NEW INDIAN URANIUM PROJECT JEOPARDIZED BY ENVIRONMENTAL

UNCLAS SECTION 01 OF 02 CHENNAI 000236

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EMIN SENV KNPT PGOV IN
SUBJECT: NEW INDIAN URANIUM PROJECT JEOPARDIZED BY ENVIRONMENTAL
OPPOSITION



1. (U) SUMMARY: As part of a larger plan to meet the growing demand
for nuclear fuel, the Government of India is planning a uranium
mining project in Kadapa district, Andhra Pradesh. This project is
part of an overall planned expansion of the nuclear sector in Andhra
Pradesh. Despite India's desire to expand its nuclear capacity,
local opposition based on environmental concerns could stall the
project in Kadapa, as it did another such project in Andhra Pradesh.
END SUMMARY. _

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ANDHRA PRADESH: PLANS FOR AN EXPANDING NUCLEAR INDUSTRY
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2. (U) The Uranium Corporation of India Limited (UCIL),a Government
of India undertaking within the Department of Atomic Energy (DAE),
mines uranium ore to produce U308 (a form of uranium oxide
specifically known as triuranium octaoxide). U308 is a component of
yellowcake, which can be further processed for use in fuel rods for
nuclear reactors. In order to meet India's growing demand for U308,
UCIL is planning a new project to exploit deposits in several
states, including the Tumalapalle deposit near Kadapa, Andhra
Pradesh. The project (both underground mining and processing) will
have an estimated cost of $224 million. It will cover 879 hectares
spread over five villages. UCIL expects the project to yield 45.48
million tons of reserve ore (averaging 0.039 percent U308 content).
The estimated lifespan of the project is 30 years and it will employ
over 1,000 local hires.


3. (U) Mr. N.M. Bahl, UCIL's Deputy General Manager, told post that
the current project is one of the several steps towards ultimately
using thorium to meet India's rising energy demands. The ore
processing plant is planned to be set up close to the mine to
extract the uranium from the uranium ore. The plant will process
900,000 tons per year to produce 256 tons of sodium diuranate
yellowcake, which will be dispatched to the Nuclear Fuel Complex in
Hyderabad for further processing.


4. (SBU) A journalist source said that Andhra Pradesh is becoming
increasingly important to the Indian nuclear industry. He added
that in addition to the Tumalapalle mining project, the government
is considering two other nuclear projects in the state: an
expansion of the Bhabha Atomic Research Center in Visakhapatnam and
a new power plant on the coast near Srikakulam.

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CHIEF MINISTER WEATHERS THE ENVIRONMENTAL BACKLASH
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5. (U) Since his election in 2004, Andhra Pradesh Chief Minister YSR
Reddy has weathered local protests from activists opposed to the
project. Police pushed back over 100 protesters when they tried to
prevent a public hearing on uranium mining in Kadapa district in
September 2006. The protesters turned violent, pelting the police
with stones when the authorities tried to stop them from storming
the public hearing arranged by UCIL. The hearing ultimately took
place, going on for for five hours with over 500 villagers present.
The environmental community was not satisfied. A non-governmental
organization known as Mines, Minerals And People stated, "a public
hearing based on irrelevant pronouncements is a mere formality and
cannot be construed as obtaining people's consent in a democratic
manner."


6. (SBU) According to J. Rama Rao of the Movement Against Mining
Project (MAUP),the Environmental Impact Assessment Report did not
comply with the law because the baseline data measurement was based
on tests conducted in the winter. Rao argued that the law requires
testing in all seasons. UCIL refuted the claim, saying that the
environmental impact assessment had been prepared in accordance with
the prevailing guidelines of the Ministry of Environment and Forests
(MOEF),which permit testing in only one season (other than the
monsoon). (NOTE: The environmental impact assessment process in
India is infamous for its lack of transparency, as is the Ministry
of Environment's prioritization of development over environmental
protection. Public input is not accepted until after the governemnt
has decided to move forward. This is based on the assertion that
the Ministry will represent what is best for the people. As a
result, the positions taken by various stakeholders in this process
have become extremely polarised, with the government and industries
on one side, and the NGOs and local communities on the other. END
NOTE.)


7. (U) Movement Against Mining Project alleged that the mining and
processing of the ore would adversely affect over 10,000 people by
contaminating air, soil, and water. UCIL official Bahl said that
group's allegation was untrue and that the commmunity's health would
not be affected. Bahl also said that a delegation of villagers led
by a local parliamentarian visited a UCIL uranium project in
Jharkhand and were satisfied with the quality of life and health of

CHENNAI 00000236 002 OF 002


the local community living adjacent to mining and processing
operations which had been ongoing for more than 30 years.


8. (U) Protesters claim that UCIL moved the project to Kadapa after
it failed to secure clearance in Nalgonda, Andhra Pradesh. The
Nalgonda project was approved by the government of India but was put
to a halt by public interest litigation filed by an environmental
group. Despite the central government's clearance, the project has
been stalled for more than three years with the case now in an
appellate court.


9. (SBU) COMMENT: If Andhra Pradesh is to expand its role in India's
nuclear energy industry, it will need to deal with environmental
opposition to new projects. UCIL claims that the public hearing was
a success and that local villagers support the project. They now
await clearance from the central government. But the experience in
Nalgonda shows that, even with the approvals in place, litigious
environmental activists can halt a project. Given the opposition to
the Kadapa project, the prospects for commencing operations in the
near future are not bright, shedding light on the need for nuclear
fuel imports that has helped drive the nuclear deal with the United
States. END COMMENT


10. This message has been coordinated with Embassy New Delhi.

HOPPER