September 08, 2008

Supreme Court rejects Vedanta bauxite mine plan in Orissa

It is reported that Vedanta Resources’ plan to operate a USD 900 million refinery in Orissa has hit a fresh obstacle after India’s Supreme Court set new conditions for the project.

The Supreme Court refused to let the project in Orissa go ahead in its present form on the grounds that it could affect sustainable development and asked Vedanta to come back with a new plan. The court was hearing the case after opponents challenged Vedanta’s plan, saying it would destroy hills regarded as sacred, displace local people and ruin the rich biodiversity of the area.

The Supreme Court said that Vedanta would have to give money for forest destruction, wildlife management and tribal development totaling around USD 180 million. Other conditions would include handing over 5% of pretax profits annually from its mining projects across India to the Orissa government. The order said that Vedanta would also have to set up a special purpose vehicle to ensure that environmental regulations were met. It added that Vedanta must file an interim application within 8 weeks saying if it agreed to the conditions and the Supreme Court would reconsider the project.

It is noted that Vedanta has been fighting for 3 years to obtain clearance for open cast mining of vast deposits of bauxite in the densely forested Niyamgiri hills to feed the USD 900 million alumina refinery it has built nearby.

Vedanta’s battle to mine bauxite to feed the refinery in forests considered sacred by indigenous people has been seen as a test case in India, pitting industrial development against the interests of local inhabitants and the environment.