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Vedanta Broke Forestry Rules in India Expansion, Minister Says

Oct. 20 (Bloomberg) -- Vedanta Resources Plc’s $8.5 billion aluminum expansion plan in India is in “serious” breach of forestry laws and a decision on the project may be taken as early as tomorrow, the Environment Ministry said.

“There have been serious violations,” Minister Jairam Ramesh said today in an interview at his New Delhi office. “There have also been some procedural violations in its existing refinery,” he said, referring to the 1 million metric ton facility at Lanjigarh in eastern Orissa state.

Vedanta, controlled by billionaire Anil Agarwal, won approval from the Orissa government in August to implement a 375 billion rupee ($8.5 billion) expansion of its Lanjigarh alumina refinery. The Environment Ministry said in August Vedanta’s existing refinery may be sourcing bauxite from mines without environmental approvals and asked Vedanta to justify why the permit for the refinery should not be canceled.

The company has replied to the ministry, said Mukesh Kumar, chief operating officer of Vedanta Aluminium Ltd., the company’s Indian unit. A notice may be sent to the company as early as tomorrow, Ramesh said today.

Vedanta will cut its investments by as much as $2 billion in the next two years after failing to get clearance to mine bauxite at the Niyamgiri hills in the state, Chief Executive Officer Mahendra Singh Mehta said Oct. 7. The capital expenditure revision “will have an impact of between $1.5 billion and $2 billion,” Mehta said, clarifying the numbers were tentative.

To contact the reporters on this story: Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net; Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs in Sydney at ahobbs4@bloomberg.net

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