Battle over Essar-led project reflects India's new mining pains

Mar 20 2014, 13:18 IST
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Villagers gather on the fringes of the Mahan forest during a protest against a coal mining project in Singrauli district in Madhya Pradesh. (Reuters) Villagers gather on the fringes of the Mahan forest during a protest against a coal mining project in Singrauli district in Madhya Pradesh. (Reuters)
SummaryIndia's mining sector has been at the centre of a multi-crore corruption scandal.

With an axe on one shoulder and lugging a large log over the other, Bhajandhari Kushwaha emerges from the dense Mahan forest in central India with his dog by his side after a day of foraging and wood cutting.

For Kushwaha, the timber, leaves and seeds of this centuries-old forest not only sustain his family of five, they represent a vital part of his community's cultural identity that has suddenly come under threat from two of India's largest mining companies.

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"This forest is our life. We get everything from it," says the 45-year-old, vowing to fight plans by Mahan Coal Ltd (MCL) - jointly owned by London-listed Essar Energy Plc and the Aditya Birla-owned Hindalco Industries Ltd - to mine part of the 1,000-square-km (385-square-mile) woods for coal. "Whatever compensation the company is offering us, we do not want it. We will fight until we die, if that's what it takes."

It is a sentiment shared by many villagers in this dusty corner of Madhya Pradesh state, a sign of growing popular resistance spurred by a new forest law that gives people a greater say over how natural resources are exploited.

What happens at Mahan could determine if anti-mining campaigns will increasingly seek a legal recourse under the new law, underscoring a new twist in the challenges facing India's quest for energy security and its industrial future.

Hundreds of projects are stuck over similar local opposition, where protests often turn violent, including more than two dozen multi-billion dollar proposals.

A THICKET OF APPROVALS

In January, London-listed Vedanta Resources Plc lost a seven-year battle to dig bauxite in the eastern state of Odisha after the Supreme Court ordered that local tribes people should decide on the project. The villagers voted against it.

The government accepted the decision even though Vedanta, had already spent more than 500 billion rupees ($8.1 billion) on an aluminium refinery, smelter and power plant in anticipation of access to local mines. The company has been forced to bring in bauxite from the neighbouring state of Chhattisgarh.

In Mahan, MCL was granted environmental approval last month to extract around 100 million tonnes of coal. Essar and Hindalco have already invested $3.2 billion building a power plant and a smelter that will run on locally mined coal.

But local resistance, led by environment group Greenpeace, could still derail the coal mine project, affecting the economic viability of

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