MAC: Mines and Communities

Mega-miner to meet its match?

Published by MAC on 2010-07-24
Source: The Independent, The Hindu, Dow Jones & others (2010-07-23)

UK's Vedanta faces numerous questions

On July 28th 2010, the board of UK-listed Vedanta Resources welcomes shareholders to the company's 2010 annual general meeting in London.

As at the previous seven AGMs, directors will confront a raft of vocal allegations of their miscreance, misappropriation and misdeeds. To such an extent that most other miners will be thanking their lucky stars they're not standing in Vedanta's shoes.

Thanks partly to the efforts of some mainstream foreign NGOs, UK public and press attention will focus on Vedanta's attempts to access the Nyamgiri bauxite reserves in Orissa. 

This year the company will be more on the defensive than ever. It has been losing thousands, if not millions, of dollars as the project gets further delayed. Within recent months many of India's own "great and good " (at any rate, politically influential servants) have cast grave - if not terminal - doubt upon the legality of the project.

Nonetheless, it's important to recognise that Vedanta isn't simply a pursuer of aluminium-rich ore from a remote mountain top in eastern India.

It is the corporate fiefdom of India's third richest man, Anil Agarwal, who along with his family were named by Business World this week as worth well over US$20 billion dollars.

Vedanta's grip on iron, zinc, copper and coal

The UK company is now the world's most important zinc producer, and ranks as India's biggest exporter of iron ore. Not only has Vedanta become one of the country's most aggressive purchasers of domestic coal; it is also India's premier manufacturer of copper cathode.

Earlier this week, Vedanta's iron ore subsidiary, Sesa Goa, announced its intention of taking over more in Jharkhand and Orissa in order to expand its mining and to set up a steel plant.

Meanwhile, numerous charges laid against the company over recent years - including foreign exchange fraud; failure to rehabilitate relocated tribal peoples; illegally commencing or expanding its operations - grind far too slowly through the courts. 

Protestors may walk away from next Wednesday's meeting, buoyed up by the prospect of at least one Vedanta project soon being thwarted.

But this might be a pyrrhic victory, should the company remain at liberty to continue stomping along its many other destructive paths.

[A cyber action has been launched on two web sites, in an effort to prevent the mining of Niyamgiri. Go to: www.niyamgiri.net and send emails to India's Environment Minister, Jairam Ramesh with cc's to the Indian Prime Minister and others.

On sending this, a new screen will invite you to contact the banks investing in Vedanata a link to http://forests.org/shared/alerts/send.aspx?id=india_mine].

Vedanta faces protests at AGM over ethical record

By Alistair Dawber

The Independent (UK)

21 July 2010

The environmental and human rights record of the miner Vedanta Resources will be put under the spotlight during its annual meeting next week, when the India-based group will face protests from pressure groups and an attempt by activist shareholders to remove members of the board.

Vedanta, the world's biggest zinc producer, declined to comment yesterday on reports that the shareholder lobby group Pirc will propose the removal of Naresh Chandra, a non-executive director who chairs the London-listed group's health, safety and environment committee and its remuneration committee. Mr Chandra, a former Indian home secretary and ambassador to the United States, joined Vedanta's board in 2004. He was not available for comment yesterday.

Pirc, which also called on shareholders not to back the re-election of directors Euan McDonald and Aman Mehta, said: "The failure of the group to engage with explicit investor-led [environmental, social and governance] concerns over the impact of group activities... [is] evidence of a lack of competent oversight, in our view."

Vedanta has consistently been attacked by a range of groups. Human rights and environmental organisations have criticised the company for its bauxite project in the Niyamgiri hills of eastern India's Orissa state. The local Dongria Kondh tribe argues that if the Indian government gives Vendanta's proposed mine a green light, their way of life will be lost. Pressure groups also complain that the project will be an environmental disaster.

Last year, the company's safety record was widely condemned after more than 100 workers were killed when a chimney collapsed at an aluminium plant in central India in which Vedanta has a 51 per cent stake through its subsidiary, Sterlite Industries. Vedanta had said the plant benefited from a "relatively low cost of operations and large and inexpensive labour and talent pools".

Some of the company's biggest institutional investors, including Wellington Management Company and Standard Life Investments, refused to comment yesterday.

A clutch of non-corporate investors have sold their Vedanta shares in recent years, including the Joseph Rowntree Foundation, the Church of England and the Norwegian state pension fund. All blamed the company's ethical record. According to one analyst, the company "couldn't care less" about its reputation. However, in recent months, Vedanta has tried to reassure potential investors. Earlier this month, it published a 56-page document to accompany its annual report, which sought to highlight its social and environmental work.


PIRC Raises Concerns On Vedanta Corporate Governance

By Alex MacDonald

Dow Jones

21 July 2010

LONDON - Shareholders of U.K.-listed miner Vedanta Resources PLC (VED.LN) should oppose the election of three non-executive directors because of their role in the company's poor handling of environmental, social, and governance issues, investor advisory group PIRC said Tuesday.

This marks the latest in a string of public outcries against the firm's corporate governance record. Dutch pension manager PGGM Investments two weeks ago joined some of Europe's biggest public investors in selling out of Vedanta on human-rights grounds, even though Vedanta is one of the strongest gainers in the FTSE-100 index over the past 12 months.

PIRC recommended that shareholders vote against the election of senior non-executive director Naresh Chandra, chair of the India-focused miner's healthy, safety and environment committee and the remuneration committee.

PIRC said the failure of the company to recognize and address weaknesses in health and safety controls following an incident at the India-based Balco power plant this year is a "significant indicator of poor governance."

In September 2009, 40 workers were killed when a chimney at Balco's 1,200-megawatt thermal plant in the state's northeastern district of Korba collapsed amid lightning and heavy storms. At least three executives were arrested in connection with the incident. The power plant is owned by state-run Bharat Aluminium Co., which is 49% owned by Vedanta.

PIRC also said the failure of the group to engage with explicit investor led concerns over the impact of group activities on the Niyamgiri region and the control issues raised by fatalities are evidence of a "lack of competent oversight."

The Indian government recently launched a second probe into the company's plans to mine bauxite, a mineral used to make aluminum, near the Niyamgiri hills of the state of Orissa, India. The probe will investigate the project's social and environmental impact in an area where Amnesty International has been campaigning to protect the human rights of the local Dongria Kondh tribal community.

PGGM spent two years trying to organize a round-table meeting with senior management in order to discuss the Orissa project, but Vedanta declined to participate, the pension manager previously said. The project has been awaiting government approval for more than four years.

Aside from health, safety, social and environmental concerns, PIRC also raised concerns over payment of annual bonuses by the committee of which Chandra is chairman. PRIC said the bonuses were granted in contradiction to the safety criteria upon which such awards can be made. It also noted that salaries were raised significantly without explanation.

PRIC also recommended that shareholders oppose the election of non-executive director and remuneration committee member Euan MacDonald and non-executive director Arman Mehta, who chairs the audit committee and sits on the remuneration committee.

Vedanta wasn't immediately able to comment when contacted by Dow Jones Newswires.

At 1039 GMT, Vedanta's shares were up 21 pence, or 0.9%, at 2249p a share.


Govt gives more powers to panel probing Vedanta project

Economic Times

23 July 2010

NEW DELHI: Supported by favourable opinion from the Attorney General, the Environment Ministry has given more powers to its panel probing into the impacts of and legal issues concerning the Vedanta mining project in Orissa.

The ministry has amended the scope of the work of the four-member panel headed by National Advisory Council (NAC) member N C Saxena, empowering it to "investigate and ascertain status of implementation of Forest Rights Act 2006 in and around the proposed areas of the project."

The widening of the panel's scope came after AG[Attorney General]  G E Vahanvati opined that the Supreme Court nod to Vedanta Resources' bauxite mining project in Niyamgiri does not bind the Environment Ministry to give an automatic clearance to it, and that the project must be approved only on "merits".

The AG gave his opinion after the ministry referred the issue to him asking whether it is within its rights to examine if the project involving bauxite mining on about 660 hectares of forest land is proceeding as per the law.

Comprising S Parasuraman from Tata Institute of Social Sciences, Promode Kant and Amita Baviskar -- both from Institute of Economic Growth, the panel has also been given a free hand "to enquire or investigate any issue which the members might
feel necessary for the purpose of their report."

The other fresh mandates of the panel include "investigation of likely physical and
economic displacement due to the project including the "resource development" of forest users and the rehabilitation plan. The panel has also been asked to investigate likely impact on the bio-diversity, wildlife and the ecology of the land, and on cultural and social lives of the members of the Dongria Kondh primitive tribal group residing
there.

The Saxena panel was formed last month following a report by a three-member committee which alleged "violation" of forest laws as well rights of the primitive tribal groups by Vedanta.

The company denies the charges. Vedanta's plan to mine bauxite for its alumina refinery in the state has been facing hurdles since 2005 after protests by the local
tribals who fear losing their homes and livelihood due to the project.


Vedanta project hits green roadblock

Times of India

23 July 2010

New Delhi: The Union environment and forests ministry has armed itself to tighten the noose against the Vedanta project in Orissa. It has sought and received an opinion from the Attorney General that the ministry, despite a Supreme Court order, still holds the legal mandate to refuse forest clearance to the company.

Alongside the ministry has also widened the scope of investigations headed by the National Advisory Council member, N C Saxena, into the impacts of and legal issues concerning the project. While the AG's advice to the ministry could help bolster its case for not providing the mandatory forest clearance under the Forest Conservation Act, 1980, an adverse report from the four-member Saxena committee could provide the ground to the ministry to block the controversial project on issues of tribal rights and concerns.

Issues have been raised earlier about the impact of the project on the wildlife and forests of the area as well as tribal entitlements under the Forest Rights Act.

As per orders of the apex court, sister concern Sterlite Industries was given permission to work on the project while Orissa Mining Corporation is to excavate in Lanjigarh tehsil of Kalahandi for the bauxite.


Forest Ministry free to say ‘no' to Vedanta: AG

Priscilla Jebaraj

The Hindu

23 July 2010

NEW DELHI - The Attorney-General has given the government a free rein to refuse forest clearance for Vedanta Aluminium's bauxite mining proposal in the Niyamgiri Hills of Orissa.

The project has been put on hold, while a committee led by NAC member N.C. Saxena examines how it would impact the life, livelihood and culture of Dongria Kondhs, a notified tribal community living in the region, as well as a possible impact on biodiversity and wildlife. Forest Conservation Act clearances for diversion of 660 hectares of land have not been granted to Vedanta and its partner, the Orissa Mining Corporation.

Vedanta, as well as certain sections within the government, suggested that the Ministry of Environment and Forests (MoEF) had no right to deny forest clearance, as the Supreme Court itself had granted approval for the project. One interpretation of the 2008 judgment was that the Ministry's role was limited to ensuring compliance with the court's conditions.

However, senior government sources say that following an MoEF query, the Attorney General has made it clear that the Ministry is bound to apply its mind and decide whether or not to grant an independent clearance on the merits of the case. If clearance is granted, the court's conditions would also have to be complied with; if not, the issue is moot.

According to the sources, the Attorney-General felt that the judgment, which said "the next step would be for MoEF to grant its approval in accordance with law," referred to the provisions of the Forest Conservation Act, which must be complied with. There was never any question of the court judgment being used to obviate the necessity of obtaining forest clearances from the government.


AG bats for forest ministry in Niyamgiri mining row

Economic Times of India

22 July 2010

NEW DELHI: Vedanta's plans to source bauxite from Niyamgiri hills in Kalahandi district of Orissa appear to have run into trouble with the Attorney General opining that the ministry of environment has the powers to stop diversion of forest land till rights of tribals under the Forest Rights Act are settled.

After the environment ministry kept on hold clearance for the Vedanta project, questions were raised on the mandate of the department to withhold approval. A section of the government was of the view that since the issue was settled in favour of Vedanta by two Supreme Court orders, there was no need to reopen the matter.

The ministry, which disputed this approach, had taken the issue to the Attorney General. It is learnt that the government's top legal officer, who removed the ambiguities over the environment ministry's mandate, has said it can decide on the clearance.

Environment minister Jairam Ramesh refused to comment of the contents of the opinion from the Attorney General.

In 2008, the Supreme Court had directed the government to give clearance for diversion of 660.749 hectares of forest land for bauxite mining on the Niyamgiri hills in Lanjigarh. The ministry of environment, which contested this order through an administrative directive in 2009, withheld final clearance. State/UT governments, where process of settlement of rights under the Forest Rights Act is yet to begin, are required to enclose evidences supporting that settlement of rights under Forest Rights Act, 2006, will be initiated and completed before the final approval for the proposals,†the environment ministry had said in its order.

The environment ministry has set up a four-member panel under NAC member NC Saxena to ascertain whether the Forest Rights Act has been properly implemented, and to determine the impact of the project on the livelihood, culture and material welfare of the Dongria Kondhs, a notified primitive tribal group, as also on the local wildlife and biodiversity. The committee is expected to submit its report in late August. The committee would revisit issues examined by a three-member study team sent by the Forest Advisory Committee in January 2010.

Doubts were raised on the findings of the team on account of methodological and other issues, including the alleged use of Vedanta equipment to undertake the forest and wildlife surveys.

Vedanta had recently sought the intervention of the prime ministerial establishment for the project. It had argued that the 2007 and 2008 orders of the Supreme Court allowed only a limited role for the environment ministry. It also cited the clean chit on wildlife and forest issues given to the project by the 2010 FAC study, a report that is being contested by the ministry.


Orissa starts accepting forest claims of Kondh tribals

Fight against mining corporation Vedanta to continue, say Niyamgiri dwellers

Down To Earth (Delhi)

20 July 2010

Under pressure from the Union Ministry of Environment and Forests (MOEF), the Orissa government has initiated the process of settling the community rights of tribals over forests in and around the Niyamgiri hills in Orissa's Kalahandi district.

The move follows the recent visit to the area by N C Saxena, head of the four-member committee formed by MOEF to look into mining related issues in Niyamgiri where the Dongria Kondh tribals live. The tribals have been resisting multinational mining corporation Vedanta's attempts to mine bauxite from the Niyamgiri hills to feed its one million tonne alumina refinery at Lanjigarh.

The Orissa chief secretary Tarun Kanti Mishra assured that allegations of forest rights violation by the company would be inquired into.

"I have received 10 community claim applications during the last one week and have asked the forest officials to prepare the maps of the respective villages following which gram sabhas would be called to discuss the claims," said Kalahandi sub-collector, Nand Kishore Sethi.

He refused to explain why the government was sitting on the matter for such a long time. Only four to five community claims under the Forest Rights Act of 2006 have been settled in the past.

The 10 villages from where the claims have been received are Kadamguda, Kendubardi, Basantpada, Balabhadrapur, Rengopalli, Semalbhata, Dengasaragi, Palberi, Phuldumer and Kunakadu.

People in these villages have been leading the movement against Vedanta. The company has already received Supreme Court's nod and first stage clearance from MOEF for bauxite mining.

Vedanta's hopes of getting a second stage clearance to commence mining received a blow in January this year when a three-member committee of MOEF expressed concern over the likely adverse impact of mining on the biodiversity of Niyamgiri area and its tribal residents after a field visit.

This prompted the ministry to set up another committee under N C Saxena, a retired bureaucrat and member of the National Advisory Council, to examine the matter in depth.

Sources said during his visit to Lanjigarh and Niyamgiri on July 7 and 8, Saxena met local residents and public representatives many of whom alleged denial of forest rights to the tribals and illegal cutting of trees by the company to widen roads in the area ( see 'Vedanta fells trees', Down To Earth, February 28, 2010). The president of Kalahandi Sachetan Nagrik Manch, Siddhartha Nayak accused the district officials of refusing to accept community forest rights claims of the people.

On his return from Lanjigarh to Bhubaneswar on July 10, Saxena met the state chief secretary to review the matter. Chief secretary Mishra later said that government would inquire into allegations of violation of forest rights in the area as it was keen to ensure that people were not deprived of their rights.

Expressing hope that the process of settling claims would be completed within two months, Mishra said concerned gram sabhas would be consulted. Vedanta has been slammed by international human rights groups and the Church of England for violating the rights of the Dongria Kondhs.

People are sceptical about Orissa government's softened stance towards the tribals.

Former chairman, Lanjigarh block, Khirabdi Sahu said "experience of the past suggests the government never keeps its word in such matters. We will believe them only when they complete the process and people actually get their rights."

He also asserted that Kondh tribals of the area would continue their agitation against Vedanta.


Dutch manager PGGM drops India's Vedanta over ethical concerns

Investment & Pensions Europe

6 July 2010

NETHERLANDS - Asset manager PGGM has withdrawn its investments in Indian mining company Vedanta Resources for "persistently ignoring" the environment and human rights.

Despite a two-year dialogue concerning Vedanta's mining activities in the state of Orissa, the company made no concrete improvements, PGGM said.

The asset manager said Vedanta's lack of improvement and refusal to co-operate on environmental and human rights issues had increasingly put the company's reputation at risk, which, PGGM felt, had translated into a financial risk.

PGGM, which manages the €91bn healthcare scheme PFZW, said it had exchanged letters and held numerous talks with the company over the last two years.

It also aimed to step up pressure on Vedanta by involving a number of international institutional investors in talks.

But PGGM said Vedanta declined to participate in a roundtable meeting with experts - initiated by the group of investors - to discuss possible solutions for problems in Orissa.

Consequently, PGGM has disinvested its €13m stake in the company, including Vedanta's subsidiaries Sterlite Industries, Hindustan Zinc and Sesa Goa.


Sesa Goa to buy land in Orissa, Jharkhand; plans to set up steel plant

American Chronicle

21 July 2010

India's largest private sector producer and exporter of iron ore, Sesa Goa Ltd, is acquiring land in the eastern states of Jharkhand and Orissa with an eye on manufacturing steel, managing director P.K. Mukherjee said on Tuesday.

"We have MoUs (memoranda of understanding) in Jharkhand and Orissa and at the moment we are awaiting a new mining licence...Land acquisition will be followed by mining approvals and then we can look at the technology (for the steel plant)," he added.

Sesa Goa is a subsidiary of Vedanta Resources Plc, the London-listed metals and mining company owned by billionaire Anil Agarwal that has been facing protests over the environmental and social impact of some of its projects in Orissa.

Mining companies in India have been facing roadblocks in land acquisitions lately, often because of delays in getting environmental clearances. Also, the steel ministry has demanded a ban on iron ore exports to give domestic steel makers priority access to raw material from the mines.

"We are hearing about these things for the last three-four years and different governments have different views. We hope the government will think from all sides," Mukherjee said, adding that duties and royalties have also increased in the past few years.

On Tuesday, Sesa Goa reported a three-fold increase in profit to Rs1,304 crore for the quarter ended June, from Rs424 crore in the corresponding period last fiscal.

The growth was largely because of an increase in exports and higher prices for iron ore abroad, the company said.

Sesa Goa exports up to 95% of its iron ore, most of it to China. Realization increased to $85 (Rs4,003) per tonne from $37 per tonne in the same period last year, Mukherjee said, explaining the rise in profits.

Pawan Burde, a senior analyst at Centrum Broking Pvt. Ltd, said while the results were in line with expectations, the company could face some challenges in the near future.

"Spot iron ore has come down to $126 per tonne from $180 per tonne a couple of months ago. Then there is a slowdown in China, which could hit demand, and there are regulatory hurdles like an export ban," he said.

As on 30 June, Sesa Goa had Rs6,495 crore in debt mutual funds and Rs1,559 crore in fixed deposits and cash. Sesa Goa shares on Tuesday closed 1.11% higher at Rs352.25 each on the Bombay Stock Exchange, while the benchmark Sensex index ended 0.28% lower at 17,878.14 points.


Villagers counter goons on site

Police-Villagers out on the streets

Situation tense, road blocked

www.mandgoa.blogspot.com

12 July 2010

According to the reports just coming in Vedanta's have deployed goons to cut the fragile mangrove forest on the Zuari river banks to put up the loading point for its company Sesa Goa. Villagers of Panchwadi has challenged the goons on site and forced them to stop deforestation and flee from the site.

Situation has remained tense in the area and police as well as villagers are out on the streets. Villagers are demanding that the mining company's goons responsible for forcible cutting down of mangrove forest be arrested with immediate. Police are yet to effect any arrests of the mining goons so far. Main road stands blocked.

Sesa Goa is tryi9ng to set up loading points for the iron ore for the purpose of loading of ore into barges to ship towards Marmagoa Port to export. Panchwadi Bachao Samiti had already filed its objection to this proposal more than a month ago. Here is a copy of the letter:

PANCHAWADI BACHAO SAMITIc/o Christev D'Costa (Ex-Sarpanch),
Vizor, Panchawadi,
Ponda Taluka, Goa

Date: 7th June 2010

To

The Member Secretary,
Goa Coastal Zone Management Authority,
Opp. Saligao Seminary, P.O. Saligao,
Bardez, Goa

SUB: Objection to Proposed Riverside Terminal for "stocking/loading" of mineral ore at Panchwadi village, Ponda Taluka by M/S. Sesa Goa Ltd. - Panchwadi Bunder Project (GCZMA/N/193)

REF: (1) Our letter to you dated 2nd March 2010

Dear Sir,

This is further to our above referred letter, to which we are yet to receive a reply.

We are in possession of documents related to the subject project, which have been collected from your office by Shri Abhijit Prabhudesai under the RTI Act, 2005. Based on these documents and the CRZ Notification, 1991 (as amended till date), the following facts are brought to your attention:

1. That the Goa Coastal Zone Management Authority gave clearance to the said project vide letter ref. no. GCZMA/N/193/301 dated 09/01/2003, more than 7 years ago.

2. That section 3., sub-section (2), (ia) of the CRZ Notification, 1991 (as amended till date) states as follows - "The clearance granted shall be valid for a period of 5 years for the commencement of the construction or operation."

3. That the third paragraph of section 2., sub-section III, (c) of the EIA Notification, 1994 (as amended till date) states as follows - "The clearance granted shall be valid for a period of 5 years for the commencement of the construction or operation of the project."

4. That no construction or mobilization has commenced for the said project till date.

5. That as per page no. C/36 of the subject file, Shri A. G. Untawale has committed gross and blatant misuse of his powers by falsifying the records of his observations made during the site visit to the Proposed Riverside Terminal, conducted on 11th and 12th October 2002. The entire 35 Has. area of the said site is covered with fully grown mangroves of many diverse species, some of which are unique to this region and not found in other parts of Goa, making this area one of the best and most diverse mangrove forests along the Zuari River. However, Mr. Untawale's report attempts to misguide the State into believing that the mangroves at the site are inconsequential and dispensible. It is further observed that the document has the names of both Dr. Claude Alvares and Mr. A. G. Untawale, yet only Mr. Untawale has signed on it. It is understood from Dr. Claude Alvares that he refused to sign the Site Report prepared by Mr. Untawale for the same reason.

From paragraphs 1 to 4 above it is abundantly clear that the clearance issued by your office for the subject project is no longer valid.

In view of the above, we request you as follows:

1. Kindly respond to our above referred letter at the earliest. In particular, please confirm that the clearance given to the said project vide letter ref. no. GCZMA/N/193/301 dated 09/01/2003, more than 7 years ago, is no longer valid.
2. Immediately take necessary steps to identify all the mangroves along the River Zuari, with prior intimation to us.
3. Any application for CRZ clearances in the village of Panchwadi to be copied to us for our information before being processed.

Thanking you,

Yours faithfully,

Sd/-

Christev D'Costa
President

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