April 18: The Supreme Court today allowed Sesa Goa and eight other iron ore companies to restart operations in Karnataka, 21 months after it slapped a mining ban in the state for environmental breaches.

It, however, ordered the closure of 49 mines, but lifted the embargo imposed by it on the grant of fresh mining leases in the state.

Last September, the apex court had allowed 18 mines that were classified in Category A (the ones with the least number of irregularities) to start operations.

In 2011, former Karnataka chief minister B.S. Yeddyurappa had to resign, following an indictment by the state Lokayukta for large-scale illegal mining.

On Thursday, a three-judge bench headed by Justice Aftab Alam allowed 63 of the 72 mines that were classified by the central empowered committee (CEC) in category B — ones with marginal illegalities — to resume operations.

Operations in seven other mining concessions in this category, which are located on the border between Andhra Pradesh and Karnataka, will remain suspended till the two states resolve a boundary dispute under the supervision of the Geological Survey of India.

Two other mining leases — granted to S.B. Minerals and Shanthalakshmi Jayaram — will remain suspended because the court did not accept their classification in category B when they clearly were above the threshold for violations.

The CEC justified this on the grounds that there were “complexities” in finalising survey sketches with respect to these two mining leases.

Rejecting the CEC’s argument, the court said the two leases should be classified in Category C for flagrant environmental violations.

The court accepted the CEC’s recommendation that the mining leases classified as Category C should be cancelled. These will be re-allocated after a transparent bidding auction process.

Following today’s Supreme Court verdict, 81 out of the 166 mines in Karnataka are now allowed to resume operations.

The resumption of iron ore mining in the state will also benefit JSW Steel, India’s third largest steel maker. JSW’s biggest plant is located at Vijaynagar in Karnataka.

The order will revive the fortunes of Anil Agarwal-led Sesa Goa. The firm’s mining business was badly affected when a ban was slapped on its operations in Goa.

The Sesa Goa stock surged to a high of Rs 154 on the BSE before dipping to Rs 150.65 at close, registering a gain of 0.87 per cent. The stock had declined 24 per cent in the past year against a 3.2 per cent fall in the benchmark Sensex.

JSW Steel surged to a high of Rs 745.90 but crumbled at close to Rs 716.90, registering a fall of 2.18 per cent.

The steel industry welcomed the decision to lift the ban on mining in Karnataka.

Seshagiri Rao, joint managing director and group CFO, JSW Steel, said the judgment would not only provide a breather to the steel industry in the region but also help to provide direct and indirect employment in this sector.

“As the Indian economy is expected to get back to the growth mode, the opening up of mining will enable raw material linkages for further investments in the steel sector in Karnataka,” he said.

Bhavesh Chauhan, senior research analyst at Angel Broking, said it would take at least six months to achieve meaningful production of iron ore in Karnataka.

Sesa Goa’s mines in Karnataka have a production capacity of 2.3 million tonnes. The resumption of mining in Karnataka will benefit the merged entity Sesa Sterlite, Chauhan added.

R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries, said the judgment with respect to category A and B mines were welcome. But the decision to cancel the leases of category C mines was disappointing.

Sharma told The Telegraph that only about 50 to 60 mines will come into operations. He indicated that production from the rest of the mines were held up because of various issues.