Govt may halt Vendata expansion this week

Govt may halt Vendata expansion this week

New Delhi: The government is likely to halt this week London-listed miner Vedanta Resources’ plans to expand its alumina refinery in Orissa due to serious violation of environmental laws, government officials said on Wednesday.

If halted, the move -- which comes two months after the government rejected the firm’s plans to mine bauxite in Orissa state over environmental concerns -- would be another blow to Vedanta, already facing hurdles to a planned $9.6 billion acquisition of a stake in Cairn India.

Vedanta operates a one million tonne-a-year alumina refinery in Orissa and wants to expand its capacity by six times. The company’s project in Orissa is valued at about $9.5 billion.

In August, the environment ministry asked the company to explain why the green clearance given to its refinery should not be revoked after a probe found it violating laws, including sourcing bauxite from mines that did not have green clearance.

The company said last week there were no regulatory violations of any kind at its refinery in Orissa’s Lanjigarh.

The officials said Union environment minister Jairam Ramesh was likely to take a final decision on Vedanta this week.

“There is procedural violation of regulation in the refinery while there is serious and unambiguous violation in the expansion plan," a senior environment ministry official said.

That could mean the existing refinery may just manage to avoid punitive action while the expansion is completely halted, other officials said.

It is not immediately clear if a refusal of permission would kill all prospects of expansion or leave scope for the company to reapply for clearance after tweaking its plans.

A Vedanta official declined comment.

Some newspapers reported on Wednesday that the government had decided to scrap the expansion proposal.

Vedanta is among several top corporations, including South Korea’s Posco, whose projects face delay as a proactive environment ministry tightens rules that often brings it in conflict with other government ministries pushing for rapid industrialization.

A majority of a review panel recommended this week environmental clearances given to South Korea’s Posco for a steel mill in Orissa be cancelled because the project could violate forest laws.

The panel’s findings are not binding, and a final decision on what has come to be seen as a test case of India’s investment climate lies with the environment minister.