MAC: Mines and Communities

Are aliens conspiring to impoverish Indians?

Published by MAC on 2012-10-08
Source: Nostromo Research

Yes they are, says London Calling

Vedanta Resources plc has been pummelled by numerous critics over recent years, not least by non-governmental organisation in the United Kingdom.

That's surely appropriate, given the company was listed on the London Stock Exchange in December 2003 and is thereby subject to scrutiny and regulation by Britain's citizenry and government.

Indeed, in October 2010, a UK government body itself censured Vedanta for failing in its duty to indigenous communities by flagrantly ignoring OECD guidelines. See: UK government finds Vedanta in major breach of trust

But all that's irrelevant, says Tavleen Singh, a correspondent for the Indian Express, writing on 30 September 2012 (see below).

According to him, there's been a foreign NGO conspiracy to undermine Vedanta's laudable activities - particularly the largesse it gives to those dependent on its Lanjigarh operations in Orissa.

What's more, says Singh, these outsiders are going much further -  trying to maintain ordinary Indians indefinitely in poverty. 

Singh in for his supper

Our Mr Singh doesn't just vent his spleen on foreign foes.

He also targets Indian NGOs and "leftist political parties", claiming they "want all the country's natural resources to remain in the hands of the state even if governments [sic] lack the money and the technology to exploit them".

Far be it for London Calling (doubtless another instrument of British neo-colonial perfidy by Singh's book) to intervene in this particular debate.

However, we'd point out that, when  BALCO was privatised in 2001, it wasn't only Indian leftwingers who "tiraded" against the aluminium enterprise being offloading  to Sterlite Industries - the Indian outfit that was folded into Vedanta on the London Stock Exchange two years later.

Critics from mainstream Indian political parties, joined by numerous trade unionists,  also warned against this dire move. They claimed that Balco was sold at a derisory price, even though it was one of the more successful public service enterprises in the country. See: On Disinvestments Of BALCO Shares To M/s Sterlite

Since then, Sterlite-Vedanta has failed to fulfil any of the key obligations it made to BALCO workers when the disreputable deal was done. (See: Balco staff 'coerced' into VRS')

The true "foreign hand"

Many readers of  the Indian Express won't have been taken in by Singh's ill-judged rantings.

Those who still need confirmation that this is exactly what they are, should look no further than a rejoinder written for the newspaper on 6th October by Amita Baviskar (see below).

Ms Baviskar was a member of the Indian government committee which, in 2010, condemned many of Vedanta's ploys in the Lanjigarh area - and specifically its intention to excavate bauxite from the nearby Nyamgiri hills.

So she's well-equipped to pour scorn on Singh's accusations, and her conclusion is a resounding one:

"If there is a 'foreign hand' out to undermine India, surely it is Vedanta".

Amen to that, Amita. Now, will you kindly slink quietly away, Tavleen Singh?

Footnote: On October 6th 2012, Orissa's state-owned mining corporation (OMC) urged the Supreme Court to reverse the central Ministry for the Environment [MoEF]'s  decision against the mining of Nyamgiri, issued two years earlier.

The OMC's locus standi in the case derives from its partnership with Vedanta in the Nyamgiri mining project. (It's a point Tasleen Singh conveniently ignores, despite OMC being one of those state-owned enterprises he castigates).

The Court's decision is still awaited. However, the judges seem likely to reject OMC's submission, declaring that: "The ministry [MoEF] cannot be reduced to a clerk, or a rubber stamp and follow the court orders without applying its executive mind. There are serious questions of jurisdiction".

[London Calling is published by Nostromo Research. Views expressed in this column do not necessarioy reflect those of any other person or party. Reproduction is welomed, under a Creative Commons Licence, provided full acknowledgment is given to Nostrom Research at the author].

There is no ‘foreign hand'

Amita Baviskar

The Indian Express

6 October 2012

Conspiracy theories are a handy standby when one wants to avoid the effort of critical thinking.

So Tavleen Singh would rather rely on "the foreign hand" - that old bogey out of Indira Gandhi's box of tricks - than examine facts that reveal uncomfortable truths.

Lamenting the closure of the Vedanta aluminium refinery at Lanjigarh, Orissa (‘Why India could remain forever', IE, September 30), Singh asserts that, if Vedanta had been allowed to mine bauxite from the Niyamgiri hills, its aluminium would have been 25 per cent cheaper than the world price.

To preempt this competition, the international aluminium industry got Amnesty International and Greenpeace to oppose the project "supposedly to protect the interests, and sacred hills, of forest-dwelling Adivasi tribes."

In Singh's view, Vedanta's departure is a disaster for Lanjigarh, where people will lose jobs and access to schools, healthcare and clean drinking water. And it is a tragedy for the Indian economy, which needs increased foreign investment for growth and prosperity.

The hero of the story is, of course, Vedanta, which took the tremendous risk of investing in darkest Orissa, only to have its refinery "bleeding to death," thanks to a thousand cuts from "vested interests". This noble corporate warrior has died for our sins, killed by the "foreign hand".

First, Vedanta built the refinery knowing very well that bauxite from Niyamgiri was not guaranteed. Yet it went ahead and even expanded its capacity six-fold, illegally, from 1 million tonnes per annum (mtpa) to 6 mtpa. Do its present troubles then deserve our sympathy?

Second, it is impossible to say whether and how much Vedanta's cheaper production would threaten its competitors. The market for aluminium is volatile, with prices fluctuating from $3,100 per tonne in 2008 to $1,400 in 2009. With demand for aluminium rising in the last three years, Vedanta is as likely to have raked in higher profits as lowered them for the industry.

(Note: Vedanta's price advantage is not because of efficient technology but from dirty mining practices - its environmental and labour violations have been indicted by the Norwegian government.)

Third, the total bauxite reserves in the Niyamgiri hills are estimated to be 72 million tonnes. It takes three tonnes of bauxite to make one tonne of alumina. Using 18 million tonnes of bauxite every year, Vedanta's 6 mtpa refinery would exhaust the ore in less than four years.

The profits would be repatriated abroad and the area devastated for ever. If that's investing in India's prosperity, we can do without it.

Fourth, international NGOs did not start the anti-Vedanta campaign. The resistance came from the Dongaria Kondh, whose entire population of 8,000 lives in the Niyamgiri range, and the Kutia Kondh who inhabit its foothills. For the Kondh, the hills are a sacred landscape, the source of their livelihood and social being. Mining would utterly destroy them and all that they cherish.

The Kondh's generations-old rights to the area are supported by the forest rights act. However, the state government ignored these claims, using armed forest and police officers to arrest and beat up villagers on the pretext that they were Maoists. NGOs did indeed support the Kondh, but the lead came from the latter since it was their lives that were on the line.

No dupes of the "foreign hand", these adivasis knew the fate of those displaced by the refinery and were determined to avoid it.

Fifth, far from being a benign presence bringing development to a deprived area, Vedanta's record is a trail of illegal operations and environmental pollution. The existing refinery has polluted the local river.

Clouds of flying dust from its waste red-mud pond choke the air. Villagers report new skin and respiratory diseases. The factory has forcibly enclosed 26 hectares of village forests. But the most brazen violation stands stark against the sky: a tall chimney for the 5 mtpa capacity built without environmental clearance.

Sixth, Vedanta has been able to function with impunity because it is supported by the Orissa government. For politicians, bureaucrats and other power elite, mining means big bucks: patronage, contracts and commissions. For some local people, there would be a temporary rise in wages, business for their small shops, contracts for transport and supplies.

But the majority would be displaced, their agriculture and forests permanently destroyed. And the tragedy of Orissa is that mining is the only game in town, one that enriches the wealthy and well-connected by laying waste the land and those who live by it.

If there is a "foreign hand" out to undermine India, surely it is Vedanta.

Vedanta's ruthless pursuit of short-term gain would kill the hills that keep rivers alive, provide a habitat for elephants and orchids, and enable the Kondh their dignity and freedom. Singh asserts that Orissa would be poor without Vedanta. The facts show that, with Vedanta, Orissa would be sucked dry and left to die.

The writer, a development economist, was a member of the N.C. Saxena Committee appointed by the ministry of environment and forests that recommended that the project not be cleared

Why India could remain forever poor

Tavleen Singh

The Indian Express

30 September 2012

If there is one story that contains in it all the reasons why India remains a poor country, it is the story of the Vedanta aluminum refinery in Odisha. Now that economic reforms are back on the government's agenda, it is a story I hope high officials, high-minded judges and busybody NGOs listen to carefully.

Why do I tell it this week? Because earlier this month, Sterlite Industries gave notice that they are closing their Lanjigarh refinery because it is bleeding to death. It has lost Rs 2,500 crores trying to stay alive these past two years. When it closes, 6,500 people will lose their jobs in one of India's poorest districts.

On a tour of Kalahandi's villages, during the 1987 drought, I saw poverty so horrific that memories of children dying slowly in barren mud huts remains etched painfully not just in my mind but in my heart.

The rains failed that year so the economy based on a single annual crop collapsed and thousands of Adivasi families were forced to live on a diet of birdseed and mango kernels for months. Women started selling babies they could not longer feed.

You would think then, would you not, that if someone was prepared to bring investment to such a desolate place he would be applauded, welcomed with open arms.

The very opposite happened and for the wrong reasons. The first people to start protesting against Vedanta were foreigners.

Had the refinery functioned on bauxite from the nearby Niyamgiri hills, aluminum could have been produced in Lanjigarh at $1,500 a tonne, instead of the global cost of $2,050. This caused alarm bells to start ringing in the ears of the international aluminum industry and soon powerful foreign NGOs appeared in Kalahandi to stop the project.

Greenpeace and Amnesty International are still there supposedly to protect the interests, and sacred hills, of forest-dwelling Adivasi tribes.

The ‘foreign hand' would not have mattered if the Government of India had not intervened to make the functioning of the refinery impossible in different ways. One of which was to declare that bauxite could not be mined in the Niyamgiri hills. There continues to be confusion about whether this was for environmental reasons or whether it was to protect Adivasis from losing their land.

But, once mining was banned, the Orissa Mining Corporation that had signed an agreement with Vedanta to supply it with 150 million tonnes of bauxite, could no longer do so. It has so far been unable to supply an ounce.

Vedanta's environmental, governmental and NGO problems began after an investment of more than Rs 15,000 crores had already been made in the refinery so for two years it functioned on bauxite imported from other states. An unviable situation so the project will now close.

The Adivasis can now go back to living in primitive harmony with nature without schools for their children, without healthcare, without electricity or clean water and without the possibility of ever improving their lives. Will they be happy this way?

Only according to urban NGOs who build flourishing businesses on romanticising desperate poverty and a way of life that they themselves could not abide for a single day.

What is interesting about the targeting of Vedanta by such a range of vested interests is that if it were a public sector company, it could have gone ahead and raped the Niyamgiri hills without anyone noticing.

It has happened often in the past and continues to happen across the country. So when the Prime Minister sets in motion his new phase of economic reform, he should ask himself why. Could it be because those who would like to see India's private sector remain the stunted creature it once was would like it to go back to being that way?

Judging from the tirades of NGOs and leftist political parties, this seems to be the case. They want all the country's natural resources to remain in the hands of the state even if governments lack the money and the technology to exploit them.

They appear never to have asked themselves why it is states that are richest in natural resources whose people remain mired in horrible poverty. Sadly they have been able to get away with the rubbish they talk in the name of the poor because the Prime Minister has never explained the need for economic reforms.

If all he can come up with is the kind of speech he made last week about ‘money not growing on trees', then there is not the smallest chance that the reforms will succeed.

The noise made by those who are either economically illiterate or have a vested interest in India remaining a poor country forever is too loud and the mood of negativity they have created too deep. The lies they have told are widely believed.

Follow Tavleen on Twitter @ tavleen_singh

Orissa Mining Corporation accuses Jairam Ramesh of contempt of court

Business Standard

6 October 2012

New Delhi - The Orissa Mining Corporation (OMC) on Friday assailed the action of former Union environment minister Jairam Ramesh in cancelling the approval granted to the state-owned company for bauxite mining in the Niyamgiri hills of impoverished Kalahandi district.

OMC's counsel told the ‘green bench' of the Supreme Court that the minister committed contempt of court, as the company was granted approval in two judgments with 32 stringent conditions and all of these were complied with. The government is ‘undermining' the power of the court, the counsel argued.

Although the conditions imposed by the court judgments were being followed, the then minister appointed a three-member committee to review the situation. When a majority of the members found the company complying with the conditions, the minister appointed another four-member committee, which gave a ‘devastating' report against the company.

The minister not only accepted the report of the four-member committee but just before he took up another portfolio, he reversed the approvals granted to OMC at all stages, OMC counsel K K Venugopal told the bench headed by judge Aftab Alam.

State government counsel

C A Sundaram joined in and asserted the ministry could not ‘wipe out' the SC orders. Mining major Sterlite also joined the chorus against the ban.

When the judges asked the ministry why it had imposed the curbs, the latter said the committee had found various new violations of the forest and environment laws, of a serious nature. Therefore, the prohibition was valid, the ministry said.

The bench expressed doubts over its jurisdiction in a matter like this.

"The ministry cannot be reduced to a clerk, or a rubber stamp and follow the court orders without applying its executive mind. There are serious questions of jurisdiction," the judges observed. The arguments were not concluded and will continue over the next week.

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