Days after its plan to mine bauxite from Niyamgiri Hills was turned down, Vedanta Resources has received yet another blow with the Environment Ministry rejecting its USD-5.8 billion expansion plan for alumina refinery in Orissa, citing violation of green norms.

The London-based metals giant had plans to increase the production capacity of the refinery in Lanjigarh in Kalahandi district from the current 1 million tonnes per annum (mtpa) to 6 mtpa.

However, the ministry in an official communication to the company on Wednesday said, “You are directed to maintain status quo at the site and no further construction activity shall be undertaken with respect to the expansion project.”

Adding to the Vedanta’s woes, the Ministry has also asked the Orissa Government to take legal action against it under the provisions of Environmental Protection Act, 1986 for violation of Environmental Impact Assessment (EIA) notification.

The Ministry’s action came as per recommendations by N C Saxena panel which had alleged that Vedanta Aluminium Ltd had undertaken expansion activity of the refinery without obtaining prior permission from it.

“The Terms of Reference (ToRs) issued on 12 March 2009 for expansion of alumina refinery from one mtpa to 6 mtpa and 75 MW to 300 MW are hereby withdrawn and consequently the public hearing on 25th April 2009 stands cancelled,” said the ministry’s four pages order.

The company has also been denied permission to increase its captive power plant capacity at the site.

Just two months ago, the ministry had rejected Vedanta Aluminium’s proposal to mine bauxite from Orissa’s Niyamgiri Hills citing threat to the ecology of the area and the Dongria Kondh tribe which lives in the hills.

The opposition by the tribals against the company’s mining plans had gained momentum just a few months back with Congress General Secretary Rahul Gandhi also taking up their cause.

Meanwhile, acting tough on the existing refinery plant, the environment ministry in a separate order has asked the company to strictly follow pollution control norms.

“The company can continue to operate its existing 1 million tons a year refinery, provided it maintains a minimum level of forested area around the plant,” the order says.

It has also been asked to monitor pollution levels and submits a bank guarantee of Rs 2 crore to the State Pollution Control Board a preventive measure.