Sterlite - SC order on bauxite mining; no relief in sight... - ICICIdirect

The Supreme Court (SC) in its ruling in the bauxite mining case in Niyamgiri Hills, Odisha has directed the Environmental Ministry to take into account the views and concerns of tribals living in the surrounding area of Niyamgiri Hills before taking its final decision of granting environmental clearance to the bauxite mining by Vedanta Aluminium (VAL) and Odisha Mining Corporation (OMC). The present ruling is in response to OMC's appeal in the apex court against the Ministry of Environment & Forests (MoEF) order on cancellation of their stage two environmental clearance for bauxite mining in 2010. The court has given Gram Sabhas of the surrounding regions three months to formulate their view and asked the MoEF to further take a final decision on the case in the next two months. The Gram Sabhas are also free to file any fresh claims against bauxite mining in their region taking into account their religious and cultural ethos within six weeks from the ruling date (April 18, 2013) in the apex court.

Our view

We believe the present order will continue to impact VAL's domestic operations with no major relief in sight. The tribals in the surrounding areas of bauxite mining project have opposed the bauxite mining in the region in the past on religious and cultural grounds. The company's alumina refinery at Lanjigarh, Odisha (capacity of 1 million tonne) remains shut since December 2012 and is likely to remain so in the short to medium term (for around next five months). We have already assumed the closure of the Lanjigarh alumina refinery for most of FY14E and continue to maintain a cautious view on the stock with a HOLD rating and a target price of Rs. 90.

Source : Equity Bulls

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