India's Sesa says mining cap may lead to job cuts

NEW DELHI, March 11 Tue Mar 11, 2014 4:23pm GMT

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NEW DELHI, March 11 (Reuters) - Indian metals producer Sesa Sterlite said it may have to cut jobs if a top court sets a limit on the amount of iron ore it can mine in the state of Goa when and if it allows mining to restart in what used to be the country's top exporter.

India's Goa state expects to resume mining before the monsoon that starts in June, its chief minister said last month. A panel appointed by the Supreme Court is due to give its recommendation on the issue by March 15.

A blanket ban on production and exports imposed in late 2012 to stop illegal mining, coupled with a similar step in neighbouring Karnataka, have cut India's exports of the ore by 85 percent, or 100 million tonnes, over the past two years.

"If our production is set at 70 percent of our current capacity, for example, we'll have to look at reducing our manpower by 30 percent and so on," Aniruddha Joshi, a vice president at the company, said, adding that making redundancies was just one option. "Options available would be firing people, allowing people to retire and reusing them in other operations."

Sesa Sterlite, a unit of billionaire Anil Agarwal-controlled Vedanta Resources Plc, employs about 3,200 in Goa and had a capacity to produce 14.5 million tonnes of ore before the ban.

Sesa Sterlite sent a notice to lay off 1,050 employees in Goa, a proposal that was rejected by both federal labour ministry and the state's labour department.

The mining restrictions in Goa and Karnataka is already estimated to have cut 200,000 jobs, according to industry group the Federation of Indian Mineral Industries. Some companies have shed their iron ore businesses too.

Although the mining ban in Karnataka was lifted in April last year, only a few mines have reopened pending forest clearances, delays in renewal of leases and other issues.

But Goa's chief minister said in February that once the Supreme Court gives its go-ahead, the state will ensure other hurdles are cleared sooner.

Goa could produce 25 million tonnes of iron ore per year on a "sustainable basis", Manohar Parrikar had said. Its exports hit about 50 million tonnes in the 2010-11 fiscal year, with most of that going to China.

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