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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.

Written by Jay Mazoomdaar | New Delhi |
Updated: August 20, 2016 1:38:29 am

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

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