* Recommended cap is less than half peak output
* But still likely to feed global iron ore surplus
* Supreme Court expected to approve suggested limit
(Adds comment, detail)
NEW DELHI, March 26 Iron ore production in Goa,
usually India's top exporting state of the raw ingredient for
steel, should be capped at 20 million tonnes a year when an
18-month old mining ban is lifted, a court-appointed panel said,
less than half peak output and curbing potential shipments to
key buyer China.
But even with that limit, additional supply from Goa could
further pressure iron ore prices in a global market expected to
be in surplus this year as top miners boost output and Chinese
India's Supreme Court is likely to implement the
recommendation from the panel, which it appointed in November to
look at lifting the ban that was imposed to curb illegal mining.
The court earlier allowed the sale of about 15 million tonnes of
iron ore that had sat in a stockpile.
The panel also said in a report seen by Reuters that Goa
should consider setting up a state iron ore mining company to
minimise environmental damage by private miners.
While analysts expect a gradual recovery in Indian iron ore
exports over the next two years, the pace is likely to be modest
and far from a record high of more than 117 million tonnes set
in the fiscal year through March 2010.
A ban on production and exports imposed in September 2012 in
Goa, coupled with similar curbs enforced earlier in neighbouring
Karnataka, have sliced India's iron ore exports by 85 percent,
or 100 million tonnes, over the past two years.
Goa's chief minister said in February he expected mining to
resume before monsoon season starts in June, and that the state
could produce 25 million tonnes per year on a "sustainable
Sesa Sterlite, India's largest private sector iron
ore mining company, said earlier this month it might have to cut
jobs if production was limited by the court.
A Sesa Sterlite official, who did not want to be identified,
said the production cap was likely to be temporary as the panel
had not had adequate time to study mining's impact on the state.
"Till the scientific study by this committee is completed,
which may take about 12 months more, the mining activity as
directed by the court will be strictly monitored and regulated"
the panel said.
India was once the third largest exporter of iron ore, but
has now slipped to No. 10.
(Reporting by Krishna N Das; Editing by Malini Menon and Joseph