VEDANTA suffered a blow to its plans in India yesterday after the government there rejected its plans to mine bauxite in the east of the country.
The London-listed miner is already facing regulatory issues over its $9.6bn (£6.2bn) bid for control of Cairn India, which would give billionaire Anil Agarwal’s group a slice of India’s oil reserves and exposure to surging energy demand in the country.
The environment ministry’s decision on the bauxite project relates to a site in Orissa state, where Vedanta runs an alumina refinery on bauxite currently imported from elsewhere in India. The firm hoped to harvest bauxite from the area to save money on transport.
Environment minister Jairam Ramesh said the decision did not amount to blacklisting Vedanta, signalling that the firm could seek to mine elsewhere.
“There has been serious violations of environment protection acts,” Ramesh said while rejecting Vedanta’s mining plans that could destroy heavily forested hills sacred to local tribal groups.
London-listed shares in Vedanta closed down 7.6 per cent at £18.82 yesterday.
“Vedanta remains committed to working with the local communities to ensure sustainable development in this region,” the company said in a statement.
It added that the government of Orissa is actively considering other sources of bauxite for the firm’s alumini refinery.