Former Rio Tinto chief executive Tom Albanese says his new business, Indian mining giant Vedanta Resources, is gunning to restart iron ore production as soon as October, after India last week cut its duties on lower-grade exports of the commodity.

The possible return of one-time exporting giant India to the seaborne iron ore export market comes despite claims from Andrew Forrest that no new tonnes outside the major producers will come into production unless the price returns to above $US100 a tonne.

India's paring of its export duty from 30 per cent to 10 per cent, effective June, has made restarting production profitable for some miners in the state of Goa, even at current prices.

Mr Albanese, who was made chief executive of the London-listed Vedanta about a year ago, told Fairfax Media that he welcomed the export duty change, and the Indian mining group would now look to restart Goa production in October, at a run rate of 5.5 million tonnes a year.

"While Goan ores are lower grade than that desired by the Indian steel industry, they have had a long standing market in China," he said.

"Following some additional local and federal environmental permit related matters, we hope to resume production after the monsoon season in October. Obviously, at current low seaborne prices, we have a lot of work to do to ensure our costs are below our net realised prices. With the current mining cap in place, we would look to be mining at about 5.5 million tonnes a year."

LANGUISHING SECTOR

India's domestic iron ore sector has been languishing since the Supreme Court ban on mining across three states was issued four years ago. The Supreme Court's ban in Goa was lifted about a year ago, with the condition that mining would be capped at 20 million tonnes a year. But the country's export duty had previously been too hefty to justify exporting.

Before the ban was slapped on, Vedanta was planning to spend $US500 million ($638 million) to double its then production capacity in Goa to 36 million tonnes.

The industry expects the 20 million-tonne cap will be lifted or adjusted up if the resumption of exporting goes well. Goa was the country's largest exporter of iron ore before the ban.

For smaller, higher-cost players, the wait to return to production will hinge on whether higher prices can incentivise them back online.

Rio Tinto iron ore chief executive Andrew Harding told the Financial Review that "we shouldn't make the mistake of thinking that other countries don't want to grab our market share".

"If iron ore producers exit the market, other suppliers will fill the market void left behind," Mr Harding told the Financial Review.

"India could come online again at a moment's notice. They have previously had a large and viable iron ore export sector and there's nothing to suggest that they won't again."

GAP 'FALLACY'

Mr Forrest last week slammed Rio and BHP Billiton's argument that if they stop increasing production, others will simply fill the gap as a "fallacy".

"I would like to address the fallacy that multi-national companies (Rio and BHP) are protecting Australia's interests by expanding on the false premise that if we don't do it, someone else will," he said last week.

"We are talking about the highest barrier of entry resources industry in the world – you can't switch it on and off."

He also told ABC Business this week that "beneath $100 iron ore … if you look out there in iron ore expansion world, all the lights are off".

Industry modelling puts the break-even for the lower cost Goa producers at roughly $US53 a tonne, and even the slimmest of margins will encourage exporting to China. The reduced export duty rate applies to ore at a grade lower than 58 per cent.

India has swung from one of the world's biggest exporters of iron ore to a net importer in just four years, largely because of the Supreme Court ban on mining across three states. In 2011, India shipped about 100 million tonnes. In the current financial year it is tipped to import about 12 million tonnes of the commodity.

UBS commodities analyst Dan Morgan says India's iron ore industry is a "wild card that needs to be closely monitored".

"It is probably too early to make a call, people have been disappointed in the past with India trying to come back from some of this disruption."