Sesa Goa inches towards resuming mining in Karnataka

Company recently secured a working permit for one year from MoEF for its mines in Chitradurga district

Sesa Goa, a division of Sesa Sterlite, is moving towards resuming iron ore mining in Karnataka. The company, which had stopped mining following a Supreme Court ban  in the state two years ago (later lifted), recently secured a working permit for one year from the union ministry of environment and forests (MoEF) for its mines in Chitradurga district.

However, the company is yet to get no-objection certificate from the forest department, Karnataka government, and final approval from the monitoring committee to resume operations. Sesa Goa has the largest mining capacity of 2.3 million tonnes a year in the state.

The MoEF approval came on August 22, 2013, pending renewal of its lease for a period of 20 years. The company’s mining lease had expired on October 20, 2012. The MoEF also accorded in-principle approval after the forest advisory committee constituted by the central government examined the proposal of the Karnataka government, which had sought prior approval under Section 3 of the Forest (Conservation) Act, 1980.

Meanwhile, the state forest department is said to have made a claim for payment of forest development tax (FDT), which runs into several crores of rupees, based on the invoice value for export for a period of three years between 2008 and 2011. Unless the company pays this amount, the department is unlikely to issue a no-objection certificate to the company, according to sources in the know.

However, the company has contested the claim of the   department, stating it had paid FDT based on the value of iron ore on an ex-mine basis.

When contacted, Sesa Goa officials declined to offer any comment.

Since the company’s mines are located on the hilltop in the Nirthadi Reserve Forest in the Holakere range of Chitradurga division, the forest department has claimed forest development tax.  The issue is pending for resolution and has further delayed final approval to commence mining operations, sources added.

The Supreme Court-appointed central empowered committee (CEC) has classified Sesa Goa’s mines under Category B. The company’s mining lease is spread over 162 hectares with an approval to mine up to 2.3 million tonnes after the CEC approved its reclamation and rehabilitation plan.

The company expects to start mining operations during the current quarter (Q3, FY14) following the forest clearance and would operate under deemed extension till the mining lease gets renewed.

“After almost a two-year ban, Sesa Sterlite iron ore mining operations in Karnataka have gotten a green signal from the Supreme Court with a pruned capacity of 2.29 million tonnes. The company expects to start mining in the third quarter post attaining forest clearance and would operate under deemed extension till the mining lease gets renewed. We expect the Karnataka Iron ore market to remain in deficit in the near term and expect domestic iron ore prices to firm up with support from a weak rupee and firming sponge iron prices,” Macquarie Securities said in its latest report on Sesa Sterlite.