India's environment ministry on Thursday ordered Vedanta Resources to immediately halt all construction work aimed at expanding its aluminum refinery in the state of Orissa, saying the company never got the required environmental clearances.
The ministry also asked the Orissa government to take legal action against the London-based mining giant. Vedanta officials did not immediately respond to a request for comment.
The decision was only the latest example of the increasingly activist ministry scuttling mining and construction plans by multinational companies.
Two months ago the ministry denied Vedanta permission to mine bauxite for its refineries in eastern India, citing violations of environmental and human rights laws.
Earlier this week, a government panel called for withdrawing the environmental clearances for South Korean steel giant Posco to build a $12 billion steel plant, citing "serious lapses and illegalities" in the process of getting the clearances and the assent of locals.
Environment Minister Jairam Ramesh has not yet announced whether he would accept those findings.
Business analysts fear the decisions could frighten away investment and hamper India's growth, but Jairam Ramesh says he is simply enforcing laws that have long been flouted in this country.
In a letter sent to Vedanta and published on the ministry's Web site on Thursday, officials painted a picture of a company that appeared to be ignoring government requirements for expanding its refinery below the Niyamgiri hills in Orissa.
The letter said the company had first applied for environmental clearances in 2006 to expand the refinery six-fold and increase the capacity of a related power plant.
As the application wound through the approval process, a team of government experts sent to the site discovered that the company had already begun expanding the plant, even without the needed permits, the letter said.