Vedanta's Niyamgiri project shown red light

The Environment Ministry rejected Vedanta Resources' application for a Stage II forest license for its mining project. Shares of Sterlite Industries Ltd. slid on the BSE today after the Union Ministry of Environment & Forest (MoEF) rejected environment clearance by the metals company to mine bauxite in Niyamgiri hills of Orissa.

At 13:10 (IST), Sterlite was at Rs 151, down Rs7.20 or 4.5% over the previous close. It had earlier been as low as Rs150.90 and as high as Rs159.35. Close to 2.8mn shares changed hands on the counter.

Shares of Vedanta Resources, the London-listed holding company of Sterlite, Sesa goa and Hindustan Zinc, were down over 4% today, at 1,949 GBP.

The MoEF rejected Vedanta Aluminium's application for a Stage II forest license for its mining project.

The MoEF also said that it was studying violation of forest laws in Niyamgiri by Vedanta Aluminium and was examining a possible penal action against the company.

The MoEF also decided to issue a Show Cause Notice to Vedanta Aluminium for its alumina refinery.

Environment Minister Jairam Ramesh told reporters in New Delhi today that there has been a very serious violation of Environment Protection Act, Forest Conservation Act and the Forest Rights Act.

"There have been no emotions and no politics and no prejudice involved in this report. I have taken this decision in a proper legal approach,” he said.

The Environment Minister announced the decision on the basis of the report submitted by a key government panel on forest clearance.

On Monday, Orissa Chief Minister Naveen Patnaik met Prime Minister Dr. Manmohan Singh and discussed the status of various projects facing delays in the state.

But Ramesh said he did not discuss the Vedanta project with Patnaik and didn't give any assurance on the project.

The Forest Advisory Committee (FAC) had submitted a report to Ramesh after reviewing the suggestions given by the N.C. Saxena panel, seeking a ban on the Vedanta mining project in view of various violations by it at the site.

The FAC has asked the Environment Ministry for a temporary withdrawal of in-principle environment clearance given to the Vedanta's mining project.

The Saxena report has citied several violations of the in-principle environment clearance given to Orissa Mining Corp. in 2008, including non-compliance with the provisions of the Forest Rights Act.

The committee believes that the Vedanta project endangers nearly 7500 square km of forest land, and that it violates tribal forest rights. The area is home to the Dongria Kondh, a primitive tribal community, who have been opposing Vedanta's plans tooth and nail.

The FAC report stated that government officials colluded with Vedanta to allow blatant and widespread violations of forest and environmental laws.

The Saxena panel also says that Vedanta Aluminium has illegally occupied at least 26 hectares of village forest land within its refinery, set up at the base of the Niyamgiri mountain.

India Infoline News Service