NEW DELHI (Commodity Online): India's environment and forests minister Jairam Ramesh rejected the environment clearance accorded to state-owned Orissa Mining Corporation (OMC) to mine bauxite in Niyamgiri Hills on December 11, 2008 for supply to Anil Agarwal-promoted Vedanta Aluminium Ltd's refinery in Lanjigarh.

The order, signed by Ramesh, not only suspended the initial approval for a six-fold expansion of the refinery, it also issued a show-cause notice asking why the Ministry should not cancel the environmental clearance for the existing 1 million tonne plant.
This decision will badly hit the mining projects of Vedanta in India and the entire mining industry is in a shock now.

The environment ministry's decision will hurt Vedanta's copper-producing arm of Sterlite, which has a roughly 30% stake in Vedanta Aluminum Ltd., the unit that was to operate the Orissa mines.

Shares of Sterlite, a unit of London-listed Vedanta, fell as much as 2.4% during the day but recovered losses and were trading up 1.9% by early afternoon Wednesday.

Vedanta had been waiting for environmental clearance for the project. Earlier this month a federal panel told the environmental ministry that the project would hurt the area's Dongria Kondh tribal community and destroy seven square kilometers of forest and recommended that the government deny environmental clearance. Vedanta has said it has not violated any regulations.

However, Vedanta Resources is not quitting from India, in spite of the fact that government rejected to give clearance to its bauxite mining project in Orissa.

Chief Minister of Orissa, Naveen Patnaik also expressed his disgrace over Environment Minister Jairam Ramesh's rejection of clearance to Vedanta's mining project.

I hope this is not politics, said Patnaik and added that the ministry should have given the clearance as the mining project would increase the job opportunity in the state.

He also informed that the state government would inquire that on which ground, the ministry rejected the clearance and would take correct and appropriate steps on the matter.

The Planning Commission of India said the government's refusal to accord environment clearance to Vedanta's aluminium project in Orissa would not tarnish India's image as an investment friendly destination.

I don't know much about Vedanta, but the development will not undermine India's image as investment friendly nation, Planning Commission Deputy Chairman Montek Singh Ahluwalia said.