Vedanta’s Bauxite Plan Snubbed by Last of 12 Niyamgiri Villages

Vedanta Resources Plc’s (VED) bid to win the consent of tribes inhabiting a hill range holding bauxite earmarked for an $7.9 billion aluminum complex in Odisha state was unanimously rebuffed, a government official said.

The last of the 12 villages on the Niyamgiri tracts in the eastern state today rejected the incentives offered in exchange for mining approval, said Sashi Bhusan Padhi, the revenue head of Rayagada district, where the meeting was held. All the villages rejected the plan, Santosh Sarangi, secretary for Odisha’s scheduled tribe and scheduled caste development department, said today. Sarangi will submit a report to the environment ministry in the first week of next month, he said.

“The meetings in all the villages took more than a month to complete because of the difficult terrain and the lack of road and phone connectivity,” Padhi said by phone. “To reach some of these villages needed many miles of trekking.”

The decision of the Dongaria and Kutia tribes, who believe their god lives in the Niyamgiri hills, is the latest in a series of setbacks for billionaire Anil Agarwal’s metal operations in India. The denial will probably prompt the environment ministry to reject clearance, further impeding raw material access for London-listed Vedanta, which has 1.25 million metric tons of new aluminum refining capacity lying idle for want of bauxite.

Village Decision

The Niyamgiri villagers were asked to decide the fate of the project on April 18 by the nation’s top court, which intervened in the case after Vedanta’s partner Orissa Mining Corp. contested the environment ministry’s August 2010 view that granting a mining permit would damage the environment and displace the tribes and wildlife in the area. Tribal right over land is recognized and the local authority of the tribes must clear the proposal, a three-judge panel headed by Aftab Alam of the Supreme Court had said in its April 18 ruling.

Vedanta, which has invested 500 billion rupees ($7.9 billion) to build a smelter, refinery and power plant near Niyamgiri, currently operates a 1 million ton refinery, a 500,000 tons smelter unit and a power unit. The refinery that had stopped output in December following bauxite shortage, restarted last month after raw material availability improved.

Vedanta had to shut the refinery after permits held by bauxite miners in the neighboring states of Jharkhand and Chhattisgarh expired. The environment ministry said March 13 the mines don’t need fresh approvals to renew their licenses, paving the way for replenishments of the ore.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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