Rio's India diamond fight

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This was published 12 years ago

Rio's India diamond fight

By Ben Doherty and Delhi

RIO Tinto's plan to open one of the world's biggest diamond mines in India has been hit by allegations that the company is exploring without Indian government permission.

The Anglo-Australian mining company has dismissed the allegations. "We are fully compliant with all laws and regulations,'' Rio Tinto India managing director Nik Senapati told BusinessDay. But a High Court challenge has the potential to halt exploration.

India's diamonds: Rio Tinto's planned diamond mines could be halted by a High Court challenge.

India's diamonds: Rio Tinto's planned diamond mines could be halted by a High Court challenge.Credit: Jessica Hromas

The Bunder mine project, near the city of Chhatarpur in Madhya Pradesh, about 500 kilometres south-east of Delhi, could be one of the largest diamond reserves in the world, Rio Tinto says.

The operation is still in the pre-feasibility stage, but early studies show an ''inferred resource'' of 27.4 million carats.

"Rio Tinto has identified a diamonds resource seven times richer than the Panna mine in India [the country's only working diamond mine]," said Bunder project director Stefanie Loader.

"Madhya Pradesh would therefore rank, in volume and value, in the top 10 diamond-producing regions in the world."

But environmental activist Neelesh Dubey has launched a public-interest litigation petition in Madhya Pradesh High Court, claiming Rio's exploration breaches environmental laws.

The High Court order, seen by BusinessDay, instructs the state and federal governments to respond to the allegations within six weeks. The court can order work to cease.

Mr Dubey said Rio Tinto had begun exploring before being granted government permission and had failed to get a ''notice of no objection'' from the state's Pollution Control Board.

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As well, he said, Rio had expanded the exploration area from 45 square kilometres to up to 70 square kilometres without permission.

Mr Dubey said local government officials had written to federal and state government authorities, but their concerns had been ignored and, in some cases, the officials had been removed from their positions. The mining operations manager for Chhatarpur district declined to speak to BusinessDay.

Mr Dubey said he did not necessarily want the mine stopped forever.

"But their activities have been causing damage to the forest,'' he said. ''They are cutting down trees and deforesting the area without permission.

"Rio Tinto doesn't have complete environmental clearances to do mining here … it should halt its operations immediately

and get all required clearances."

Locating economically viable diamond reserves is a risky endeavour, and slow. Typically, it is 14 years between discovery and exploration.

Dr Senapati said Rio Tinto was still in the pre-feasibility stage to determine whether the mine site was economically viable.

He said he was confident the issue would be resolved quickly, and that exploration would continue in the meantime.

"As far as we're concerned, we have always been fully compliant with all of the laws and regulations from both the central and state governments,'' he said.

''We are fully compliant and we always will be."

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