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BW Businessworld

Sesa Drops As Goa Temporarily Suspends Mining

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Shares in Sesa Goa and Sterlite Industries fell more than 5 per cent after Goa, a key iron ore producing state in India, temporarily suspended all mining activities.
 
Goa is India's second-biggest iron ore producer — with an output of more than 50 million tonnes — and exports almost all of it, making it the top exporter. If the ban continues for long, it could further dent India's shipments of the steelmaking ingredient. 
 
India used to be the world's No. 3 iron ore exporter, with most of its product heading to China. But a clampdown on illegal mining in 2010, and New Delhi's measures to keep output for domestic steel mills, slashed exports in half. The mining-suspension order came a week after the Supreme Court partially allowed mining in the neighbouring Karnataka following a ban of more than a year. 
 
"If the ban continues for long time, it could impact exports," said R.K. Sharma, secretary general of Federation of Indian Mineral Industries (FIMI), adding it was too early to estimate the fall in exports.
 
Sesa Goa Ltd, an Indian unit of London-listed Vedanta Resources Plc, gets most of its iron ore from mines based in Goa. Sesa shares fell more than 7 per cent after news of the suspension. Shares of non-ferrous metals producer Sterlite, which is set to merge with miner Sesa Goa to create Sesa Sterlite — the eventual umbrella unit for other subsidiaries of the Vedanta Group, were 4.77 per cent lower at Rs 93.80.
 
The move by Goa to temporarily suspend mining activities, effective Tuesday, came after an expert panel formed by the federal government found "serious illegalities and irregularities" in mining operations. Goa has not banned movement of iron ore already produced and stored at ports or in transit, the statement by the state government said. The state will form a verification and clearance committee to scrutinise operations before giving approval to resume mining, R.K. Verma, principal secretary at mines and geology, said in the statement.
 
(Reuters)