|
Mumbai, Sept 11: Shares of two Vedanta group companies — Sesa Goa and Sterlite Industries (India) Ltd — today tumbled on the stock exchanges after the Goa government suspended mining operations from Tuesday.
Sesa Goa is the country’s largest producer and exporter of iron ore and it is feared that the mining suspension could impact its revenues. Sesa Goa has mining operations in Karnataka and Goa but most of its iron ore is sourced from Goa.
Reflecting the investor apprehension, shares of Sesa Goa tumbled nearly 6 per cent, or Rs 9.85, to Rs 159.80 after opening lower at Rs 161.
The Sterlite Industries scrip also witnessed selling pressure, closing with a loss of 4.43 per cent at Rs 93.95. Sterlite is due to be merged into Sesa Goa to form Sesa Sterlite.
In a press statement, Sesa Goa said it had stopped extraction of iron ore from all its mines in the state. Sesa Goa added that it would submit all relevant documents to the government authorities for scrutiny at the earliest in order to ensure early restart of operations. The company, however, did not say what impact the suspension of mining in the state would have on its revenues.
On Tuesday, the Goa government issued a notification asking all the 90 mines to suspend operations in the state following the submission of the Justice M B Shah Commission report which claimed that none of the mines in the state had an approval from the National Board for Wildlife.
Analysts believe the suspension is temporary and that it might lead to some uptick in global iron ore prices.
According to Jagdish Agarwal, analyst at Emkay Global Financial Services, the impact is likely to be short-lived on Sesa Goa. The company has a mining capacity of 14.5 million tonnes in Goa. With the enforcement of the current ban, Sesa Goa’s domestic operations would come to standstill. He, however, noted that mining operations during the monsoon period were always minimal on account of handling and transportation bottlenecks.
“Sesa Goa is better placed as compared with its peers (unorganised sector) and is likely to get permissions to resume operations soon,” Agarwal said. He revised downwards Sesa Goa’s iron ore volume assumptions to 10.7 million tonnes from 13.2 million tonnes in this fiscal. This would result in an 8 per cent drop in earnings per share (EPS) to Rs 40.1 in 2012-13.
|
