Vedanta setback as India rejects mining plan

India yesterday rejected a plan by UK-based mining group Vedanta Resources to mine bauxite in an eastern state over environmental concerns, a blow to the firm already facing hurdles to a planned £6.2bn energy deal in the country.

The decision comes after about four years of a global campaign against Vedanta's plan to mine in Orissa state that the government says could affect large swathes of forested hills considered sacred by indigenous tribes.

Vedanta set up a one-million-tonne alumina refinery in Orissa in 2008 which was running on bauxite from a neighbouring state while it awaited a mining lease closer to the plant to help cut operating costs.

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Environment Minister Jairam Ramesh said: "There is no emotion, no politics, no prejudice ... I have taken the decision in a purely legal approach."

Ramesh also asked Vedanta to explain why its permit for the alumina refinery should not be cancelled because it was taking bauxite from mines that did not have green clearance.

The blow comes as Vedanta seeks to buy a majority stake in Cairn India from its UK-based parent Cairn Energy, although India's trade minister said yesterday state-run Oil and Natural Gas Corp should have a say in the deal.

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

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