Vedanta says hopeful can expand Indian refinery later

22nd October 2010, Comments 0 comments

Britain's Vedanta Resources said Friday it was optimistic New Delhi would eventually approve expansion of the company's Indian aluminium refinery, a day after the move was blocked.

Mukesh Kumar, head of Vedanta unit Vedanta Aluminium Ltd in Orissa state, called the rejection of the expansion plans "a negative development".

But Vedanta is "hopeful" of getting expansion permission after submitting certain documents," Kumar told the Press Trust of India, without elaborating.

India rejected on Thursday Vedanta's request for permission to expand its aluminium refinery in Orissa state to six million tonnes annually from one million tonnes, citing environmental concerns.

The setback came as Vedanta struggles to win Indian government approval of its planned 9.6-billion-dollar acquisition of a controlling stake in Cairn India, a unit of Edinburgh-based Cairn Energy.

Two months ago, the environment ministry also rejected Vedanta's plans to mine bauxite on land held sacred by tribes people that was intended to feed the Orissa refinery.

The ministry said Thursday that Vedanta, controlled by Indian-born billionaire Anil Agarwal, must "maintain the status quo" and banned further construction work at the Lanjigarh plant.

Vedanta's refinery expansion plans were fiercely opposed by locals who said it would wreck the area's fragile eco-system.

The company had already started expanding the plant, investing 1.1 billion dollars, which the government said was a "clear" violation of regulations.

The censure marked an embarrassment for Vedanta as it seeks the government's nod for its planned Cairn purchase.

The goverment also told Orissa state to take legal action against Vedanta for the unauthorised construction.

In the past, when the federal environment ministry was seen as little more than a "rubber stamp," some companies embarked on unauthorised construction but Environment Minister Jairam Ramesh has shown a keenness to police the rules.

Kumar said Vedanta stopped expansion work four months ago and was happy to follow environmental conditions laid down by the government.

"Conditions are always there for big industries. We will follow all pollution norms," he said.

© 2010 AFP

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