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Vedanta mulls options for Indian iron ore workers after shutdown: sources

Reuters  |  NEW DELHI 

By N. Das

NEW DELHI (Reuters) - Resources is considering options including lay-offs for some of the 2,000 employees of its iron ore business in that was shut down by a court, two sources said, as it struggles with a series of setbacks in the country.

The in February cancelled all iron ore extraction permits in the southwestern state of and ordered to cease from March 16 on environmental and other concerns. The state is known for its low-quality iron ore exported to countries such as

London-listed Vedanta, controlled by Indian billionaire Anil Agarwal, has come under increased scrutiny in the country since police opened fire on protesters, killing 13, at a demonstration against its copper smelter in last month. The smelter has since been shut down.

In Goa, industry leaders and the two sources close to said was unlikely to resume within the next three years at least, as the state would have to conduct a fresh survey of its iron ore reserves before auctioning mines and seeking environmental clearances to operate them.

said in late March it was likely to record an impairment charge of up to $600 million following the closure of the iron ore business. It added, however, that the ore business would not have "any material impact" on the overall profitability of the group.

One of the sources close to the company said Vedanta typically does not fire workers, but keeping on all employees without generating sales would be difficult. The sources did not give any timeline for any action, but added the company might also offer to retain them without pay.

In response to questions on its plans for the workforce, Sangeetha Chakravarthy, a for Vedanta's iron ore business, said in a statement: "We have moved some of our personnel to other units across the country, however that is a small fraction of the total workforce impacted by the ban. As of now, employees are being paid. However, this is not indefinitely sustainable in the absence of any revenue."

The company, the biggest in Goa with an annual production of around 5.5 million tonnes before the shutdown, said it spends 120 million rupees ($1.77 million) a month on salaries of its employees in the state.

Prasanna Acharya, of Goa's Directorate of Mines and Geology, was not immediately available for comment, his office said.

Chakravarthy said Vedanta's Goa employees had been told not to report to work, but added the company had retained its workforce during previous court and between 2012 and 2015.

Several small, unlisted companies were also affected by the ban.

"The court order came as a rude shock but companies by and large have retained their direct employees, in the hope that things will be worked out," said Glenn Kalavampara, of the "But for how long can they keep them?"

Vedanta's business, run through its local unit Vedanta Ltd, has been a target of environmentalists for years. The southern state of shut down its copper smelter on environmental grounds following the police shootings at a demonstration against an expansion of the plant on May 22.

Environmental activists and some locals are also opposed to its alumina refinery in the eastern state of Odisha. Vedanta denies it is in breach of any environmental rules and says it adheres to international standards of sustainability and corporate governance. ($1 = 67.6550 Indian rupees)

(Reporting by N. Das; Editing by Alex Richardson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, June 14 2018. 17:34 IST
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