In a decision that spells bad news for Vedanta, the Environment Ministry, Government of India has asked the state government of Orissa to take legal action against the London based company. This action of the Ministry of Environment is said to have been taken after it found the company to be flouting environment laws of the country. This move of the ministry has stopped the proposed six fold expansion of Vedanta’s aluminum refinery and captive power plant.

In August, 2010, the ministry had issued a show-cause notice to Vedanta pertaining to construction it carried out without obtaining the requisite clearances from the ministry. The clearances were about an Environmental Impact Assessment, 2006 notice regarding the company’s expansion of captive power plant from 25 MW to 300 MW, as well as the capacity increase of its aluminum refinery, from 1 to 6 MMTA (million tones per annum). By not notifying the Ministry of Environment, Vedanta violated the regulations of the Environment Protection Act, and it was not allowed to mine from the Lanjigarh plant anymore.

Presently, Vedanta has been asked to maintain status quo on its operations and is not allowed to carry out anymore expansion. Also, the terms of reference (ToR) issued in 2009 have become invalid and the Secretary, Environment & Forest, Orissa has been directed by the ministry to pursue the legal route under EPA for violating the abovementioned EIA 2006. Prior to this, the company had been stopped from mining bauxite as it was flouting environment laws at that time.