India's top court lifts iron ore mining ban in Goa

India's top court ruled Monday that iron ore mining can resume in the mineral-rich state of Goa but capped annual output, ending a ban imposed to stop environmental damage.

India was once the third-biggest exporter of the raw material, used to make steel, shipping some 100 million tonnes abroad annually, but a ban was imposed in September 2012 to prevent illegal mining and environmental destruction.

The court said a maximum of 20 million tonnes could now be mined annually and ordered no mining within a kilometre (mile) of parks and wildlife sanctuaries in the scenic coastal state, which is also a top tourist destination.

It also asked the government to identify other eco-sensitive areas that should remain off limits.

The annual amount the court said it would permit on Monday is half the 41.2 million tonnes mined in 2010-11.

Shares in Sesa Sterlite, a unit of Britain-based resource giant Vedanta controlled by billionaire Anil Agarwal, jumped by nearly five percent on the back of the ruling.

Sesa has a significant iron ore mining presence in Goa.

A sharp rise in iron ore mining in Goa from 10 million metric tonnes per annum in 1980 led to a "massive negative impacts" on air, water, and soil in the state, the court noted.

Last year the Supreme Court allowed more than 100 mines in the southern state of Karnataka to resume operations after a suspension of more than a year due to environmental concerns.

But only around 25 mines in Karnataka have restarted production, according to the Federation of Indian Mineral Industries, which expects iron ore output to grow by around 14 percent this fiscal year.

Scandals in the mining sector have shone a light on the government's management of natural resources and dubious connections between regulators, politicians and business owners.

A federally-appointed commission of inquiry by Justice M.B. Shah said in a 2012 report Indian mining operators had become "richer and richer" as they plundered reserves and allowed an "unrestricted, unchecked and unregulated export of iron ore to China".

The Shah Commission said companies in Goa exported 350 billion rupees ($6 billion) of illegally mined ore -- accusations denied by miners.

The green light to resume mining comes as China's economy has slowed and there is a global surplus of iron ore.

Questions remain as to whether China, which has passed new environmental protection legislation, will be as eager a buyer of lower grade Goan ore as in the past.

The Supreme Court bench, led by Justice A.K. Patnaik, also said the expert panel must submit a report within six months on the subject of the annual cap.