Vedanta mulls options for iron ore workers after shutdown
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?”