India’s Supreme Court has kept a ban on bauxite mining in hills in Odisha, considered sacred by residents, whose opinion it has ordered to be sought on whether digging would disrupt the environment or their livelihoods, Reuters reported.

The Supreme Court also allowed just nine more iron ore mines to restart in Karnataka.

The approvals will help domestic steel mills desperate for raw material, but there will still be no exports of iron ore, as the state government has not issued transport permits.

The court stripped about 49 mines of their leases because they had been mining illegally. Taken together, the mines had produced about a third of Karnataka's iron ore.

The Odisha mining project was planned to supply up to 150 Mt of bauxite to Vedanta Aluminium, a unit of London-listed Vedanta Resources and India’s largest producer of the metal, for a 1-Mt/a plant shut since December for lack of the raw material.

The project has drawn the anger of rights groups and highlights the difficult task Prime Minister Manmohan Singh’s government faces in balancing economic development with the need to cushion hundreds of millions of poor from the fallout.

Now, a village body, with help from the state’s high court, will have to decide within three months if it wants mining to go ahead. India’s environment and forests ministry, which has opposed the project, will then make the final decision.

India has the world's fifth-largest bauxite reserve of about 593 Mt, with the majority of that in Odisha.

India used to be the world's third-biggest exporter of iron ore, shipping about half of its annual output of around 200 Mt, mostly to China.

But a government clampdown aimed at curbing illegal mining in 2010, and steps to retain output at home, slashed exports to just over 30 Mt last year.

In Karnataka, the decision adds to the 18 mines that the top court had already allowed to resume operations and includes one mine operated by Vedanta-controlled Sesa Goa. They have all had to come up with detailed plans to meet environmental and security conditions. Karnataka was the country’s second-biggest producer of the ore before the ban, at about 45 Mt to 50 Mt.