Delhi High Court halts coal ministry move to encash ₹29 crore from Vedanta’s bank guarantee

Vedanta had challenged a 21 July order by the coal ministry’s Nominated Authority directing the appropriation from its ₹263.17 crore guarantee. In its writ petition, a copy of which was reviewed by Mint, the company sought a stay on the order and an extension of project milestones, citing regulatory delays and unforeseen ecological issues.

Vedanta won the coal mine in a 2020 auction. The mine is critical to powering the company’s aluminium operations.

“The Petitioner seeks appropriate orders to stop the implementation of the appropriation order dated 21.07.2025 issued by the Nominated Authority, Ministry of Coal, and to refund any amount that may have been taken under it,” the plea said.

“Vedanta has sought legal remedies. The matter is sub judice and we will not be able to comment on this,” a company spokesperson said in response to Mint’s queries.

Emailed queries to the coal ministry remained unanswered at press time.

Vedanta argued that the order is “illegal, arbitrary, unjust, and unsustainable,” claiming the delays stemmed from administrative and regulatory factors rather than negligence. It has asked the court to cancel the order, halt its enforcement, refund any deducted amount, and allow additional time under the Coal Mine Development and Production Agreement (CMDPA).

The petition cites several reasons for the delay in achieving Milestone-3, including the second wave of COVID-19, boundary mapping issues, and delays in securing forest and environmental clearances.

“The Petitioner has invested over ₹350 crore and made substantial progress toward mine development. However, due to administrative inconsistencies and unforeseen ecological developments—including the presence of elephant corridors and areas now classified as deemed forest—the project timeline became impossible to meet,” the plea added.

The Ministry of Coal, in its response before the high court, said action was taken because Vedanta failed to obtain the required forest and environmental clearances on time. The delay was treated as a violation of the project timeline, particularly since Vedanta had committed to completing the project by 3 June 2025.

The Radhikapur (West) coal block, located in Angul district about 190 km from Vedanta’s Jharsuguda aluminium plant, is a combined opencast and underground mine with a peak production capacity of 6 million tonnes per annum (MTPA). Spread over 1,048 hectares, it holds 312 million tonnes of coal reserves, of which 151 million tonnes are extractable.

The project has a long and complicated history. Originally allotted in 2009 to a joint venture comprising Rungta Mines Ltd, OCL India Ltd, and Ocean Ispat Pvt. Ltd, the block was among those cancelled following the Supreme Court’s 2014 coal block deallocation ruling.

Vedanta won the re-auction in December 2020, signed the CMDPA in January 2021, and received the Vesting Order in March 2021, formally transferring all prior approvals and rights.

Despite this, delays in forest and environmental clearances disrupted the milestone schedule. The Ministry of Environment, Forest and Climate Change played a key role. The Forest Advisory Committee deferred Stage-I forest clearance in November 2021. Though clearance was granted in January 2022, site inspections later revealed 36 acres of Sal tree growth, prompting land reclassification and changes in the mine plan.

The area was also identified as an elephant habitat and a high human-elephant conflict zone, requiring additional scrutiny. Further delays arose from mapping discrepancies, issues with afforestation land, and a freeze on public hearings during the 2024 enforcement of the Model Code of Conduct for the general elections.

Following these setbacks, the coal ministry issued a second show-cause notice to Vedanta in June 2024. After reviewing the matter, it passed the 21 July 2025 order directing the appropriation of ₹29.23 crore from Vedanta’s performance guarantee for non-compliance with the deadline—prompting the company’s legal challenge.

Billionaire Anil Agarwal-led Vedanta Ltd is a global natural resources group with operations in oil and gas, zinc, lead, silver, copper, iron ore, steel, aluminium, and power across India, South Africa, and Namibia.

Vedanta currently operates five coal blocks—Jamkhani, Kuraloi (A) North, Radhikapur, Ghogharpalli, and Barra (under exploration)—with a total capacity of about 40 MTPA. These mines are crucial for powering its aluminium business, which accounted for over half of India’s total aluminium production in FY24. While Vedanta is gradually increasing its share of green aluminium (currently 13%, with a target of 30% by 2030), coal remains essential for operational stability and cost efficiency.

On Thursday, ₹5,000 crore for the April–June quarter”>Vedanta reported a profit of ₹5,000 crore for the April–June quarter, up 13% from a year earlier. Revenue rose 6% to ₹37,434 crore, driven by strong performance in aluminium, zinc, and power.

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