Pressure is mounting on Wandsworth Council to review its pension fund portfolio after it was revealed the council held £454,000 in a mining company due to demolish a sacred Indian mountain.

International Development charity ActionAid called on the council to ask Vedanta to withdraw its controversial mining project, which, it said, would destroy the lives of 8,000 people of an indigenous tribe.

The charity’s request comes a week after the Wandsworth Guardian revealed the council had £7m invested in tobacco companies, despite it championing its role in reducing smoking rates.

Critics said a review of the pension portfolio, which covers council employees, was now necessary. But the council insisted it had a duty to maximise fund returns, adding any shortfall would be made up by taxpayers.

Vedanta defended the project as bringing “benefits to a deprived region”. It plans to mine bauxite (aluminium) on the Niyamgiri mountain in the eastern state of Orissa.

But Meredith Alexander, ActionAid’s head of trade and corporates, said the Kondh tribe, who have lived around the mountain for hundreds of years, were dependent on the mountain for crops and water.

The Kondh regard the mountain as the sacred home of their god, Niyam Raja, she said, and the area was home to tigers, elephants and leopards – threatened with extinction if mining goes ahead.

She said: “Shareholders, including Wandsworth Council, are investing in a mine that will destroy a community’s way of life, at the same time as irreversibly damaging a unique environment.”

Councillor Tony Belton, opposition leader in the council, said, despite the mine issue not being known at the time of investing, some fundholders “would not be happy at all”.

He said: “Given public concern about the plans and the significance of this mountain to the tribe I would imagine the council would either ask Vedanta withdraws from the project or the council sells its shares.”

A council spokesman said it was duty-bound to get the best financial return on its investment. He said: “As the law stands, any shortfall in the fund’s performance would have to be met by taxpayers, so it is important these investments make the best possible return.”

A Vedanta spokesman said the mine would bring economic, health and education benefits to a deprived region and would be “conducted in a sensitive way that takes into account the way of life and the beliefs of the communities in the area”.

For information on the campaign visit actionaid.org.uk.

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