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Indian Supreme Court's iron ore mining ban in Goa takes effect

The secretary of the Goa Mineral Ore Exporters Association, Glenn Kalavampara, told S&P Global Market Intelligence that the iron ore mining ban in the Indian state, which came into effect March 16 on orders from the Indian Supreme Court, will have a massive impact on the state's economy and investment credibility.

The Feb. 7 court order, prompted by an appeal filed by environmental action group Goa Foundation, forced all mining activity at 88 leases in the state to be halted for the second time in six years.

Iron ore production from Goa was in the range of 12 million to 13 million tonnes per year from 35 to 40 mines before the latest ban.

A previous ban on iron ore mining in the state lasted more than two years, from September 2012 until the state received environmental clearance to lift the suspension in March 2015.

The government will regain control of all 88 mining leases and start the process of granting new mining leases and environmental clearances, according to various media outlets.

"This has resulted in widespread anxiety amongst the entire mining fraternity and various stakeholders in the state of Goa," Kalavampara told S&P Global Market Intelligence via email. "The mining industry in the state of Goa is in a state of shock as it faces its latest economic crisis post resumption a few years back."

Kalavampara said the state would take a financial hit of about 35 billion Indian rupees in annual revenue, with 50,000 to 60,000 direct and indirect jobs expected to be affected.

Representatives from the Goa Mineral Ore Exporters Association met with the state and central government on behalf of mine owners to relay concerns regarding the impact on the economy and the resumption of operations.

"We are evaluating probable methods and solutions including a review," Kalavampara said.

A Goa delegation of members of the Bharatiya Janata Party and the Indian National Congress, the two major Indian political parties, met with Nitin Gadkari, India's transport minister, earlier in March to relay concerns about canceling mining leases.

Nilkanth Halarnkar, congress member of the Legislative Assembly, expects mining in the state to be halted for more than a year, resulting in huge economic losses for Goa.

The transport industry is also feeling the strain of the ever-changing situation in Goa and is seeking more clarity. Nilkant Gawas, president of the All Goa Truck Owners' Association, said the government should provide more clarity on whether mining will be permitted or shut down completely.

The state exported about 50 million tonnes of iron ore per year before the 2012 ban, while the March 2015 resumption included a cap of 20 million tonnes.

Vedanta Resources PLC's Vedanta Ltd. subsidiary, the country's largest private iron ore miner, received the biggest chunk of the mining budget when operations resumed, an allowance of 5.5 million tonnes per year.

The company, which is controlled by billionaire Anil Agarwal, said in February that its mines in Goa will be affected by the judgement and it was evaluating the financial and operational impacts.

India's largest steel producer, state-owned Steel Authority of India Ltd., will not be affected by the ban, Santanu Ghosh, chief of communications for SAIL's raw materials division, told S&P Global Market Intelligence. The company sources most of its raw material from its own mines in the states of Jharkhand and Odisha.

Goa Foundation director Claude Alvares, a petitioner in the case, said it will take several years for mining operations in the state to resume, as leases will be costly and environmental clearances will be challenged.

As of March 15, US$1 was equivalent to 64.98 Indian rupees.