* Giant economy faces battle to save forests or boost mining
* Environment minister says forests key to climate fight
* Risk that unchecked mining could fuel Maoist insurgency
(Repeats to more subscribers)
By Krittivas Mukherjee an Ruchira Singh
NEW DELHI, June 24 (Reuters) - India's maverick environment minister is resisting pressure from some cabinet colleagues to clear forests for mining and roads in a tussle that underlines the country's struggle for sustainable growth.
Jairam Ramesh wants to protect and expand India's remaining forest land as part of a strategy to fight climate change, but that could mean giving up mining about a quarter of the country's mineral reserves, needed to power Asia's third-largest economy.
He has scrapped or delayed clearance for some 100 mining
projects, including those backed by India-focused miner Vedanta
Resources Plc
"What you see in this debate is the challenge of the balance between growth and environment protection," said Sunita Narain, head of New Delhi-based Centre for Science and Environment.
But saving forests in India is more than just about protecting the environment.
Years of uncontrolled mining has pushed tribal people off their forest land, alienating them and fuelling insurgencies that feed off a perceived neglect of the poor.
In India, two-thirds of the population makes a living from farming and a growing Maoist rebellion has capitalised on farmers' resentment over the government's seizure of their land for industry.
For example, violence has flared over POSCO's proposed 12-million-tonne capacity steel plant in the eastern state of Orissa. The steelmaker needs 1,600 hectares (4,000 acres) of land and a large portion of the proposed site is forested. [ID:nSGE64E02M]
Vedanta wants to push ahead with a long-stalled bauxite mine in eastern India but a government panel accused Vedanta in March of violating environmental guidelines. [ID:nSGE62E0TM]
COLLISION COURSE
About 65 million hectares, or 20 percent of India's land, is forested. And this is also where most of India's mineral resources lie, including huge deposits of iron ore, and the coal that fuels about 60 percent of India's power output.
Forests also absorb about 11 percent of India's greenhouse gas emissions every year.
Ramesh is among a handful of political leaders watched closely for their ability to push an agenda to modernise India against conservative figures in the ruling Congress party focused more on political expediency.
He wants to extend forest cover by about a million hectares every year, putting him on possible collision path with his colleagues from the mining and highways ministries because it could put more areas out of bounds for them.
In his quest to better regulate the mining sector, Ramesh has identified "no-go" zones in forest land that could put about 620 million tonnes of coal, among other minerals, out of reach.
An angry mining ministry has sought the intervention of the prime minister's office. Officials say it is a tough decision to make in view of the environmental, social and political fallout.
The mining sector's clout means there could be some redrawing of Ramesh's "no-go" zones.
But a spotlight on steps the world's number four greenhouse gas polluter takes to cut carbon emissions, and realisation that taking away forest land from poor tribes will only worsen the Maoist insurgency, could limit changes.
Thousands have died in the rebellion since the armed struggle began in the late 1960s, and the prime minister has described the insurgency as the nation's biggest security challenge. [ID:nSGE64U07I]
Industry says it is pricing in stronger environmental rules.
"I think environmental norms are going to get tougher and tougher," Haresh Melwani, chief executive of mining and exporting firm HL Nathurmal & Co, told Reuters.
"It is being seen not only in India, but globally because of public awareness. One has to build in environmental costs into total costs and move on."
CRACKDOWN ON ILLEGAL MINING
Ramesh has also cracked down on illegal mining, often done with help from local politicians, and brought more accountability in a sector that had minimal environmental regulations.
Stringent environmental checks are seeing some fallout in the mining sector.
"Gestation periods for mining projects are going up because of clearance issues," said a mining ministry official on condition of anonymity as he is not authorised to speak to media.
Extracting minerals such as coal will be crucial for India if it has to keep growing at about 10 percent in the medium term.
In 2009/10, India's coal output was 531 million tonnes, about 70 million tonnes short of domestic demand. Coal imports are forecast to rise beyond 100 million tonnes by 2012.
Coal Minister Sriprakash Jaiswal said on Wednesday that the threat of Maoist attacks was hampering coal mining in several states, keeping production lower than the demand from growing industries [ID:nSGE65M04J].
Stronger environmental laws could also impact iron ore, of which India is the world's third largest supplier, shipping out around 107 million tonnes of the mineral mostly to China in 2009.
But many in the industry are happy at what they say is much-needed clarity in policy.
"I think the industry has been saying for a long time that rather than on a reactive basis, tell us proactively what is permissible and what is not in terms of areas," Kameswara Rao, executive director, PricewaterhouseCoopers, told Reuters. (Writing by Krittivas Mukherjee; Editing by David Fogarty)