Rio Tinto Exploration India Private Limited has announced that it has decided “not (to) proceed with development of its Bunder project in India”, according to reports in the Indian media. The company said in a statement to The Indian Express that the step was “part of its ongoing efforts to drive shareholder value by conserving cash and cutting costs further”, and that it “will be seeking to close all project infrastructure by the end of year 2016”.

It may be recalled that last month, an official panel had raised concerns over the environmental impact of the project and its possible effects on two wildlife sanctuaries that were in close proximity to the proposed site. Subsequently, the environment ministry had recommended that mining should be limited only to 76.43 hectares instead of the originally proposed 971 hectares. It also recommended exploring the possibility of underground mining rather than surface mining.

The reports suggest that Rio Tinto has already invested over Rs 400 crore in the project, and currently has over 300 persons working on the site. The company was granted a reconnaissance permit in 2004, and subsequently got a prospecting licence as well. During 2010-12 it received support letters from the Madhya Pradesh government for a 30-year lease.

The statement added that the Company “will offer a fair and equitable voluntary severance scheme to contractors employed at the project site.”

According to the reports, the project area had an estimated diamond resource of 34.2 million carats. It was projected to yield Rs 2,058 crore and Rs 208 crore towards royalty and taxes, respectively.

Rio Tinto has been quoted as saying that “the Bunder deposit is a high-quality discovery”. It has reportedly offered to help the state and the Union government in finding a “third-party investor to carry forward the development of the project”.