CEC Committee Begins Inspection Of Iron Ore Mines In Goa

After the ban on the mining activities in Goa the mining and its related activities has come to an absolute halt impacting the mining industry in the region. One of the major victims of this ban is Sesa Goa who's mining and transportation activities has come to a major slowdown in the last three months. Its production has come down by 90% on YoY basis to 0.2 mn tonnes in the September quarter 2012.

Sesa Goa India's largest private iron ore exporter has reported muted results for the September quarter 2012 on the back of the ongoing temporary mining ban.

The Supreme Court earlier this month banned all mining activity along with transportation of the steel making ingredient and asked for a report into illegal mining in the state of Goa in four weeks. Goa is India's second-biggest iron ore producing state. It produces more than 50 million tonnes annually and exports almost all of it, making it the top exporter.

From the latest media reports it is known that the Supreme Court's appointed CEC committee has begun ground inspection in the state by visiting various mining leases. The appointed Members of the Committee, during their two day visit will hold meetings with mining stakeholders like owners of trucks, barges and mines. The panel has been trying to ascertain extend of illegal mining in the state.

The CEC's visit has come at the backdrop of the impending recession in the iron ore-rich belt of the state. With no mining activity, it is feared that almost one lakh people would be rendered jobless in coming days. Considering these issues we believe Supreme Court or the Ministry of environment and Forest (MoEF) may announce some sort of relaxation in the coming months.

As per the statement given in the media Sesa Goa is also expecting an early resolution of the current situation. Also Sesa Goa and other miners in the state are pushing for at least a lift in the ban on transportation of ore. Any such easing could help the company in selling inventories of up to 35 lakh tonne, thereby reaching 50% of last year’s volumes. In the month of October Sesa  has an inventory of about two million tonnes  in Goa.

In conclusion we believe that Supreme Court may provide some relief in the coming months at least by allowing transportation activity in the region. However removal of the mining ban will take much longer time and may get extended for one more quarter. This also means Sesa Goa will continue to report lower volumes in the coming quarter as well.