Economic Times, Aug 27, 2010
MUMBAI/KOLKATA: Vedanta Aluminium has halted its expansion programme at the alumina refinery at Lanjigarh, in Orissa, after the government issued a notification making it mandatory for companies to seek environment clearance for any major change in processes.
On August 24, the Central government said that Vedanta Aluminium had not sought prior approval for expanding the refinery capacity to 6 million tonnes from 1 million tonnes. Another government decision that day, announced by the minister of state for environment and forests Jairam Ramesh, stopping plans to mine bauxite at Nyamgiri near Lanjigarh, attracted much more attention but the brake on the refinery expansion could have a longer term impact on the fortunes of Vedanta. The bauxite was to be supplied to the refinery.
The chief operating officer of the Anil Agarwal-controlled company, Mukesh Kumar, expressed his doubts on Thursday over the “intention” behind these announcements in view of an earlier notification.
The ministry of environment and forests had said on August 19 that for all projects which were increasing capacity and where terms of references—the guidelines and scope for any expansion—have been mentioned and where construction activities have been started, the terms of references may be suspended or withdrawn.
"Instances have come to the notice of this ministry where project proponents have undertaken construction activities without obtaining requisite environmental clearance...No activity relating to any project covered under this notification, including civil construction, can be undertaken at site without obtaining prior environmental clearance," the notification added.
The notification relates to environment impact assessment (EIA)— a crucial part of the project approval process under the Environment Protection Act. The EPA is the umbrella legislation that regulates the impact of all industrial and commercial activities on environment.
The Vedanta official said that no prior approval for expansion was needed according to the rules in place—the Environment Impact Assessment notification of 2006—before the changes announced on August 19.
"There is no threshold limit given in the EIA notification for such a project," Mr Kumar told ET. "Hence prior environment clearance, as per the notification for our proposed expansion, is not mandatory before undertaking any construction activities."
Mr Kumar also referred to a section in the 2006 notification which stipulates that approval to the terms of reference for any project has to be announced within 60 days from the date of submission. "If the decision is not conveyed within 60 days, then the terms of references suggested by the applicant, "shall be deemed as final terms for the EIA study."
Vedanta had submitted its proposal for expanding the capacity to the ministry of environment and forests for approval on October 3, 2007. The company didn't get approval within 60 days, which is the mandatory period as per the notification.
Mr Ramesh did not respond to calls and text messages sent to his mobile.
While the expansion programme has been stopped, Vedanta Aluminium will continue with operations at the existing one million tonne refinery in Orissa. The unit is presently running at 90% capacity with bauxite purchased from outside the state. "Though Niyamgiri is off limit, we are hopeful of getting fresh allocation of bauxite reserves within 30 km of our refinery. There are some 500-600 mt of reserves in and around our refinery. Logistically, it won't be much of a problem," said Mr Kumar.
Vedanta needs three million tonnes of bauxite to operate its one million tonne refinery. The company has been sourcing 60% of its bauxite needs from group company Balco. It has also been using a blend of the ore using bauxite purchased from states like Maharashtra, Gujarat, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, Jharkhand and Bihar.
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