Sesa to Restart Karnataka Mining, Boosting Iron Ore Supplies

India’s top court today allowed Sesa Goa Ltd. (SESA) and eight other iron ore companies to restart operations in Karnataka, 21 months after imposing a mining ban in the southern state for environmental breaches.

The Supreme Court, which had earlier allowed mines with the least number of irregularities to resume, today granted permission to those with a higher number of breaches. The permits of mines with the most number of violations were canceled, according to a ruling by a three-judge panel headed by Justice Aftab Alam.

Restarting the iron ore mines will ease raw material supplies to the mills in the southern state, including JSW Steel Ltd. (JSTL), India’s third-largest steelmaker. JSW’s biggest plant is located at Vijaynagar in Karnataka. The order will also allow Sesa, owned by billionaire Anil Agarwal, to revive its mining business more than six months after a ban also halted its operations in Goa, where it is based.

Shares of the company extended yesterday’s gains, rising as much as 3.2 percent to 154 rupees. The stock has declined 24 percent in the past year, compared with a 3.2 percent fall in the benchmark S&P BSE Sensex. JSW shares gained as much as 1.8 percent to 745.90 rupees.

Mining in the Bellary region of Karnataka was banned in July 2011, and the court extended the ban to two other iron ore- rich regions in the state the following month as it probed violations of environmental norms. The court subsequently allowed state-run NMDC Ltd. (NMDC), the nation’s biggest miner, to extract as much as 1 million tons of ore a month and ordered all sales to be made through online auctions.

On Sept. 3, the Supreme Court allowed 18 iron ore miners in the state, with capacity to produce 7 million tons annually, to resume operations. Until last month, 10 mines had been restarted in the state.

To contact the reporters on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net; Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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