Goa expects iron ore mining to restart before monsoon

By Krishna N Das

NEW DELHI (Reuters) - Goa expects to resume mining before monsoon that starts in June, its chief minister said on Monday, but this may not mean an immediate resumption in shipments from what used to be the country's top iron ore exporter.

A ban on mining and exports in September 2012 to clamp down on illegal mining in Goa, coupled with a similar step in neighbouring Karnataka, has slashed output and shipments from India.

The loss of business for India, once the world's third-largest iron ore exporter, has helped miners such as Vale , Rio Tinto and BHP Billiton boost sales to China, Japan and South Korea.

"Complete ban for a very long period can be very dangerous, very economically damaging. Our reputation as a supplier is at stake," Manohar Parrikar told business leaders at a conference, adding mining will "probably start some time this season".

Goa's mining season runs from October to May as monsoon rains allow no activity from June to September. The state's mines director said in November he did not expect a resumption in mining before October this year.

The Supreme Court will resume hearing later this month an appeal to restart mining in the state. A panel formed by the court will submit a report on an output limit for Goa by February 15.

Goa could produce 25 million tonnes of iron ore per year on a "sustainable basis", Parrikar said. Its shipments reached about 50 million tonnes in the 2010-11 fiscal year.

The minister said he was hopeful that the court would lift the ban soon given that it has allowed the auction of more than 11 million tonnes of already-mined ore stocked at ports or docks in the state.

He declined to say whether he expected exports too to begin this season but said iron ore from the state "cannot be economically used" in India.

With the Indian Bureau of Mining allowing exploration of even very low grade ores, he expects Goa's iron ore reserve to be about 3 billion tonnes, almost triple the current estimates.

That would be good news for Sesa Sterlite , India's top private miner that has most of its operations in the state.

(Writing by Siddesh Mayenkar; Editing by Muralikumar Anantharaman)