Interview - Vedanta says will work to lift cap on India iron ore output

By A. Ananthalakshmi

SINGAPORE (Reuters) - India-focused Vedanta Resources Plc (VED.L) will aim to lift a court-imposed cap on its iron ore output in Goa, the country's top state for exporting the commodity, as it prepares to resume mining there in October after a three-year lull.

A mining ban that had been in place in Goa since September 2012 was lifted last year, but the resumption of operations was delayed while the government gave environmental clearance.

The Supreme Court imposed a production cap of 20 million tonnes, of which Vedanta has been allocated 5.5 million tonnes.

"We believe that we can mine at much higher rates and we look forward to working with the government on lifting the cap," Vedanta Chief Executive Tom Albanese told Reuters on the sidelines of an industry conference. He is also head of the company's Indian unit, Vedanta Ltd (VDAN.NS).

Albanese said it would be up to a court-appointed panel to determine how much more Vedanta could produce.

Increased supply from India would pressure prices for the steelmaking material that have recovered from a decade-low hit in April, but are still down more than 50 percent from last year's peak.

India said last month it would cut export taxes on low-grade iron ore from Goa to 10 percent from 30 percent, in a move aimed at making it more feasible for miners to sell overseas amid the plunge in global prices.

"We do feel that the circumstances on the ground in Goa, with proper operating practices should support an industry much larger than 20 million tonnes per year," Albanese said.

Goa exported about 50 million tonnes of iron ore a year before the ban was imposed in 2012 as part of a clampdown on illegal mining.

The state produced low-quality iron ore, with iron content of less than 58 percent, that was shipped mostly to China as Indian steelmakers prefer higher grade material.

But more Chinese mills have opted for high-grade iron ore following the drop in prices.

Albanese believes there is still Chinese appetite for Goan ore, but said it would be tough to recover market share.

"Even in this current market where the buyer has a lot of choices ... I do believe we will be able to find some market for our material," he said.

"But I do think it's important for Indian policymakers to recognise that we have lost a huge amount of market share over the past three years with these mining closures that it will be very difficult to recover from."

(Writing by Manolo Serapio Jr.; Editing by Joseph Radford)