goa

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The Supreme Court on Monday allowed e-auction of about 11.46 million tonne (mt) iron ore in Goa, which has already been mined but lying unused.

The move brings relief to Goa miners, including the Vedanta group firm Sesa-Sterlite, which have been suffering due to a ban on mining in the state.

The e-auctioning would be conducted under the supervision of a three-member committee comprising two former bureaucrats U B Singh and S Naiumuddin.

“The state government is allowed to do the e-auctioning,” a three-judge forest bench headed by Justice A K Patnaik said, adding the amount collected be kept as “fixed deposits till this court decides the matter.”

Last year the court had stopped mining, transportation and export of iron ore in Goa following a report of irregularities by the Justice M B Shah Commission, which led to a substantial loss to the state exchequer.

The bench on Monday also ordered setting up of another six-member panel which would decide the annual cap of iron ore volumes to be mined and submit report by February 15.

The six-member panel will have one representative each from Ministry of Environment and Forests and the Department of Mining besides “an ecologoist, a geologist, a mineralogist and an expert on forest”.              

Asking the Centre and others to come up with the names of experts on November 18, it said, “The committee of experts shall give the report as to what should be the ceiling on mining.”

In an interaction with a television channel, Ambar Timblo, honorary secretary of Goa Mineral Ore Exporters Association said the entire stock of iron ore is going to be exported.

“From what I have heard today is all of this will be going in the export area,” he said.

However, analysts do not see much impact on the valuation of Sesa-Sterlite, which has nearly 3-3.8 million tonne of excavated ore in Goa.

“The company is likely to fetch $100 million for this stock, as it gets nearly $35 of Ebitda margin for per-tonne ore,” Giriraj Daga, an analyst with Nirmal Bang, said.

Most analysts expect ore mining ban getting lifted over next six months and are looking forward to quantum of cap that might be prescribed by the court-appointed panel.

Sesa-Sterlite’s Goa operations used to produce nearly 14 mt of ore annually, which most analysts said may have halved to 6-7 mt after the ban.

Currently, Sesa-Sterlite’s 10% valuation is reflected by iron ore business. Sesa-Sterlite, which was recently formed by merger of Sesa Goa and Sterlite Industries, also has operations in oil & gas, zinc, lead, silver, copper, aluminum and commercial power.

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