Goa likely to extract about 6-mt iron ore in FY15

Even as the Supreme Court allowed extraction of 20 million tonnes (mt) of iron ore from Goa, the clarity emerges that the production is likely to be in the range of five-six mt. The actual mining is likely to start only in the third quarter of FY15.

According to industry sources, the state government has already started auctioning 11.5 mt from the old stock and together with fresh mining the total quantity could work out to 16-17 mt for FY15. Auction of the old stock was allowed a few months ago, which is largely being exported as auction progresses.

Cap on production suggested by the court is around half of the production that was taking place in the state prior to the ban.

As all the mining leases in Goa have expired post 2007, the restarting of mines largely depends on how soon the Goa government sets the ball rolling for renewal of leases. According to sources, the state government has already collected stamp duty from 20 companies, including Sesa Sterlite Limited for renewal of leases. This means the government has accorded in-principle clearance to these mines, which are outside the forest areas, subject to environment clearance from the Union ministry of environment and forests.

"There are a lot of issues that needs to be resolved before the actual mining starts. First of all, the capacity for each mine has to be fixed and also mining leases will have to secure various approvals. It requires a lot of compliance on the part of mines and the state government," a miner said.

Kalpana Jain, senior director, Deloitte in India, said, "There is a need to work out a formula on fixing the quantity each miner could produce. Probably, the governments need to take into consideration the mine able resources and eliminate those mines from the business that are inside the forest areas."

The apex court, in its order on April 21, 2014, said, "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 November 22, 2007 was illegal and hence the impugned order dated September 10, 2012 of Government of Goa and the impugned order dated September 14, 2012 of the MoEF, are not liable to be quashed."

It was for the state government to decide as a matter of policy in what manner mining leases were to be granted in future but the constitutionality or legality of the decision of the state government could be examined by the court in the exercise of its power of judicial review, an analyst tracking the developments in Goa said.

"It is for the government of Goa to chart out a future course of action. We view the government providing an in-principle approval for renewal of 20 plus leases located outside forest areas by collecting the stamp duty as encouraging. The MoEF will have to step in to decide by when the mining operations can actually start," said Ritesh Shah, lead analyst, Espirito Santo Securities.

He said the best case scenario would be a new central government setting up a task force to fast track EC approvals.