Iron ore mining will recommence in the Indian state of Goa after the Supreme Court of India lifted a 19 month ban on Monday.
The court has imposed a 20 million tonne cap on extraction of the resource, as a panel of experts appointed by the court said in March that Goa can sustain the extraction of 27.5 million tonnes of iron ore each year, but suggested 20 million as the permissible limit.
The Supreme Court of India introduced the moratorium on iron ore mining to combat illegal ore extraction in the area, as well as the tax evasion and pollution involved.
“This will bring the mining industry back to Goa,” he said.
“It will create employment and boost the economic activity.”
Industry analysts in India have said that although this is a positive move for the iron ore sector and the local economy, it will be months before mining will resume, due to several factors including the monsoon season which ends in September.
On the production cap, Bahanushali said that the 20 million tonne limit has been set to extend mine life, to keep the mines operational for the next 20-25 years.
The additional supply from Goa to world markets will increase the expected surplus of iron ore from Rio Tinto, BHP Billiton and Vale, in the face of slackening demand in China.
Prior to the ban India was the third largest exporter of iron ore in the world, and since has slipped to tenth place.
Analysts have suggested that economic concerns of oversupply and falling demand, as well as new government controls in China to reduce industrial pollution, mean that China may not be as eager as it was in the past to buy the lower quality iron ore from India.