MUMBAI, Aug. 16 -- Vedanta Resources Plc's plan to mine in the Indian state of Orissa should be rejected because it will endanger the livelihoods of locals, a panel set up by the environment ministry said.
"Allowing mining in the proposed lease area by depriving two primitive tribal groups of their rights over the proposed mining sites in order to benefit a private company would shake the faith of tribal people in the laws of the land," a four- member committee said in a report.
Permission to Vedanta, controlled by billionaire Anil Agarwal, to mine in the Niyamgiri hills in Orissa has been delayed for more than four years by opposition from tribal communities and concern over damage to the environment. The panel report, if accepted by the ministry, may hurt the company's plan to raise capacity at its Indian unit, Vedanta Aluminium Ltd.
Vedanta Aluminium spokesman Bibek Chattopadhyay declined to comment on the committee's findings.
India's environment ministry formed the panel in June to investigate the impact of mining on local tribes and wildlife in Orissa, where Vedanta hopes to develop bauxite reserves.
The report will be considered by another panel on August 20, Minister for Environment and Forests Jairam Ramesh said in New Delhi today.
"The immediate issue in front of me is whether to issue final clearance for mining," Ramesh said.
The company has violated laws including the Forest Conservation Act and the Environment Protection Act, the 119- page report said. Chattopadhyay declined to comment.
Vedanta Aluminium plans to use bauxite from the proposed mine to run its alumina refinery in that region. The mine will help the company, which produced 762,000 metric tons of alumina in the year ended March 31, reduce its raw material costs. Aluminum is made from alumina refined from bauxite.
Vedanta Aluminium won approval for a 375 billion rupee ($8 billion) expansion from the Orissa government to increase its smelter and refinery capacity six fold each to 1.6 million tons and 6 million tons respectively, Senior Vice President A.K. Samal said last week.
Separately, Vedanta Resources said today it agreed to buy as much as 60 percent of Cairn India Ltd. for $9.6 billion to gain access to India's biggest onshore oil field.