VZCZCXRO5264
RR RUEHBI RUEHCI
DE RUEHCG #0236/01 0851038
ZNR UUUUU ZZH
R 261038Z MAR 07
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 0787
INFO RUEHNE/AMEMBASSY NEW DELHI 2392
RUEHCI/AMCONSUL KOLKATA 0739
RUEHBI/AMCONSUL MUMBAI 5004

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. _ 
 
--------------------------------------------- ---------- 
ANDHRA PRADESH: PLANS FOR AN EXPANDING NUCLEAR INDUSTRY 
--------------------------------------------- ---------- 
 
¶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. 
 
--------------------------------------------- ------ 
CHIEF MINISTER WEATHERS THE ENVIRONMENTAL BACKLASH 
--------------------------------------------- ------ 
 
¶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