MAC: Mines and Communities

Vedanta thrashed, as board clashes with shareholders

Published by MAC on 2011-08-01
Source: Guardian, Dow Jones, ICN, PTI, Reuters, statement

If there were any lingering doubts among human rights and environmental NGOs that Vedanta Resources is the most delinquent London-listed miner, they were surely put to rest last week.

Banner at 2011 Vedanta London AGM
Banner at Vedanta 2011 London AGM Source: Kerima Mohideen

For a solid two hours, representatives of Amnesty International, Survival International, the London Mining Network, Britain's largest insurance company, and Indian activists, slammed the company at its annual general meeting on 27 July.

From Australia to Zambia, passing by way of Goa,  Chhattisgarh and Orissa, Vedanta's appalling record of disasters, legal violations, and intrinsic deceit was exposed before the audience.

When it came to the crucial vote on directors' remuneration, a significant proportion (around a third) of independent shareholders voted against the motion.

As at the company's previous seven AGMs, chairman Anil Agarwal tried arguing that his outfit always complied with regulations (stupendously false) and was continually improving its social and environmental performance (almost equally untrue).

For how much longer will these pretenses cut ice with those investors who still back his company -  scathingly described by one shareholder as "a house without a toilet"?

[Commentary by Nostromo Research, 30 July 2011]

Vedanta bosses clash with protesters over pollution and human rights

Board of Indian mining company faces barrage of hostile questions at annual meeting

By Richard Wachman


28 July 2011

Anger erupted inside and outside Vedanta's annual meeting on Wednesday as campaigners protested against the mining company's environmental and human rights record.

Protestors at Vedanta 2011 London AGM
Protestors at Vedanta 2011 London AGM Source: Kerima Mohideen

Scores of people picketed the building where the gathering was being held in London and chanted slogans against the firm, which has been at the centre of a row over corporate social responsibility.

The board, led by Anil Agarwal, whose family control 62% of the shares, faced a barrage of hostile questions from shareholders and representatives of lobby groups. More than 13% of shareholders failed to back the remuneration report, while more than 7% voted against the re-election of head of the firm's health and safety committee, Naresh Chandra.

The proceedings were ill-tempered, with heated exchanges between executives and investors. At one point security men had to restrain an investor who wanted to hand directors leaflets about an accident at a Vedanta operation in Goa.

Management was attacked for a poor safety record, disregarding human rights and pollution at factories across the sub-continent. Vedanta is an Indian company that listed on the London Stock Exchange in 2003, but has been dogged by controversy. A company spokesman said recently: "Vedanta is fully committed to doing business in a responsible manner respecting the environment and human rights. We work closely with local communities in all geographies ... to ensure sustainable development."

Aviva Investors voted against the remuneration report in a protest against pay rises that were not linked to the firm meeting a range of "green targets". Aviva is demanding linkage between directors' remuneration and the attainment of internationally recognised environmental standards.

The pensions fund group also voted against the reappointment of several non-executives, who it claimed were not independent. It abstained during the vote to re-elect Navin Agarwal, the chairman's brother, because he apparently collected an £850,000 subsistence allowance. The company later advised Aviva that the amount was £85,000.

Groups such as Amnesty International and Action Aid demanded Vedanta scrap plans to build a bauxite mine in Orissa, eastern India, on land deemed sacred by the indigenous Dongria Kondh tribe. Protesters are also opposed to the expansion of an aluminium refinery in the same area, which they claim has polluted local rivers.

Jo Woodman, of Survival International, said: "We are calling on Vedanta to pull the plug on its Orissa project; shareholders, government agencies and campaigners have highlighted the company's record on the environment and shown it has paid scant regard to the interests of local people."

Vedanta's expansion plans in Orissa have been blocked by the Indian government, but the group has lodged an appeal with the supreme court.

Two years ago, Vedanta received a barrage of adverse publicity when 40 people were killed in the state of Chhattisgarh after a chimney collapsed. Three Vedanta officials were arrested.

The London Mining Network says Vedanta's record has not markedly improved, with 26 fatalities at its mines reported last year and a waste dump in Goa overflowing this month.

As a result, millions of tonnes of mud and silt flooded into the [Goan] village of Mulgao, swamping farmland, choking rivers and threatening people's livelihoods," said an LMN spokesman. Vedanta has offered to compensate farmers.

Michael Palin, the former Monty Python actor, issued a statement, saying: "I am very disappointed that the decision to stop Vedanta's mine by India's environment minister is now being challenged in the courts. Vedanta needs once and for all to abandon this ill-conceived project and respect the rights of the Dongria Kondh people."

Vedanta Bonus Report Approved, But 'No' Vote Is High

By Alex MacDonald

Dow Jones Newswires

27 July 2011

LONDON- Shareholders in U.K.-listed, India-focused Vedanta Resources PLC Wednesday approved the company's proposed remuneration report but a high percentage nonetheless showed their opposition.

Placards at 2011 Vedanta London AGM
Placards at 2011 Vedanta London AGM Source: Kerima Mohideen

At the company's annual general meeting in London, the vote in favor of the remuneration was 86.29% while the vote against was 13.71%.*

Vedanta said in its latest annual report that £980,000 in annual performance bonuses would be awarded to the company's three top executive directors, including chairman Anil Agarwal, for the fiscal year ending March 31, 2011.

The annual bonuses are for business operational performance and projects, including green field and expansion projects. In addition, they are linked to strategic initiatives in mergers and acquisitions and effective stakeholder management that resulted in recognition and achievement of awards in corporate social responsibility, safety, quality, business excellence and best employer status, according to the annual report.

Earlier this month, independent U.K. shareholder advisory group PIRC called on Vedanta shareholders to oppose the remuneration report, citing their concerns over safety performance at the firm.

Vedanta is a FTSE 100 diversified metals and mining company that produces aluminum, copper, zinc, lead, iron ore and commercial energy at operations in India, Zambia and Australia. The bulk of operations are in India.

PIRC, a U.K. independent shareholder advisory group, advised Vedanta shareholders to oppose the remuneration report, citing the lack of a clear link between bonus and steps to improve safety performance at the firm.

Each of Vedanta's board of director earned at least a 20% rise in their 2011 compensation packages, even though the company reported 26 fatalities across its group in the fiscal year ending March 31.

Vedanta's fatality track record is high compared with only three deaths each at Anglo-Australian diversified miner Rio Tinto PLC and Anglo-Swiss miner Xstrata PLC, and 14 fatalities at Anglo American PLC in 2010.

Aviva Investors, which owns a 0.3% stake in Vedanta, voted against the company's remuneration report at the annual general meeting Wednesday on grounds that the bonuses seem excessive given the company's safety performance.

"Given that they had 26 fatalities, we find it hard to understand how they could justify that bonus payout," Stephanie Maier, Corporate Responsibility Manager at Aviva Investors said on the sidelines of the meeting.

Maier also noted that Aviva Investors voted against the election of Naresh Chandra, the chairman of Vedanta's remuneration committee and sustainability committee, which is responsible for safety.

Chandra was re-elected to the board with 92.78% of the vote.

Maier said Aviva Investors welcomed the steps the company had taken to improve its social and environmental policies, particularly in appointing Anthony Henshaw as chief sustainability officer. But she said that progress was too slow and more steps need to be taken.

Vedanta is a FTSE 100 diversified metals and mining company that produces aluminum, copper, zinc, lead, iron ore and commercial energy at operations in India, Zambia and Australia. The bulk of operations are in India.

* MAC comment: The significance of this figure is considerably heightened, in view of the fact that the Agarwal family, through their Volcan Trust, hold just over62% of the voting share capital of the company. In effect, more than one third of shareholders, independent of the Agarwal's, voted against the remuneration proposal.

Vedanta faces angry protesters at AGM

By Clara Ferreira-Marques


27 July 2011

LONDON - India-focused miner Vedanta faced two hours of angry questioning on Wednesday, as its board was forced to defend the company against accusations from investors and pressure groups that it has repeatedly breached health and environmental rules.

Pressure groups including Survival International, Amnesty International and others have long opposed a projected bauxite mine in India's Orissa state, planned for an area considered sacred by indigenous people, as well as proposals to increase capacity at Vedanta's Lanjigarh alumina refinery to 6 million tonnes per year from 1 million.

They say the company has failed to adequately consider the full human and environmental impact of the project.

But the FTSE 100 miner also came under fire over its operations in Korba, in the central Indian state of Chhattisgarh, where a chimney collapse two years ago killed more than 40 people, and in the coastal state of Goa, which earlier this month saw the outer wall of a mine collapse during heavy rains, causing a slide of silt and mud into fields and nearby settlements.

Chief Executive M.S. Mehta said damage from the Goa mine collapse was temporary and repairable, calling the incident "an accident, that should not have happened".

Vedanta has aluminium operations in Korba and owns a majority stake in iron ore producer Sesa Goa.

Protesters, several dozen of whom stood outside the conference centre waving a banner demanding the arrest of Vedanta Chairman Anil Agarwal, have attracted high-profile supporters including Bianca Jagger and Michael Palin.

"The company's performance has been directly affected by some of the allegations that have been made over the company's ability to conduct itself according to the law. I, as a minority investor, would like more clarity so that I can better understand my investment position," shareholder Jamie Burton told the board during the London annual meeting.

Shares in Vedanta, 62 percent owned by the Agarwal family, have dropped 27 percent so far this year, underperforming the broader UK-listed mining sector.

Another shareholder accused the company of behaving "as a corporation like a house with no toilet", while Survival International urged the company to appoint an independent official to assess accusations and report to shareholders.

The board did not answer questions over whether it accepted there had been breaches in the past, but board member Naresh Chandra said it was committed to "every environmental standard".

"Every member of the board is fully committed to maintaining a high standard, there is nothing to hide," he said.

Protesters were joined by asset manager Aviva Investors, part of insurer Aviva , and a small but vocal shareholder whose move to join the protest marks a more activist stance from institutional investors on social issues.

Aviva, which also voiced concerns last year, has said it welcomed progress from Vedanta on social issues including the appointment of a chief sustainability officer, but said this month it would withhold support for three key resolutions at the annual meeting.

"We would urge faster progress," Stephanie Maier, corporate responsibility manager at Aviva Investors, told the meeting.

Vedanta, one of India's biggest aluminium producers and keen to capitalise on growing demand in the subcontinent, has denied its plans for expansion at Lanjigarh would harm the indigenous Dongria Kondh people, saying it would help lift mineral-rich Orissa out of poverty.

Last week, the Orissa High Court upheld the government's decision to halt the refinery expansion plans. Vedanta can, however, submit a new bid for environmental clearance.

M.S. Mehta said Vedanta, which was invited by the state of Orissa to build its refinery near the Niyamgiri bauxite deposits was open to mining elsewhere: "As of now we are waiting for the government to give us alternative bauxite location."

Vedanta did not give details on progress in the long-delayed deal to purchase Cairn India, given conditional approval by the Indian government last month. Mehta, however, said after the meeting that the deal could be completed within two months.

The parties are negotiating over royalties, with India's oil ministry pushing Cairn India to share these with the state-run Oil and Natural Gas Corp . ONGC has a 30 percent stake but pays 100 percent of royalties.

Vedanta, whose financial year runs to end-March, is due to update the market on first-quarter production numbers on Friday.

Statement of PIRC re Vedanta AGM

Pensions & Investment Research Consultants (PIRC)

28th July

We have a number of concerns about Vedanta Resources' handling of environmental, social and governance issues.

We recommend that shareholders oppose the election of senior non-executive director Naresh Chandra, who is chair of the group health, safety and environment committee, and the remuneration committee. PIRC considers the failure of the company to recognise and address weaknesses in health and safety controls exposed by the incident at the Balco power plant during the year is a significant indicator of poor governance.

The failure of the group to engage with explicit investor led ESG concerns over the impact of group activities on the Niyamgiri region and the control issues raised by the fatalities are evidence of a lack of competent oversight in our view.

We also have concerns over the payment of annual bonuses by the committee of which he is chairman in apparent contradiction of the safety criteria upon which such awards can be made and the award of unexplained significant salary increases to executives in the year.

For similar reasons we recommend opposition to the election of non-executive director and remuneration committee member Euan Macdonald, and non-executive Aman Mehta, who chairs the audit committee and sits on the remuneration committee.

Environment campaigners protest against Vedanta in UK

Times of India (PTI)

27 July 2001

London - Environment campaigners today held a demonstration against mining major Vedanta Resources during its annual general meeting here, asking the company to give up its projects in Orissa.

The demonstrators also asked the Indian Government not to give clearance to Vedanta Mining projects in Orissa, saying that the bauxite mining company had "forced displacement, injury and illness" to Adivasis in the state.

A spokeswoman of the campaigners said that they feared the Indian government, which charged Vedanta last year with a number of environmental crimes, will now step in to reverse its own decisions.

Vedanta plc is a London-listed FTSE 100 mining corporation owned by NRI industrialist Anil Agarwal and his family.

Vedanta was reportedly denied permission to mine in the Niyamgiri Hills, home of the Dongria Kondh tribe who have been vigorously protesting against the mining.

The issue is now in the Supreme Court.

Campaigners to picket Vedanta - mining company with world's worst safety record

By Jo Siedlecka

Independent Catholic News

26 July 2011

Justice and Peace groups will be joining NGOs and other campaigners in London tomorrow to picket the Annual Shareholders' Meeting of Vedanta - which has the worst health, safety and environment record of any mining company based in the UK - and probably anywhere in the world. The AGM takes place at 3pm at the Queen Elizabeth II Conference Centre, Westminster.

These are just some of the accidents and disasters occurring on Vedanta's watch within the past five years; the latest just eleven days ago:

16 July 2011: A waste dump at a Vedanta iron ore mine in Goa (India) collapsed in numerous places: millions of tonnes of mud and silt flooded into the village of Mulgao, swamping farmland, choking rivers and threatening people's lives.

5 April 2011: Toxic wastes cascaded from a breach in Vedanta's caustic red mud pond at its Lanjigarh alumina refinery in Orissa (India), contaminating the adjacent Vamsadhara River.

16 May 2011: A "copycat" failure at the same pond. Amnesty International warned that "thousands of families in...Orissa are [now] facing serious health risks during the imminent monsoon season."

In July 2011, the Chief Minister of Andhra Pradesh said the pollution had crossed the state border and "people in many mandals [administrative divisions] of Srikakulam district are facing health hazards due to contaminated drinking water."

1 November 2010: Vedanta's subsidiary, Konkola Copper Mines (KCM) in Zambia is fined for polluting the Kafue River, killing fish and leaving local inhabitants without tap water. This is the very river polluted by Vedanta four years earlier.

On 6 November 2006, acidified effluents cascaded from burst slurry pipelines at KCM. They gushed into the Kafue River, raising its copper concentrations to 1,000% of acceptable levels, concentrations of manganese to 77,000% (sic) of the legal limit; and those of cobalt to 10,000%. Domestic water supplies are cut off for 75,000 residents in the town of Chingola.

26 March 2010: Four workers die when ground collapses around them at Vedanta's Nchanga copper mill in Zambia.

24 September 2009: A chimney, under construction for a coal-fired power plant at Vedanta's Korba aluminium complex in India's Chhattisgarh state, toppled to the ground. At least 41 workers were buried alive. Vedanta was accused by Korba's police chief of illegally embarking on the construction at the outset. Three top Vedanta officials were arrested and charged with "culpable homicide" - one degree below murder.

In October 2010, Vedanta's chairman, Anil Agarwal, was summoned to give evidence at the Korba District Court in answer to a charge of Criminal Trespass relating to the previous year's events. He refuses to attend.

24 August 2009: During heavy rains, a vast mudslide swept into underground workings of Vedanta's Mt Lyell copper mine in Tasmania, Australia. The mine was closed, leaving 180 workers and their dependents stranded without paid leave.

Collapse of Vedanta's credibility

Between November 2007 and 2011 a significant number of investment funds ejected Vedanta Resources from their portfolios, citing the company's unethical behaviour and its failure to address human rights and environmental issues.

Among these were: Norway's Government Pension Fund; the Church of England; PGGM (a major Dutch Pension Fund); the Joseph Rowntree Charitable Trust; and Northwest and Ethical Investments (Canada).

Campaigners urge: "If you, your Pension Fund or Bank, currently finance Vedanta in any way, please seriously examine evidence of the company's woeful failure to meet rudimentary operational standards, during the eight years since its admission to trading on the London Stock Exchange."

Norway's Council on Ethics in November 2007 concluded that, continuing to invest in Vedanta would present "an unacceptable risk of contributing to grossly unethical activities."

Since then, such activities have multiplied. So, too, have the reputational risks of backing a company that makes a mockery of "corporate social responsibility."

For further information on Vedanta's record, please see:

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