Will start production from Karnataka mine in May: Sesa Goa

Iron ore miner Sesa Goa is confident to start production at its Narrain mine located at Chitradurga in Karnataka by May, following a Supreme Court order issued today, which lifted one and half year long mining ban in the state.

Supreme Court today allowed 63 mines in category A and B to resume operations subject to fulfillment of rehabilitation and resettlement norms. The court also lifted the embargo on grant of fresh mining leases in the state. The apex court had earlier allowed 18 mines from Category A to resume operations. 

"We have to get the forest clearance from ministry of environment and forest and we are expecting in a matter of days because a lot of process has been already gone through and there are last one or two processes we have to go through. So, we are very hopeful that by next month in the month of May we will be able to start production," P K Mukherjee, Managing Director, Sesa Goa told CNBC-TV18 today.

Also read: SC verdict will not give major relief to Sesa Goa: Centrum

Supreme Court order comes as relief for Sesa Goa as most of its operation in Goa are also shut. While the company may be able to resume mining, it will not be able to utilize the maximum potential of the mine due to output cap prescribed by the apex court.   

Narrain mine's maximum capacity is 6 million tonne per year, however Sesa Goa is allowed to produce only 2.29 mln tn. In earlier decision the Supreme Court had stipulated that a maximum of 25 million tonnes of iron ore can be extracted annually from Bellary district and 5 million tonnes from the districts of Chitradurga and Tumkur.

Nevertheless, Vedanta Group company is eager to resume its operation and is also enthusiastic for applying new mining licenses as and when decides to distribute them in Karnataka.

Below is the verbatim transcript of the interview

Q: Its been difficult two years for you, there is some relief that has come in from the Supreme Court as far as Karnataka is concerned. The Supreme Court has set the mining cap at about 2.2 million tonne per annum, your capacity is about 6 million tonnes per annum. So, what happens then to your remaining capacity how do you recover?

A: Remaining capacity we cannot operate, that is very clear, 2.29 million tones to be precise. However in the judgement itself Supreme Court has very clearly stated that in case there is any change in the reserves and resource situation of the mines and the dumping area available for the mines and the evacuation capacity available for the mines, if any changes are there then this capacity can be revisited.

Q: So what would entail a review of that mining cap?

A: If there is any change in any of these three parameters then definitely the lessee can ask for a review of this capacity to the appropriate authorities including the ministry of environment, forest. I have to go through that order exactly to whom we have to go. But Supreme Court has categorically stated that.

Q: But are you hopeful of a review given the context that you are operating in? Do you believe that if you were to seek a review you will be granted a relief?

A: Lets us not immediately start building on that. Let us first resume the production and for some time lets us produce and bring normalcy in the mind of the workers, employees and everybody and then we will revisit this particular point at the proper time.

Q: By when do you expect to actually be able to start operations because our understanding is that the forest clearance by the environment ministry is still pending? By when do you expect the forest clearance to come in, by when do you hope to start operations?

A: We are not thinking in terms of years or months. We are thinking in terms of days. We have to get the forest clearance from ministry of environment and forest and we are expecting in a matter of days because a lot of process has been already gone through and there are last one or two processes we have to go through. So, we expect it in a matter of days. So, we are very hopeful that by next month in the month of May we will be able to start production.

Q: In terms of new mining licenses are you going to be looking at the possibility of applying for any new mining licenses? Is that going to be a priority for you at this point?

A: Yes definitely. Particularly we have invested two years back in Bellary Steel Assets at Rs 200 crore plus, definitely we would like our growth trajectory to go through the value addition route in Karnataka. We will definitely apply for more mining leases.

Q: Can you give us a sense of how many more licenses you are likely to apply for and by when you hope to start that process?

A: These things cannot be predicted just like that. There is a process of mining lease given by the state governments. So, that process one has to go through and one has to see which are the areas accordingly it has to be worked out.