Sesa Goa readies capex for Liberia project

Company plans to begin shipments from ore mining project by Feb 2014

Vedanta group firm Sesa Goa has finalised the capital expenditure plan for its Liberian iron ore mining project and plans to begin shipments from it from February 2014, a top company official said.

The company is aiming to produce 10 million tonnes of iron ore per annum in the first phase from Liberia's Western Clusters project, which it had acquired in two phases for about $123.5 million (about Rs 595 crore).

"We are really upbeat on the project, work is going on as envisaged. Internally, we now have idea about the capex for the project but we are not going public. It (the capex) should be about $80-90 per tonne of capacity," Sesa Goa Managing Director P K Mukherjee told PTI.

He added that the company has completed over 48,000 metres of drilling at the project site till December, 2012 and shipments from the project will begin in February, 2014.

"We have divided first phase of production in two parts - 4 million tonnes in part-A and 6 million tonnes in part-B. Of this, first part of production will begin in 2013-14 and first shipment will happen in February, 2014," Mukherjee said.

He added: "We are also developing logistics capacity of 20 million tonnes for evacuation of iron ore from the mines. There could be more than one shipments in FY14. It (the Western Clusters project) is now more related to development of logistics than production."

The Goa-based miner has plans to ramp up production by up to 30 MT in the second phase at Western Clusters, Liberia, which is expected to begin by 2016-17. Sesa Goa is now estimating nearly three times more iron ore reserves than earlier estimates of one billion tonnes.

The company had begun exploration of the asset during April-May, 2012 and had said that it would be spending about Rs 400-450 crore on the project, largely on payments to the local government, exploration, equipment and other related studies for the project.

Sesa Goa is going through turbulent times, following a ban on mining in Goa and has deferred 10-25 per cent of salaries of its employees from January. It hopes to soon resume its operations at Karnataka.

The Reclamation and Rehabilitation (R&R) plan of company's mine at Chitradurg district in Karnataka has already been approved by the Supreme Court-appointed Central Empowered Committee (CEC), though at a provisional production capacity of 2.29 MTPA.

The Karnataka operations of the company have been closed for more than a year now, following an apex court-imposed mining ban in the state.

"Now we are waiting for directions from the apex court," he said, adding that next hearing on Karnataka mining issue is likely in early February.