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SC allows iron ore mining in Goa with output limit

21 April 2014

The Supreme Court has lifted a ban on iron ore mining in Goa and allowed mining companies to resume operations, although with conditions, ending an 18-month ban imposed in the wake of environmental violations.

A three-judge bench headed by justice AK Patnaik allowed mining in the top iron ore exporting state with an upper limit of 20 million tonnes per year.

Any increase in the output limit will depend on the environmental impact report to be submitted by a court-appointed panel, which is expected in six months.

The SC in its order also directed the state government to constitute an expert panel and submit a report regarding capping of output and other issues, like dumping, within six months.

Goa accounted for about half of the nation's exports before the ban.

The state can now produce a maximum of 20 million tonnes of iron ore a year after miners renew their leases with the state government, against the production level of 45 million tonnes before the mining ban.

This will limit Goa's iron ore output to the lowest since the year ended 31 March 2005, according to steel ministry data.

The restart of mining operations, would raise iron ore supplies in the world market, especially to China, which used to buy most of Goa's ore before the ban.

However, actual mining may not start before October as the mining companies will have to get a valid mining lease from the state government.

All mining leases in Goa expired in 2007 and any mining activity since then is deemed illegal.

The apex court has, however, banned grant of lease for mining around one km of national parks and wild life sanctuaries.

The court also ordered that 10 per cent of proceeds from ore sales be used for welfare programmes and asked the Goa government to prepare a report on how it plans to use the fund.

The order also directs the local government to seize all ore lying at various locations in the state before the court-appointed panel suggests ways to utilise the commodity.

Goa and neighbouring Karnataka accounted for almost half of India's output of iron ore as demand soared amid China's economic boom. Goa, however, lost an estimated Rs34,940 crore ($5.8 billion) because of illegal mining, according to a panel set up by the mines ministry.

The ministry of environment and forests will identify eco-sensitive areas around national parks within six months.

While the SC order bans dumping outside mining lease, it has allowed the state government to decide the manner in which lease can be granted.

Miners including Sesa Sterlite Ltd. (SSLT) owned by billionaire Anil Agarwal, and Timblo Group will benefit from the resumption of ore extraction.

Shares of Sesa Sterlite, which owns the biggest mines in the area, surged 4.6 per cent, the highest increase in more than four months, to Rs201.65 at the close of trading in Mumbai today.

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