This was following allegations of irregularities and e cancellation was recommended by the Industries Department, Chief Minister Oommen Chandy said.
The permission was granted by the previous CPI-M-led LDF government.
The government will analyse all aspects of the issue and then take a decision regarding whether to conduct an inquiry into the issue, said Chandy.
Centre too had ordered to ban mining in the area.
The proposed mining site has been demarcated as ecologically sensitive area in the Kasturirangan report on Western Ghats conservation.
(WIth PTI inputs)