MAC: Mines and Communities

Vedanta set for rough ride as shareholders hover

Published by MAC on 2011-07-25
Source: Times of India, IANS, Reuters, statements

It was naive to expect that UK-listed Vedanta Resources would meekly give way to last year's judgment by India's Ministry of Environment and Forests (MoEF) that it had violated forest laws in its attempts to seize the bauxite deposits in Orissa's Nyamgiri hills. See: The Nyamgiri struggle may be over

Instead, the company went on to appeal the decision before the National Green Tribunal.

Last week, as the Ministry re-confirmed Vedanta's earlier violations, it seemed likely the company would withdraw its petition from the Tribunal.

However, a related case, laid by Vedanta's ally the Orissa Mining Corporation, is still before India's Supreme Court.

Last week, too, Orissa's High Court rejected Vedanta's attempt to expand its Lanjigarh alumina refinery six fold, re-affirming another earlier ruling by the MoEF.

Once again this is not the end to the matter.

Although the MoEF is clear that Vedanta illegally embarked on the expansion, the ministry has reportedly invited the company "to furnish a fresh proposal to obtain environmental clearance for the proposed expansion".

Unacceptable stakes

On 27 July, Vedanta will face shareholders at its eighth Annual General Meeting in London.

A large number of these will insist the company has egregiously failed to show any improvement in its corporate governance or conformity with regulations over the past year.

On the contrary: see, for example, this week's postings from Goa: Vedanta mine disaster in Goa is greeted by corporate lies and civil outrage

Promising to attend this week's AGM is the UK's biggest private insurer, Aviva.

Aviva will vote against three resolutions on Vedanta's agenda. Steve Waygood, head of the Group's sustainability research and engagement declares:

"We are not against the development of the region (of Orissa) but we do believe in supporting the broader community as well as the shareholders of the company, and that balance has not been struck."

No environment clearance for Vedanta, Centre tells green tribunal

By Nitin Sethi

Times of India

22 July 2011

NEW DELHI: Vedanta's environment clearance to mine the Niyamgiri hills has been withdrawn as the rejection of forest clearance had made the green nod 'inoperable and infractuous', the environment ministry told the National Green Tribunal on Thursday while indicating that the environmental clearance in itself was not bad technically.

The failure to meet one-precondition - securing the forest clearance - the ministry contended, had led it to withdraw the environment clearance to Vedanta's project in Lanjigarh, Orissa.

The court gave Vedanta and the state government's mining arm time till July 28 to respond to the environment ministry's affidavit. In case Vedanta decides to withdraw its petition before the tribunal, the future of its mining project, linked to its already existing aluminium refinery, would rest solely on the ongoing case in the Supreme Court where the company has challenged the rejection of forest clearance.

The environment ministry gives two clearances - one for diverting forest land and another environmental clearance. Though the two are not linked, the ministry in its environmental clearance to Vedanta had said that it would only be operational if the company also secured the forest clearance. The then environment minister Jairam Ramesh set up a committee that recommended rejection of forest clearance which he agreed to, also ordering that the environmental clearance stood 'inoperable'.

At the same time, the green appellate body, petitioned by civil society groups, asked the ministry to 'revisit' the environmental clearance as well.

Even though the environment minister had termed it inoperable, the ministry's Environmental Appraisal Committee yet again gave a thumbs-up to the mining proposal sending out mixed signals. After this was reported by TOI, the minister stepped in again to declare that the appraisal committee's recommendations did not matter and he was withdrawing the environmental clearance, which was anyway inoperable.

The rejection of forest clearance was done by the ministry primarily on the basis of violation of Forest Rights Act, which secures rights of tribal groups on the disputed land. But subsequently, in the Posco case in the same state, the Centre changed its stance and said compliance with FRA was primarily the state government's domain and it had no legal provision under the law to ascertain if it was been followed or not except to ask for the state's assurance.

This change of heart at the environment ministry could weaken its case against Vedanta in the Supreme Court.

The Orissa High Court had earlier rejected the company's plea to over rule the ministry's rejection of expansion plans for the refinery that is linked to the Niyamgiri bauxite mining plans.

Court rejects Vedanta plea for alumina refinery expansion

Indo-Asian News Service (IANS)

19 July 2011

Bhubaneswar - The Orissa High Court Tuesday dismissed Vedanta Aluminum Ltd's petition to quash the central government's notification stalling expansion of its refinery project in the state, a lawyer said.

The environment and forests ministry last year stalled the expansion of Vedanta alumina refinery project in Lanjigarh in Kalahandi district from one million tonnes a year to six million tonnes capacity and of its captive power plant from 75 to 300 MW.

Vedanta had moved the court against the order. A high court bench of Chief Justice V. Gopala Gowda and Justice B.N. Mohapatra delivered the verdict at Cuttack, about 26 km from here, after hearing all parties concerned.

"The court dismissed the petition filed by Vedanta. It upheld the argument of the environment ministry," Manoj Mishra, a lawyer associated with the case, told IANS.

The environment ministry had in August last year issued show cause notice to the company under the Environment Protection Act for undertaking construction without prior clearance under the Environmental Impact Assessment Notification-2006.

After examining the company's response on the matter, the ministry in October cancelled the terms of reference issued in 2009.

The ministry then directed the company to maintain status quo at the site and asked it to ensure that no further construction was undertaken in respect of expansion of the project.

The ministry had also asked the state secretary for environment and forest to take legal action against the company under the provision of the Environment Protection Act for violation of Environmental Impact Assessment Notification-2006.

The ministry had also asked the company to furnish a fresh proposal to obtain environmental clearance for the proposed expansion.

Orissa high court rejects Vedanta refinery expansion

Amnesty International Press Release

19 July 2011

Amnesty International has urged the Indian authorities to order the immediate clean-up of an alumina refinery in the state of Orissa, following a high court decision to reject plans for its expansion by a subsidiary of the UK-based Vedanta Resources.

The High Court of Orissa on Tuesday upheld the Indian government's decision made in August 2010, to reject Vedanta Aluminium's plans for the six-fold expansion of the Lanjigarh refinery, finding that the project violated the country's environmental laws.

Vedanta Aluminium challenged the Ministry of Environment and Forest's decision in the high court on November 2010.

"This decision is of tremendous significance for the local communities, who have been fighting to prevent this expansion going ahead," said Amnesty International's Asia-Pacific Deputy Director, Madhu Malhotra.

"The refinery, which has been in operation for four years, fails to meet accepted national and international standards in relation to its environmental, social and human rights impact. The authorities must order an immediate clean-up of the site and monitor the health status of the local communities.

"The Ministry of Environment and Forests must also carry out an independent audit to ascertain whether the refinery's almost-full 28 hectare red mud pond, from which two breaches have been reported in April and May, is operating in compliance with India's environmental protection laws and international standards."

Residents of 12 villages who live in the shadow of the massive refinery - mostly Majhi Kondh Adivasi (Indigenous) and Dalit communities who rely on agriculture for their livelihoods - have long campaigned against the expansion, arguing it would further pollute their land and water.

The Ministry of Environment and Forests rejected the expansion plan on 24 August 2010. It also rejected plans, by Sterlite India, another Vedanta Resources' subsidiary and the state-owned Orissa Mining Corporation, to mine bauxite at Niyamgiri Hills near Lanjigarh after finding that it would violate forest and environmental laws and the rights of the Dongria Kondh adivasi communities.

Challenges against this by Sterlite India and the Orissa Mining Corporation are pending in India's National Green Tribunal and Supreme Court.

Notes to Editors

• For more information or to arrange interviews please contact Amnesty International Asia-Pacific Press Officer, Katya Nasim + 44 207 413 5871 / +44 7904398103

Aviva to withhold support at miner Vedanta's AGM


15 July 2011

LONDON - Asset manager Aviva Investors still has concerns over miner Vedanta's social conscience and corporate governance standards, despite a high-profile campaign last year that saw the group under pressure from shareholders and activists.

Aviva, small but vocal shareholder in Vedanta, said on Friday it would again withhold support for three key resolutions at Vedanta's annual general meeting later this month.

A storm last year centring on Vedanta's planned mine in India's eastern Orissa state forced the company, 62 percent owned by the Agarwal family, to defend its human rights record.

The involvement of Aviva in the protest over plans to build a bauxite mine in an area sacred to indigenous people has marked a more activist stance from institutions on social issues.

"The company has made some progress, and we welcome that. But while the direction of travel is the right direction, the speed is far too slow," said Steve Waygood, head of sustainability research and engagement at Aviva Investors.

Changes at Vedanta have included the appointment of a chief sustainability officer late last year, a move welcomed by Aviva.

"We are not against the development of the region (of Orissa) but we do believe in supporting the broader community as well as the shareholders of the company, and that balance has not been struck."

Vedanta has denied its plan would harm the indigenous Dongria Kondh people and said its plan would help lift the Kalahandi district out of poverty.

There has been increased debate about corporate governance in the mining sector after a storm at miner ENRC last month forced a corporate governance review.

Vedanta has long been criticised for its opacity, with critics maintaining it does not have enough independent representation on its board.

Though not uncommon elsewhere, hefty founder-shareholders are unusual in U.S. and UK markets where ownership tends to be more dispersed. This means miners like Vedanta but also Fresnillo , Antofagasta and ENRC are viewed with caution by institutions, as are other more recent arrivals, like Bumi , a venture founded by Nat Rothschild and in which the Indonesia's politically connected Bakrie family have a majority stake

"We are increasingly concerned about the quality of the governance and sustainability of companies that are listing in the UK," Waygood said. "The more companies listing in the UK that do not really uphold standards of good governance and sustainability, the more it brings the exchange into disrepute."

Vedanta's annual shareholder meeting will be held on July 27. Vedanta were not immediately available for comment.

Aviva has a passive 0.3 percent stake. (Reporting by Clara Ferreira-Marques, editing by Jane Merriman)

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