Sesa drops as Goa mining temporarily suspended

STERLITE-SESA-GOA-MINING:Sesa drops as Goa mining temporarily suspended

mumbai  September 11, 2012, 11:03 IST

mumbai  09 11, 2012, 11:10 IST

 

Shares in Sesa Goa and Sterlite Industries fell more than 5 percent after Goa, a key iron ore producing state in India, temporarily suspended all mining activities.

Goa is India's second-biggest iron ore producer -- with an output of more than 50 million tonnes -- and exports almost all of it, making it the top exporter. If the ban continues for long, it could further dent India's shipments of the steelmaking ingredient.

India used to be the world's No. 3 iron ore exporter, with most of its product heading to China. But a clampdown on illegal mining in 2010, and New Delhi's measures to keep output for domestic steel mills, slashed exports in half.

"If the ban continues for long time, it could impact exports," said R.K. Sharma, secretary general of Federation of Indian Mineral Industries (FIMI), adding it was too early to estimate the fall in exports.

Sesa Goa Ltd, an Indian unit of London-listed Vedanta Resources Plc , gets most of its iron ore from mines based in Goa. Sesa shares fell more than 7 percent after news of the suspension.

Shares of non-ferrous metals producer Sterlite, which is set to merge with miner Sesa Goa to create Sesa Sterlite -- the eventual umbrella unit for other subsidiaries of the Vedanta Group, were 4.77 percent lower at 93.80 rupees.

The move by Goa to temporarily suspend mining activities, effective Tuesday, came after an expert panel formed by the federal government found "serious illegalities and irregularities" in mining operations.

Goa will, however, allow movement of iron ore already produced or that has been stored at ports.