Sesa Goa to begin exploration in Liberia mines this week

Liberia mines estimated to hold 1 bn tonne reserves

Press Trust of India / New Delhi Apr 26, 2012,
Vedanta group firm Sesa Goa will begin exploration at its Liberian iron ore project, later this week, that is estimated to hold reserves of over 1 billion tonnes, a top company official said.

Last year, the company had acquired 51 per cent stake in Western Clusters Ltd, that is developing the project for about $90 million (Rs 411 crore). This was the first overseas acquisition of the Vedanta group miner.

"We have got the licences for all the three blocks. First rig arrived last week and exploration will begin later this week," Sesa Goa Managing Director P K Mukherjee said.

He added the company has completed the aeromagnetic survey of the Liberian iron ore reserves and Sesa Goa's capital expenditure plan for the project will be known in next 2-3 months.

"We are bullish on it... Exploration is about to begin and we will get the idea about the reserves in 2-3 months," Mukherjee said, adding that "we would come to know the broad contours of the capex only by then".

Two days back, the Goa-based miner had said the resource base at the mines are much more than earlier estimated 1 billion tonnes.

Stating that the company is maintaining its guidance of first shipment from the project by March, 2014, Mukherjee said that investments in Liberia will be spread over 2-3 years.

Excluding Liberia, the company has kept a capex of Rs 600 crore for its existing and expansion activities in the current fiscal.

Besides, the iron ore miner has kept a production and sales guidance of 15 million tonnes (MT) from Goa in the current fiscal, the Sesa Goa MD said.

He, however, declined to put any numbers for Karnataka, where the company has a 6-MT mine in Chitradurga district but operations are closed due to an apex court imposed mining ban in the state.

"It all depends on what directions we get from the Supreme Court," Mukherjee said, adding that company can begin productions immediately as and when it resumes in the state.

Last year, the company added 68 million tonnes of reserves and resource, thereby taking its total mining reserve base to 374 MT.

"This was higher ever accretion for us and at our production capacity of 21 MT, this resource base can be sustained for 17-18 years," he said.

The iron ore miner's profitability was hit by the ban on mining and increased export duties, among other issue in last fiscal, where it reported a 36 per cent decline in its net profit to Rs 2,695.50 crore. Besides, its revenues were 10 per cent and production was down 27 per cent in FY'12.