The temporary suspension of iron ore mining ban in Goa is unlikely to have a major impact on Sesa Goa and other miners in the state as mining activity is anyway at its minimum during the monsoon, and analysts do not expect the ban to last too long.
The second quarter is the slowest quarter for mining companies as monsoons make it difficult for mining operations to continue. Companies, including Sesa Goa, slow down mining during these months and even the sales take a slight hit. This is a seasonal phenomenon.
Moreover, with two thirds of the quarter already over, the financial impact of the mining suspension on Sesa Goa would be contained.
The government has made it clear that all ore that is already mined or sent to the ports for transit will not be affected by the ban. Therefore, companies can sell or ship iron ore that they have already mined out.
Analysts don’t see this ban on mining continuing for a long time as the mining companies have been asked to submit a report in a week’s time.
Till last year, India was the world’s third largest exporter of iron ore with nearly 100 million tonne and half of it came from Goa making it the largest exporter state of iron ore in the country.
The Karnataka iron ore mining ban cut exports completely from the state for over a year but Goa continued its business as usual.
With this temporary mining ban, the unorganised iron ore mining sector in Goa and big companies like Sesa Goa are likely to get marginally affected.