(IDEX Online News) – Rio Tinto has pulled out of a diamond mining project in the Indian state of Madhya Pradesh due to environment-linked issues, according to a report in the Indian press.

The diversified miner was requested to explore the possibility of significantly more expensive underground mining and to await the completion of a river linking project.

Environmental issues have held the project back for some time. The country’s first private diamond mining project would cause damage to the wildlife corridor between the Panna Tiger Reserve and the Navardehi Wildlife Sanctuary Wildlife, it was claimed.

The environment ministry proposed that mining take place in an area of less than 10% of the 971-hectare project. It wrote to the state government on August 10, claiming that surface mining “would entail greater extent of forest land use leading to permanent loss of the high quality forest areas” and “the project proponent may also explore the possibility of underground (mining),” according to the Indian Express.

“As part of its ongoing efforts to drive shareholder value by conserving cash and cutting costs further, Rio Tinto has decided to not proceed with development of its Bunder project in India,” Rio Tinto Exploration India Private Limited wrote in a statement to The Indian Express. “Accordingly, we will be seeking to close all project infrastructure by the end of year 2016.”

Rio Tinto’s decision is also a blow for the government of Madhya Pradesh whose Chief Minister Shivraj Singh Chauhan had pushed for the statutory clearances required for the project.

The diamond mine was expected to provide considerable royalties and taxes for the state government. Rio Tinto sources said that the miner had already invested millions of dollars on prospecting and had hired more than 300 people at the project site.

The deposit is estimated to have diamond reserves of 34.2 million carats.