Shares of Vedanta Resources fell for the second successive session today on the London Stock Exchange, after the metals and mining major failed to get an environment clearance for its $1.7 billion bauxite mining project in Orissa.
The scrip opened on a weak note and further fell by 1.16 per cent to hit a low of 18.60 pounds in morning trade on LSE. The scrip had tanked 7.6 per cent yesterday.
The broader UK market too was weak and the benchmark FTSE 100 was trading in the red in early session. Other mining stocks too were in the negative territory on LSE.
Vedanta Resources is a London-listed FTSE 100 metals and mining major. The group produces aluminium, copper, zinc, lead, iron ore and commercial energy. Vedanta has operations in India, Zambia and Australia.
Meanwhile, Sterlite Industries, the principal subsidiary of Vedanta Resources, today bounced back and was trading 1.12 per cent higher in afternoon session on the Bombay Stock Exchange. Sterlite, which had lost 4 per cent in previous day, was the top gainer in Sensex pack today.
"In our view, the mining denial is a big dampener for VAL's expansion projects. However, we feel the company will consider other alternatives, as captive bauxite is key to VAL's projects in the long term," domestic brokerage house Angel Broking said.
"Moreover, the development will not have a material impact on earnings estimates by us, as the consolidated financial statements for Sterlite include only 29 per cent of the profit from VAL," it added.
The Ministry of Environment and Forests has rejected Vedanta Aluminium's (VAL) application for Stage-II forest licence for its Niyamgiri mining project (Orissa). VAL is a subsidiary of Vedanta Resources (71 per cent) and Sterlite (29 per cent).
The MoEF's decision comes after the government-appointed NC Saxena panel recommended last week that it would be illegal to allow bauxite mining operations on the Niyamgiri hills as the company has consistently violated the Forest Conservation Act, Forest Rights Act, Environment Protection Act and the Orissa Forest Act.