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Sesa Goa sees mining ban in Karnataka to be lifted by December

Sesa Goa expects the mining ban in Karnataka to be lifted by December 2011, enabling the Vedanta group firm to resume normal production in the state from early 2012.

In an investor conference call, the top company management said the case on illegal mining, pending before the Supreme Court, is likely to be resolved in the next two months.

Mr PK Mukherjee MD of Sesa Goa said that "Inspection of our mine by apex court nominated agency is over. Hopefully, by this quarter, the case will come to a conclusion and by next quarter, we can have normal production and sales from the state. We are one of the cleanest. That is what we get to feel from the way the inspecting agency team was talking."

While imposing a complete ban on mining in Karnataka, in August 2011, the apex court had directed to conduct a macro level environment impact assessment of the areas by Indian Council of Forestry Research and Education, together with other expert agencies in the field of forestry. The court had directed to submit the EIA report within three months.

Following the ban, Sesa Goa had stopped production from its only mine in Karnataka's Chitradurga district. The mine has an annual production capacity of 6 million tonnes.

Mr Mukherjee said that annual production of the company will remain at the last year's level or marginally higher, if production from Karnataka resumes in the January to March quarter. He added that the company can produce up to 2 million tonnes of iron ore from the state in the fourth quarter, if the mining ban is lifted.

The private sector mining major, which produced 18.8 million tonnes of iron ore in the last fiscal, had earlier said that ban on mining in Chitradurga will affect its gross revenues by up to 15%.

Before the mining ban, the company had an inventory of 800,000 tonnes of iron ore in its mine from Karnataka. Of this, 292,000 tonnes were sold through e auction, which is being monitored by an apex court appointed panel. The company is expecting to sell rest of the stock in the coming months via the e auction route.

For the quarter ended September 30th 2011, Sesa Goa's consolidated net profit plunged over 99% to INR 1.28 crore due to foreign exchange losses and lower realization from iron ore.