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ATHREE-JUDGE bench of the Supreme Court has asked the Ministry of Environment and Forests (MoEF) to consider giving conditional clearance to the French cement giant, Lafarge, to restart mining operations in Meghalaya so that it can resume supply of limestone to its cement plant in Bangladesh.

While the court didn’t lift the stay on mining it seems likely that Lafarge will be able to resume mining by agreeing to pay around Rs 500 crore over the lifetime of the project to a special purpose vehicle (SPV) which will spend the money for the benefit of the local tribal communities, according to officials involved in the case.

This consists of a one-time payment of Rs 65 crore and a royalty of Rs 90 per tonne of limestone mined. India’s attorney-general Goolam E Vahanvati has supported the idea of Lafarge getting environment and mining licenses by paying the SPV.

The case, which has seen a high-profile collision between India’s environmental laws which discourages mining in forest areas and the need to maintain cordial relations with the Sheikh Hasina-led government in Bangladesh, is being heard by the Supreme Court, which had stayed mining on February 5 because the company allegedly obtained forest clearance by misrepresenting facts.

But Lafarge is being staunchly backed by the Indian government and by multilateral donors.

Four such donors — the International Finance Corporation (the World Bank arm which lends to the private sector), the Asian Development Bank, the European Investment bank and Deutsche Investitions, a German Development Finance institution — have urged the Indian government to give the project its final forest clearance.

These institutions, all of whom funded the project, say that the controversy over the project’s alleged location in the middle of a dense forest arose after it received all clearances. Their letter, dated 8 March, insists “all required authorisations (including those related to environmental matters) had been obtained prior to the construction of the project”, and that it was only in April, 2007 (subsequent to the start of its operations), that the mining area was “reclassified as ‘forest land’, requiring additional approval under the Forest Conservation Act.”

The SC bench sought the response of the MoEF to a report by an expert committee which had found that the company had complied with environmental norms. It posted the matter for further hearing on April 26.

Mr Vahanvati on behalf of centre at the start of the proceedings sought permission of the court to vacate its stay on the mining operations by of French cement giant in Meghalaya saying it was essential to maintain cordial diplomatic relationship with Bangladesh. However, this was opposed by UU Lalit, the lawyer acting as amicus curae or friend of the court. The issue has to be resolved within the existing legal framework and diplomatic relationship cannot be cited as a ground to permit the company to start mining in an ecologically fragile area, said Mr Lalit.

Mr Vahanvati said Lafarge would now deposit Rs 55 crore with interest at the rate of 9% per annum from April 1, 2007, within four weeks. The total amount, which would come to a little over Rs 65 crore would be utilised for afforestation in the state, espcially the mining affected area.

Lafarge, which had been mining 2 million tonnes of limestone per year, would also pay Rs 90 per tonne mineral. This amount would go to a to-be-constituted SPV under the chairmanship of the Meghalaya chief secretary. However, while proposing a hike in the contribution from Lafarge towards afforestation and a SPV, Mr Vahanvati said the company should be able to get the environmental clearance in two weeks by following proper procedure. Lafarge has welcomed the SPV solution to the tangle it finds itself in.

In a statement Lafarge said it looked forward to an early resulution of the matter.

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