Vedanta mulls op­tions for iron ore work­ers af­ter shut­down

Financial Chronicle - - PLAN, POLICY - KR­ISHNA N DAS

NEW DELHI: Vedanta Re­sources is con­sid­er­ing op­tions in­clud­ing lay-offs for some of the 2,000 em­ploy­ees of its iron ore busi­ness in south­west In­dia that was shut down by a 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.

Lon­don-listed Vedanta, con­trolled by In­dian bil­lion­aire Anil Agar­wal, has come un­der scru­tiny since po­lice opened fire on pro­test­ers, killing 13, at a protest against its cop­per smelter in Tamil Nadu last month. The smelter has since been shut down.

In Goa, in­dus­try lead­ers and the two sources close to Vedanta said min­ing was un­likely to re­sume within 3 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 March it was likely to record an im­pair­ment charge of up to $600 mil­lion fol­low­ing clo­sure of the iron ore busi­ness. But it said, the Goa ore busi­ness would not have “any ma­te­rial im­pact” on the over­all prof­itabil­ity of the group. One of the sources close to the firm said Vedanta typ­i­cally does not fire work­ers, but keep­ing on all staff with­out gen­er­at­ing sales would be dif­fi­cult. Sources did not give any time­line for any ac­tion, but added the com­pany might also of­fer to re­tain them with­out pay.

In re­sponse to Reuters ques­tions on its plans for the work­force, Sangeetha Chakravarthy, a spokes­woman for Vedanta’s Goa iron ore busi­ness, said: “We have moved some of our per­son­nel to other units across In­dia, how­ever that is a small frac­tion of the to­tal work­force im­pacted by the min­ing ban. As of now, em­ploy­ees are be­ing paid. But this is not in­def­i­nitely sus­tain­able in the ab­sence of any rev­enue.”

The firm, the big­gest miner in Goa with an an­nual pro­duc­tion of 5.5 mil­lion tonnes be­fore shut­down, said it spends Rs 120 mil­lion ($1.77 mil­lion) a month on salaries of em­ploy­ees in the state. 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.

Sev­eral small, un­listed firms were also af­fected by the ban. “The court or­der came as a rude shock but firms by and large have re­tained their di­rect em­ploy­ees, in the hope that things will be worked out,” said Glenn Kalavam­para, sec­re­tary of the Goa Min­eral Ore Ex­porters As­so­ci­a­tion. “But for how long can they keep them?”

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