Activists say the open-cast mine would also wreck the rich biodiversity of the hills and disrupt key water sources that supply springs and streams in the area and feed two rivers which irrigate large farmlands.

But India's environment ministry told the Supreme Court -- where the issue is being fought out -- that the mining would only affect a marginal amount of forest land and that it would have "negligible" impact on flora.

"If the total forest area required for bauxite mining component of the project were to be compared with the total forest area of the district, it works out to be only 0.26 percent," said a ministry report submitted to the court.

Vedanta wants to feed an alumina refinery it has already built in the area, as part of a US$800 million project expected to initially produce 1 million tonnes of alumina per year.

Earlier, a Supreme Court committee said that the government had violated its own guidelines by allowing the firm to build the refinery without getting clearance to mine the hills.

The ministry report said "special efforts" would be made to manage and conserve wildlife in the area, which is part of an elephant corridor, shelters leopards and is the only known home in Orissa of the rare golden gecko.

"The operations in these bauxite mining areas will be undertaken with strict regulatory conditions to minimise the impact of noise generated from occasional blasting and vehicular movement on the wildlife," said the report.

The government said other industrial projects occurring in the area had had a significant positive impact on the life of tribal people -- providing direct and indirect employment, service and support opportunities.

"The envisaged bauxite mining projects in these districts will bring about economic prosperity," it said.