Mumbai London-listed Vedanta’s iron ore mining arm in India, Sesa Goa, is likely to produce only a third of its fiscal 2012-13 production target of 15 million tonne from Goa as the company faces a lengthy spell of non-production in the state. In September, the Goa government first announced a ban on iron ore mining due to environmental concerns raised by the Justice MB Shah commission. However, on October 5, the Supreme Court extended the ban for a further one month till the Central Empowered Committee submitted its report. Brokerage houses now expect the ban to last for at least a year. Sesa Goa has a capacity to produce slightly more than 15 mt of iron ore. Last year, it produced 12.7 mt mainly hampered by transportation hurdles in the state. While the company did not comment on the possible production this year, brokerages estimate that the company will produce anywhere between 6 mt and 8 mt of iron ore from both Goa and Karnataka during the fiscal. “We hope the ban is lifted expeditiously and we are ready to submit our environmental clearances for revalidation if necessary,” a senior official of Sesa Goa said on condition of anonymity. “We also hope to restart some of our operations in Karnataka by Q3 and Q4, which would contribute around 2 mt to the annual production.” Last year, the company had produced 13.8 mt of iron ore, of which 12.7 mt came from Goa and the rest from Karnataka. “Due to the ban in Goa and likely downward revision in mining limits, we have cut our volume estimates by 60% for FY13,” said Prasad Baji, senior vice-president with Edelweiss Securities, a Mumbai-based brokerage, in a research note. “Volumes are expected to pick up in FY14 post restart of Karnataka mines and a potential end of the mining ban in Goa.” The SC also ordered a ban on movement of stockpile, further denting Sesa Goa’s sales plans for the quarter. “The expectation was that the ore in the stockpiles would be allowed to be exported,” said another senior Sesa Goa official on condition of anonymity. “But the ban on movement of stockpile has made a big dent in our targeted sales volumes, which will definitely impact revenues.” “We expect Sesa’s revenue to decline 57% year-on-year in the second quarter of fiscal 2012-13 due to lower sales volumes,” Mumbai-based brokerage Motilal Oswal stated in its earnings preview report published on October 8. Motilal Oswal, too, has cut production estimates to 7.9 mt for the year compared with 14.7 mt predicted by them earlier this year. Goa produced 20% of India’s iron ore last year, of which nearly 95% was exported. The state produces mainly low-grade iron ore and the domestic industry consumes a minimal amount for making sponge iron. Citi Research, a division of Citi Global Markets, said in a report dated September 21 that even while domestic steel industry won’t be affected, availability of iron ore will come down in the global markets. “It is unclear how long the process of obtaining fresh environment clearances is likely to take,” Citi Research said in its note. “If exports out of Goa do not resume in the current year, India’s exports will be less than 30 mt.” Despite the problems, Sesa Goa’s shares have rallied back from a six-month low of R159.8 on September 12 after the initial announcement of the mining ban to close at R171 on Monday, down 0.58% over the previous close of trade. Brokerages say that the shares remained strong because of Sesa Sterlite merger, which will de-risk the company’s iron ore business with other profitable verticals like zinc and oil.