Odisha tribal community set to block Vedanta bauxite project

By Jatindra Dash and Krishna N Das

BHUBANESWAR, India/NEW DELHI (Reuters) - Vedanta Resources Plc's plans to mine bauxite to feed its alumina refinery in Odisha have suffered a blow after a majority of local residents voted against mining around the hills they consider sacred.

Failure to source bauxite from within the state might force the London-listed company to reconsider its 1-million-tonne-per-year plant, which has already been shut several times due to a shortage of the raw material.

The project has drawn the anger of rights groups internationally and highlights the difficult task India faces in balancing economic development with the need to cushion hundreds of millions of poor from the fallout.

Seven out of 12 villages whose opinion the Odisha government sought on the orders of the Supreme Court have rejected mining in the area, a top government official and witnesses said.

"The villagers have so far said no to the mining project," the official, who requested anonymity as he was not authorised to talk to the media, told Reuters on Monday.

The Supreme Court in April ordered the state to submit a report based on the views of the villagers to the federal environment and forest ministry within three months.

The ministry, which had earlier opposed the project, would make the final decision two months thereafter on whether Vedanta and partner Orissa Mining Corp Ltd (OMC) can go ahead with mining, the court had ruled.

"People sue-motto (on their own) came to the meeting and spoke against the project in their own tribal languages," said Siddharth Nayak of Green Kalahandi, an organisation protesting against mining in the area.

"The whole Niyamgiri hill is our god and we will protect it at any cost," Nayak said.

The remaining five villages are to share their views by August 19, the government official said.

"The environment ministry can reject the mining, taking into consideration the decision of even only one gram sabha (village council meeting)," he said.

A ministry official did not immediately comment.

Ajit Yadav, Vedanta's legal head, told Reuters the company could do little apart from waiting for the environment ministry to decide. He declined to comment on the fate of the project.

"Today's vote surely means the end of Vedanta's plans to mine the Niyamgiri hills," said Amnesty International's Ramesh Gopalakrishnan, who added that he was present at several of the meetings.

The Lanjigarh plant in Kalahandi district, about 450 km (280 miles) from state capital Bhubaneswar, has been struggling to source bauxite since its commissioning in August 2007.

The company recently restarted the plant after a shutdown of nearly seven months as it sourced bauxite from other states, but executives have said that cannot be sustained unless it acquires the raw material in Odisha.

(Editing by Dale Hudson)