Vedanta Resources, the global diversified metals and mining company owned and controlled by Anil Agarwal, has recently stated that it would record an impairment charge of up to $600 million on its iron ore business in Goa, India.
Earlier in February, the Supreme Court of India passed an order to quash all iron ore mining in the southwestern Goa state. All mining permits and mining stopped from March 16 impeding the state from producing materials used in steel. Following the halt to all mining, Vedanta said that it would probably have to record a non-cash charge of $500-600 million net of taxes, or $700-800 million gross of taxes, on this account.
According to statement by Vedanta, “This is mainly related to mining reserve and would be reflected in the results for financial year 2017 to 2018. Further, the closure of Group’s iron ore business in Goa would not have any material impact on the Group’s profitability.”
The Goa industry was shut for over two years from 2012 following the Court’s action against illegal mining. An estimate suggested that the illegal mining has cost Rs. 350 billion to the government in lost tax. Prior to the ban, Goa had exported about 50 million tonnes a year and later, the Supreme Court later limited production in the state to 20 million tonnes a year. After the ban was overturned, strict rules were imposed on Vedanta to mine 5.5m tonnes a year.