India has rejected Vedanta Resources' $8.5bn plan to expand its alumina refinery in eastern India.
The six-fold expansion was expected to boost output by up to six million tons per year.
The Indian Ministry for Environment and Forests said that Vedanta can continue its existing operations at the Lanjigarh plant, but cannot start construction activities in respect of an expansion project.
Vedanta has also been asked to maintain a minimum level of forested area around the existing plant and to monitor pollution levels.
The Indian Government has previously rejected another Vedanta proposal, to mine bauxite at Niyamgiri Hills in Orissa, as several tribal groups reside in and around the proposed mining area.