Apex court stalls Vedanta project

Allows special company to monitor compliance in Orissa.

The Supreme Court has stalled the Rs 4,000-crore alumina refinery of NRI industrialist Anil Agarwal's Sterlite Industries and Vedanta Alumina Ltd in Orissa by denying approval to it on the principle of sustainable development.

However, the court has provided an escape clause for the mining giants by setting up a special purpose vehicle (SPV) to ensure that environmental regulations are complied within the development of the bauxite mines at the Niyamgiri hill near Lanjigarh in Kalahandi district and the Khambasi hill in adjoining Rayagada district.

Once the requirements of employment of displaced people and tribals and protection of wildlife are taken care of, the companies can approach the court again for its green signal.

The one-million-tonne alumina refinery was caught in an environmental controversy as the Supreme Court has banned all non-forest activities like mining, refineries and saw mills in forest areas.

The court has been passing orders on individual projects for the past decade. This project has been under examination since 2004 and was one among many others that were stopped.

The SPV consists of the Orissa government, the public sector Orissa Mining Corporation and Sterlite, the local associate of Britain's Vedanta Resources.

The three parties will contribute to a common fund, audited by the Auditor General of India.

The court also apportioned funds for mitigating the damage if the project gets under way. For instance, Rs 12.5 crore will be allotted to tribal development and Rs 50.5 crore to wildlife. Displaced and landless people and tribals shall be given assured employment and other benefits like housing and hospitals.

The court enjoined upon Sterlite to comply with the environmental regulations as, according to the bench headed by Chief Justice KG Balakrishnan, news reports have said that Vedanta had been blacklisted in Norway for environmental damage, violation of human rights and forced eviction of tribal people.

The court stated that it did not entirely give credence to news reports, but since Vedanta could always walk out of the project and its assets and shareholding status were not clear, it could not be handed over the responsibility.

When the company sought permission to start mining in the forest area of 672.018 hectares in the poverty-ridden Kalahandi district, environment groups and wildlife enthusiasts challenged the plan, arguing that it would displace tribal people and destroy the flora and fauna of the region.

Vedanta had denied the allegations and maintained that all regulations had been complied with. It also asserted in the latest affidavit that it had set aside 5 per cent of its net profits for tribal welfare.

Amid the controversy, the Supreme Court asked the central empowered committee set up by it to look into the controversial aspects of the project.