Rajam Krishnan
Vedanta Resources Plc is a London Stock Exchange -listed diversified FTSE 100 metals and mining company. It is India’s largest non-ferrous metals and mining company based on revenues. With assets and operations in India, Zambia and Australia, it is primarily engaged in copper, zinc, aluminium and iron ore businesses. Recently, it has ventured into commercial power generation business. It is the first Indian manufacturing company to be listed on the London Stock Exchange. It is well on its way to become a million-tonne per annum producer at the lowest decile costs in aluminum, copper and zinc by 2010.
It has experienced significant growth in recent years through various expansion projects for copper, zinc and aluminium businesses and acquisition of Sesa Goa in April 2007, which enabled it to enter the iron ore business. Revenue from businesses increased from $3,701.8 million in fiscal 2006 to $7,930.5 million in fiscal 2010, representing a compound annual growth rate of 21%.
Vedanta has been criticised by human rights and activist groups, including Survival International and Amnesty International, due to their operations in Niyamgiri Hills in Orissa, India that are said to threaten the lives of the Dongria Kondh that populate this region. The Niyamgiri hills are also claimed to be an important wildlife habitat in Eastern Ghats of India as per a report by the Wildlife Institute of India as well as independent reports/studies carried out by civil society groups. In January 2009, thousands of locals formed a human chain around the hill in protest at the plans to start bauxite mining in the area.
Vedanta’s Alumina Refinery in Lanjigarh was criticised by the Orissa State Pollution Control Board (the statutory environmental regulation body) for air pollution and water pollution in the area. According to Amnesty International, local people reported dust from the plant settling on clothes, crops and food. An environmental impact assessment by the government found dust pollution was within acceptable limits. Vedanta officials claimed there was no dust pollution from the plant at all. An environmental inspection of the plant reported water pollution by the plant including increasing the pH value of the river Vamshadhara below the refinery and a high level of SPM in the stack emissions. In October 2009 it was reported that the British Government has criticised Vedanta for its treatment of the Dongria Kondh tribe in Orissa, India. The company refused to co-operate with the British Government and with an OECD investigation. They have rejected charges of environmental damage, saying it may be related to the increased use of fertiliser by farmers.
In 2007 unsafe mining operations led to 1,246 injuries and 26 deaths involving the group’s employees and contractors.
In respect of bauxite mines at Lanjigarh, Orissa, public interest litigations were filed in 2004 by Indian non-government organisations led by the Peoples Union for Civil Liberties to the Supreme Court sub-committee regarding the potential environmental impact of the mines. The Ministry of Environment and Forests received reports from expert organisations and has submitted its recommendations to the Supreme Court.
The sub-committee has found “blatant violations” of environmental regulations and grave concerns about the impact of the Niyamgiri mine on both the environment and the local tribal population. The committee recommended to the Court that mining in such an ecologically sensitive area should not be permitted.
Ministry’s negative response to Vedanta Project
After a long drawn-out consultation process, the Union government has finally pronounced its verdict against Vedanta Alumina’s $1.7-billion plan to mine bauxite in the Niyamgiri Hills of Orissa on 24th August 2010.
The Minister for Environment and Forests Jairam Ramesh said that there has been a very serious violation of the Environment Protection Act, the Forest Conservation Act and the Forest Rights Act. He blamed Vedanta, the Orissa Mining Corporation, and State officials for the violations. The clearance stands rejected.
Mr. Ramesh accepted the recommendation of the Forest Advisory Committee (FAC) to withdraw the Stage I forest clearance, granted in 2008, and reject the Stage II clearance that the promoters had applied for. In the light of this, the environmental clearance will also become invalid. (See also Articles on ‘Environmental Issues’ in jeywin.com).
In a further blow to Vedanta’s plans in the region, the Ministry will investigate the allegation that bauxite for Vedanta’s Orissa refinery is being sourced from 14 Jharkhand mines, of which at least 11 do not have a valid environmental clearance.
The Ministry is also issuing a show-cause notice, threatening cancellation of the licence given to the refinery itself, which has illegally grabbed village forest lands and carrying out a six-fold expansion without permission. The appraisal process of the expansion has been suspended.
The FAC’s recommendation was based on the N.C. Saxena Committee report that detailed the violations and the adverse impact of the project on the local Dongria Kondh tribal community and biodiversity in the region. The Orissa Forest Secretary met Mr. Ramesh on 24th August 2010 to voice the State Government’s objections to the report. He also reiterated the argument put forth by Chief Minister Naveen Patnaik that the Supreme Court’s August 2008 ruling in favour of an in-principle clearance made the final clearance a fait accompli.
He claims that his Ministry cannot function on the basis of fait accomplis. Since August 2008, a lot of new information has come to light. He says that it is on the basis of this incriminating new evidence that the decision has been taken.
Among the new information is the State government’s failure to implement the Forest Rights Act, which protects the community rights of forest-dwellers, especially tribals.
Instead, the Saxena Committee found that district administration officials deliberately submitted documents faking the consent of gram sabhas.
26 August 2010
After the bold action taken by the Union Environment and Forest Ministry against Vedanta’s plans to mine bauxite in Orissa, the clutch of bauxite and alumina projects in Visakhapatnam district in Andhra Pradesh may now feel the heat. Already, there is lurking fear in the bauxite mining and alumina refining industry that their projects could be next in the firing line by the Ministry as the issues were akin to those raised in the case of Vedanta. These include impact on indigenous tribal communities, ecologically sensitive region, rich flora and fauna and water sources, besides violations of Forest laws.
Union Mines Minister B. K. Handique, acting on a representation by Congress MP from Araku and chairman of Committee on Pubic Undertakings V. Kishore Chandra Deo, made it clear that the commencement of bauxite mining operations in Visakhapatnam will be kept on hold till issues raised by the latter were addressed.
The Environmental Impact Assessment report for Araku region would be re-evaluated.
The Minister made specific mention of the Jindal South West Holdings Limited, Ras-al Khaimah and three projects of National Aluminium Company Limited, all joint ventures with Andhra Pradesh Mineral Development Corporation (APMDC).
He informed the MP that a committee of the Union Ministry of Environment and Forests will look into the issues regarding the impact of bauxite mining on water table, catchments, reservoirs, forest cover etc.
Reactions of the Tribals
The Congress general secretary Rahul Gandhi has backed the tribals’ cause in Orissa’s Niyamgiri hills, which is the hotbed of the Vedanta controversy. Rahul’s visit comes two days after the Centre refused to give an environment clearance to Vedanta’s bauxite mining project. The Gandhi scion said development is important but it should be done after listening to the poor and the tribals.
He claims that does not mean curbing the poor, the tribals and the backward. Rahul said the tribals of Niyamgiri were being crushed. He reiterated the promise made in 2004 that the government of the poor and the common man would come at the Centre and they had shown that.
In March 2008, Rahul visited Lanjigarh and expressed his solidarity with the Dongriya Kondhs who have been opposing the Vedanta mines. He is back in 2010.
The timing of Rahul’s visit, just two days after Jairam Ramesh’s ban on Vedanta’s mining, has prompted the Orissa government to cry foul.
In the past 10 years, the tribal vote bank of the Congress has eroded in favour of the BJD. Many believe Rahul’s visit to Langigarh is to revive this tribal vote bank. The Congress, of course, denies the allegation.
As for the tribals of Lanjigarh, who have been opposing the mine for almost five years, the environment ministry’s order is a welcome reprieve. To counter Rahul’s tribal rally, the BJD is planning to organise a similar rally at the same place next week. It’s clear no political party wants to alienate the tribals in order to please Vedanta.
Vedanta has made it very clear that it has already invested $ 5.4 billion in the aluminum project in Orissa and there is no question of the company pulling out of the State.
But the big question is if Vedanta does not get its bauxite from the controversial Niyamgiri hills, will the Orissa government oblige to provide alternate source of bauxite to the company.
30th august 2010 – the current scenario
The government is planning to put in place a more transparent mining policy by designating parts of mineral-rich regions as out of bounds for industry because of environmental concerns, a move that can avoid episodes such as the recent ban on mining at Niyamgiri in Orissa but could hurt expansion plans of companies located in such areas.
The plan is to divide the country’s mineral-rich regions into so-called ‘go’ and ‘no-go’ areas, replicating a similar exercise carried out by the environment ministry for the coal sector. The exercise, spelt out by the ministry of mines in a note prepared a few days ago, is to identify areas where mining could be carried out without causing serious environmental damage. The nub of the exercise is to identify areas of dense forest cover where mining will not be allowed.
The note, which was prepared last week and has been seen by ET, will be reviewed by a group of ministers. The group, consisting of those with a stake in mining policy, includes BK Handique, the minister in charge of mining, finance minister Pranab Mukherjee, minister of state for coal SP Jaiswal, as well as minister of state for environment Jairam Ramesh, whose activism has provoked the policy review.
Once cleared by this group, the policy will be notified. The demarcation between mining and no-mining areas covers metallic minerals such as iron ore, bauxite and zinc, according to the note. Mr Handique could not be reached for comments.
While such proposals have been mooted earlier, efforts to bring in greater transparency into India’s notoriously opaque mining policy gained momentum after the environment ministry on August 24 denied permission to Orissa Mining Corp to mine bauxite on the Niyamgiri hills. The Niyamgiri bauxite was intended for Vedanta Aluminium, a joint venture partner of Orissa Mining Corp. However, the project faced stiff opposition from the local tribal population and from environmentalists who drummed up local and international support that resulted in the shelving of the project.
The proposal has the backing of the Prime Minister’s Office (PMO), which has been taking an active interest in matters concerning mining and its impact on the environment. The PMO recently asked the group of ministers to prepare a national policy that will also spell out areas that can be allowed for mining.
The mapping exercise proposed by the mines ministry will use data collected by the Indian Bureau of Mines, a body controlled by the ministry which is involved in the development of mineral resources and in protecting the environment in mining areas.
The bureau is currently engaged in developing overlays or mining areas overlapping with thick forest cover. This could be used as the basic input for adopting the ‘go’ and ‘no-go’ concept. The mines ministry exercise will support the initiative proposed by the environment ministry to collate the density data of forest areas and put it on its website. This will enable organisations, including the Geological Survey of India, to prioritise areas for exploration for minerals.
For existing mining operations, the government official quoted earlier said, the categorisation will only have minimal impact though some portion of expansion of existing mining operations may get impacted.
A recent study by global research body BMO, that backs higher investment in mining-rich countries like India, says that among industrial commodities, copper, iron ore and metallurgical coal are the top picks because of expectations of strong demand in China.
Of the 89 minerals produced in the country, four are fuel minerals, 11 metallic, 52 non-metallic and 22 minor minerals. India is the largest producer of mica blocks and mica splitting; it ranks third in the production of coal and lignite, barytes and chromite. It is the fourth-largest producer of iron ore the sixth-largest of bauxite and manganese ore and the tenth-largest producer of aluminium.
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