MAC: Mines and Communities

Rio Tinto pulls out of diamond mine in India

Published by MAC on 2016-08-22
Source: Business Standard, Indian Express

For now at least...

Facing green hurdles, Rio Tinto pulls out of diamond mine in MP

The diamond mine was expected to yield Rs 2,058 crore and Rs 208 crore towards royalty and taxes, respectively, to the state once excavation began.

Jay Mazoomdaar

Indian Express -

August 20, 2016

Asked to explore the possibility of underground mining and wait until the Ken-Betwa river linking project was finalised, mining giant Rio Tinto on Friday decided to close its Rs 2,200-crore diamond mine project in Madhya Pradesh.

“As part of its ongoing efforts to drive shareholder value by conserving cash and cutting costs further, Rio Tinto has decided to not proceed with development of its Bunder project in India. Accordingly, we will be seeking to close all project infrastructure by the end of year 2016,” Rio Tinto Exploration India Private Limited said in a statement emailed to The Indian Express.

It is a setback for the Madhya Pradesh government as Chief Minister Shivraj Singh Chauhan had himself pushed for the statutory clearances required for the project. The diamond mine was expected to yield Rs 2,058 crore and Rs 208 crore towards royalty and taxes, respectively, to the state once excavation began.

Rio Tinto, say company sources in India, has already invested over Rs 400 crore on prospecting etc and hired more than 300 people at the project site. “Rio Tinto will offer a fair and equitable Voluntary Severance Scheme to contractors employed at the project site,” the company’s Indian arm said in the statement. The country’s first private diamond mining project was red-flagged for undermining the wildlife corridor between the Panna Tiger Reserve and the Navardehi Wildlife Sanctuary. This July, a report by the National Tiger Conservation Authority said that the project “has the potential to disrupt tiger dispersal around Panna landscape”.

Accordingly, the environment ministry sought to limit mining only to 76.43 hectares out of the total 971 hectare project. In a letter to the state government on August 10, the ministry further conveyed that surface extraction “would entail greater extent of forest land use leading to permanent loss of the high quality forest areas” and “the project proponent may also explore the possibility of underground (mining)”.

As per government records, the estimated deposit of diamond at the site is 34.2 million carat. While pulling out of the project, Rio Tinto has reiterated that “the Bunder deposit is a high-quality discovery” and offered to help the state and the Union government in finding a “third-party investor to carry forward the development of the project”.

Madhya Pradesh granted reconnaissance permit to Rio Tinto for diamond mining in Chhatarpur’s Bunder area in 2004. The Shivraj Singh Chouhan government signed a support agreement with the company in 2010 and subsequently issued a letter of intent for a 30-year lease in 2012. Indian Bureau of Mines approved the mining plan in 2013 and the project is awaiting forest clearance since 2014.

Asked to wait and also explore underground mining

The diamond mine was expected to yield Rs 2,058 crore and Rs 208 crore towards royalty and taxes, respectively, to the state once excavation began. It is a setback for the Madhya Pradesh government as Chief Minister Shivraj Singh Chauhan had himself pushed for the statutory clearances required for the project.

Rio Tinto's diamond project catches tiger by the tail

While project is in endangered big cat habitat, its fate now hinges on Ken-Betwa interlinking; govt expert panel leaves window of hope open.

Nitin Sethi

August 9, 2016

Rio Tinto’s Bundar diamond mining project in Madhya Pradesh has hit a snag. The project, expected to mine 30.8 million carats of diamond, has been temporarily put on hold in its current shape for trespassing on an important habitat of the endangered tiger - a fact that the company denied in its filings before the government.

The future of the diamond mine has now been hitched to another proposed project in the region, the Ken-Betwa interlinking of rivers, which itself is expected to inundate 4,000 hectares (ha) of prime tiger habitat. The diamond mine requires 971.5 ha of dense forest land, which, too, the government has concluded, is tiger habitat.

The decision by the Union environment ministry’s expert panel to link the fate of two projects has reduced the chances of the mining operations starting any time soon, but also left the company’s hope alive.

Business Standard reviewed the discussions of the government and the filings of the company and the state government before the environment ministry.

Rio Tinto did not reply to a detailed questionnaire despite repeated requests.

The project proposal, in its current shape, suffered a setback when the National Tiger Conservation Authority (NTCA) confirmed that the mine sits in middle of migratory corridors, which have to be kept alive for free movement of tigers in the region.

India’s wildlife law requires the government to secure such migratory corridors of the endangered cat, to ensure connectivity between the protected tiger habitats, in this case, the Panna Tiger Reserve and the Nauradehi wildlife sanctuary. Yet, leaving a flickering hope alive for Rio Tinto, the ministry’s expert panel did not outright reject the mining proposal.

Early signs of Rio Tinto facing difficulties emerged some months ago. The environment ministry’s expert panel, reviewing the first set of filings on the company’s proposal for 971.5 ha of forest land, raised several critical queries.

This made the company withdraw its original proposal mid-course and put in a revised one – to initially mine just 76.43 ha of the forest and merely take possession of the rest of the forest land. This proposal, too, like the previous one, got the backing of the state government. But, the NTCA saw through this and concluded the revised proposal was a piecemeal approach and eventually 500,000 trees spread over the entire 971.5 ha of the tiger habitat and dense forests would have to be chopped down for mining diamond.

The proposed interlinking of Ken and Betwa rivers added to Rio Tinto’s woes. The linking of rivers, pursued vigorously by the National Democratic Alliance government, promises to flood 6,000 hectares of the Panna Tiger Reserve. This has forced the environment ministry to look for some compensation to make up for this reduction in the area protected under the Panna Tiger Reserve. As an alternative, it is looking to conserve other good forest patches in the vicinity.

The NTCA concluded that Rio Tinto’s diamond mine sits in the middle of the landscape it has proposed to conserve as compensation for the loss the Ken-Betwa linking of rivers will cause to the Panna Tiger Reserve.

Consequently, the environment ministry’s expert panel has asked Rio Tinto to do three things. One, await the environment ministry’s final decision on the Ken-Betwa linking of rivers – it’s currently under appraisal. Two, look for alternative sites and three, consider underground mining instead of open-cast mining of diamonds. The recommendation to Rio Tinto to look for alternative sites is odd because the company has already prospected for diamonds and discovered the rich haul at this location. It has made it plain in its filings that no other alternative sites exist.

The company has gone through other tribulations as well. In its initial filings to the environment ministry, it did not disclose that many villages and people had rights in the forest land it was seeking to divert for mining. Neither did the state government, claiming such information “was not necessary”.

The company told the authorities that there was no human presence in the 971.5 ha, except a few people who collected some forest produce from the area. It later emerged that several villages had rights in the land under the Forest Rights Act. At least one of these villages flatly refused to give up their rights over the land to the company. Their consent is mandatory under the law.

The company also has reflected different estimates of the diamond content available in the mines in its filings before the government and its annual reports. All these were reviewed by Business Standard. The company did not respond to specific queries about the discrepancy in its information on these and other counts.

A perusal of the company and state government’s filings with the environment ministry show they have made some other conflicting submissions to seek the two mandatory clearances - environmental and forest – such as the number of people who would find employment in the mine. These are handled by two different divisions and sets of experts in the ministry and the processes run in parallel.

When a project requires forest land, even if the proposal for an environment clearance has been appraised positively, it is held back till the forest clearance is secured. Rio Tinto had recently secured the conditional positive appraisal for the environment clearance. It will now have to wait till the government decides on the Ken-Betwa river link to get the second mandatory clearance from the environment ministry. For now, it’s survived a point-blank rejection despite being found to be located in the tiger habitat.

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