Vedanta Resources is now considering options including layoffs for some of the 2,000 employees of its iron ore business in Goa that was shut down by Supreme Court, two sources said, as it struggles with a series of setbacks in the country.
The Supreme Court in February cancelled all iron ore extraction permits in Goa and ordered mining to cease from March 16 on environmental and other concerns. The state is known for its low-quality iron ore exported to countries such as China.
In Goa, industry leaders and the two sources close to Vedanta said mining was unlikely to resume within the next three years at least, as the state would have to conduct a fresh survey of its iron ore reserves before auctioning mines and seeking environmental clearances to operate them.
Vedanta said in late March it was likely to record an impairment charge of up to $600 million following the closure of the iron ore business. It added, however, that the Goa ore business would not have “any material impact” on the overall profitability of the group.
One of the sources close to the company said Vedanta typically does not fire workers, but keeping on all employees without generating sales would be difficult. The sources did not give any timeline for any action but added the company might also offer to retain them without pay.
The company, the biggest miner in Goa with an annual production of around 5.5 million tonnes before the shutdown, said it spends Rs 1.20 crore a month on salaries of its employees in the state.
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Prasanna Acharya, head of Goa’s Directorate of Mines and Geology, was not immediately available for comment, his office said.
Chakravarthy said Vedanta’s Goa employees had been told not to report to work but added the company had retained its workforce during previous court and government-imposed mining bans between 2012 and 2015.
Environmental activists and some locals are also opposed to its alumina refinery in the eastern state of Odisha. Vedanta denies it is in breach of any environmental rules and says it adheres to international standards of sustainability and corporate governance.
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