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Supreme Court lifts ban on iron ore mining in Goa

But caps annual production from these mines at 20 million tonnes

BS Reporters  |  New Delhi/Bangalore 

The Supreme Court on Monday allowed iron ore mining in Goa, lifting a ban imposed about 18 months ago, but placed a cap of 20 million tonnes on annual production from these mines. Before the ban, iron ore production from Goa was around 45 million tonnes per year (mtpa).

Exports from Goa, earlier more than half of India’s total export of the mineral, had fallen to zero during the period the restriction was in force. As a result, India, once the world’s third-largest exporter, turned a net importer of the commodity in recent times. According to Prakash Duvvuri, head of research at OreTeam Research, Goa could produce about half of the 20 mt cap during the current financial year.

A three-judge Bench, headed by A K Patnaik, ordered an expert panel to give within six months its final recommendations on the annual excavation cap from Goa mines. The order also said there could not be a deemed lease renewal after 2007, of the existing lease deeds emanating from 1962 onwards.

Besides, leases will not be granted for mining within a kilometre of national parks and wildlife sanctuaries. The Court has directed the Ministry of Environment & Forests to identify within six months the eco-sensitive areas around national parks.

Goa Chief Minister Manohar Parrikar had earlier told Business Standard that mining operations could resume three to six months after a favourable verdict from the Supreme Court, as the entire mining machinery had been demobilised.

The Court also asked the Goa government to set up an expert panel, which would within six months give its report on capping of annual production, among other things.

A separate committee set up by the apex court last month had recommended lifting of the ban in Goa, with conditions like a lowered production cap.

In November, the Court had allowed e-auction of iron ore already mined in Goa (around 11.48 mt). The latest order also asked the Goa government to formulate a scheme within six months for utilising funds generated by the e-auction.

Earlier, the apex court had banned illegal mining in Karnataka in July 2011. But a partial resumption of mines was allowed in April 2013. That was with a production cap of 30 mtpa. In Odisha, too, the state government banned iron ore export in October 2012. It had said mining could be done only for captive use.

The Supreme Court Bench on Monday also asked the central government, the Odisha government and the Central Empowered Committee (CEC) to formally explain the allegations of widespread mining illegalities, sparking fears Odisha could face a ban similar to those in Karnataka and Goa. CEC will give a list of mines involved in these illegalities. The matter was listed for Monday, when an interim order would be given.

The ban on iron ore mining in Goa was imposed in September 2012 on a petition filed by lawyer Prashant Bhushan after a judicial commission, headed by judge M B Shah, exposed a Rs 35,000-crore scam involving top mining companies, politicians and bureaucrats.

The apex court on Monday rejected mining associations’ argument that it should not look into the matter since it was for the government and Parliament to take a view on the Shah commission report.

Among private miners, Sesa Sterlite, the largest mining company in Goa that produced around 16 mtpa of iron ore until the ban was imposed, will be the biggest beneficiary of the Supreme Court order.

A spokesperson for the company said: “Sesa Sterlite welcomes the on lifting of the iron ore mining ban in Goa. We will work constructively with the central and state government authorities to restart mining. Sesa Sterlite is committed to following responsible and sustainable mining practices.”

However, with a cap of 20 mtpa, Sesa’s production could come down heavily. Ritesh Shah, lead analyst at Espirito Santo Securities, said: “Sesa Sterlite should be able to produce at least 7 mt iron ore in 2014-15. This includes about 2.2 mt in Karnataka. The company has an inventory of 3.5 mt in Goa.”


“Though the Court has put a cap of 20 mt, this will enable the miners and dependents like truck and barge operators, besides employees, to recover. Even Mormugao Port will get some revenue,” said Federation of Indian Mineral Industries (Fimi) Secretary-General R K Sharma.

Most Indian steel mills, except JSW Steel, prefer high-grade iron ore. So, the domestic mills are unlikely to benefit much from the Goan ore, which is low- to medium-grade. Even JSW is unlikely to use the Goan ore for its major steel plant at Vijayanagar in Karnataka’s Bellary district. It might, though, consider using the Goan produce for its steel plant at Dolvi near Mumbai, according to analysts.

“This will help miners export their ore, which is of little use in India. The Goan ore is more suitable for exports, as China has the technology to make use of low-grade ore. In India, except JSW, which can make use of low-grade, there is no market for Goan ore. It cannot be brought to Karnataka due to tough terrain of Western Ghats and it cannot be loaded on to the rail wagons, either,” said Mineral Exports Ltd Managing Director Basant Poddar.

India exported 12.57 mt from April 2013 to February 2014, against 17.35 mt in the year-ago period, according to Fimi data. Before the mining ban, the country exported more than 100 mt a year, mainly to China.

The steel industry in and around Karnataka requires 36 mt of iron ore annually. The Court had allowed 115 Category ‘A’ and ‘B’ mines to resume production. But only 21 mines have so far started their mining operations and their output stands at around 18 mt, of which nine mt was mined by state-owned NMDC.


SETTING THE BALL ROLLING

2012
  • Sep 11: Goa halts iron ore mining after an expert panel finds serious illegalities and irregularities in operations
  • Sep 12: After a ban on mining, the environment ministry suspends clearances given to 93 iron ore mines in Goa
  • Oct 5: Supreme Court (SC) suspends iron ore mining in Goa; Justice M B Shah panel appointed to probe issue
  • Nov: Goa govt issues transport ban
2013
  • Nov 11: SC maintains ban on iron ore mining, allows sale of 11.46 mt of stockpiles
  • Dec: State govt declares all notified dumps (> 765 million tonnes); the Goa govt completes process of renewals for a majority of mining leases
2014
  • Feb 17: Goa conducts first e-auction for sale of half an mt of iron ore
  • Apr 21: SC lifts ban; caps production at 20 mt a year

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First Published: Tue, April 22 2014. 00:59 IST
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