MAC: Mines and Communities

Final nail plunged into Vedanta's Nyamgiri coffin

Published by MAC on 2014-01-13
Source: Bloomberg, Economic Times, The Hindu, statement

India blocks Vedanta's Odisha bauxite mining plan

Debjit Chakraborty & Rakteem Katakey


13 January 2014

India has blocked Vedanta Resources Plc from mining in a hill range that holds bauxite earmarked for an $8.1 billion aluminum complex in Odisha state following objections by local tribes.

"We rejected it after the local panchayats rejected," Environment Minister Veerappa Moily said in New Delhi today, referring to village-level governance bodies. "That's what we're doing for most projects," Moily said, adding he has recently permitted some worth 1.5 trillion rupees ($24.4 billion).

The Environment Ministry's decision adds to billionaire Anil Agarwal's troubles in India's metals industry. London- listed Vedanta has 1.25 million metric tons of new aluminum refining capacity lying idle because of a lack of bauxite.

"This is the end of the Niyamgiri project," Goutam Chakraborty, a Mumbai-based research analyst at Emkay Global Financial Services Ltd., said by phone. "Even if Vedanta looks at new mines for sourcing bauxite, it will take them at least 4 to 5 years."

Pavan Kaushik, a spokesman at Vedanta Resources, didn't respond to two calls on his mobile phone seeking comment.

All 12 villages in the Niyamgiri area in the eastern state inhabited by the Dongaria and Kutia tribes believe their god lives in the Niyamgiri hills and have rejected the incentives offered in exchange for mining approval.

The Niyamgiri villagers were asked to decide the fate of the project on April 18 by the nation's top court. The judges intervened in the case after Vedanta's partner, Orissa Mining Corp., contested the Environment Ministry's August 2010 finding that granting a mining permit would damage the environment and displace the tribes and wildlife in the area.

Tribal right over land is recognized and the local authority of the tribes must clear the proposal, a three-judge panel headed by Aftab Alam of the Supreme Court said in its April 18 ruling.

Vedanta, which has invested 500 billion rupees ($8.1 billion) to build a smelter, refinery and power plant near Niyamgiri, currently operates a 1 million-ton refinery, a 500,000 ton smelter unit and a power unit.

The refinery, which stopped output following a bauxite shortage, restarted in July after raw-material availability improved.

--Editors: Eric Coleman, Anthony Aarons

Environment Ministry rejects Vedanta's mining proposal in Niyamgiri

By Urmi A Goswami & Meera Mohant

Economic Times (India)

11 January 2014

NEW DELHI: Environment Minister Veerappa Moily has decided not to allow the Vedanta Group to mine the Niyamgiri Hills for bauxite, the raw material that it needs for its Rs 4,500-crore alumina plant at Lanjigarh, ministry officials said. The decision will be conveyed to the Supreme Court this month, they added.

Moily's decision brings to a close Agarwal's decade-long efforts, both in and outside the courts, to source bauxite from the Niyamgiri Hills, which is held sacred by the Dongria Kondh tribe. The mines were to be developed by a joint venture between Vedanta group company Sterlite and the Orissa Mining Corp (OMC). Sterlite holds majority stake in the joint venture.

The minister's decision comes on the back of the overwhelming rejection by 12 state-government designated villages of the proposal to mine the Niyamgiri Hills. In April, the Supreme Court had ruled that villages in the two districts of Rayagada and Kalahandi were to decide if mining should be allowed in the Niyamgiri Hills.

India's rejection of Vedanta's bauxite mine is a victory for tribal rights

Guardian opinion

15 January 2015

India's decision to reject a London miner's request to mine bauxite on tribal land marks a major victory for human rights in the country.

For too long, tribal communities have been pushed off their land in the name of development and industrialisation, their attempts to defend their lands brushed aside or brutally suppressed.

The Dongria Kondh's determination to protect Niyamgiri hills from the mining heavyweight Vedanta Resources has paid off, despite the state government's complicity in the $2bn project.

Like many tribal communities worldwide, the Dongria have a strong connection to their land. They have expert knowledge of local forests, plants and wildlife - families grow more than 100 crops and gather food from the forests including mangoes, mushrooms and honey.

The 8,000-strong community has been campaigning against the mining project for almost a decade amid alleged intimidation by paramilitary police and local goons.

Many locals and organisations, including activists and international groups including Survival and Amnesty International, have worked hard to amplify the Dongria's voices. They understood this was a David and Goliath-style battle of India's tribal people fighting to protect their ways of life, and the integrity of their forests, from the wanton industrialisation that would destroy them.

The pressure on Vedanta was increased by Survival's complaint to the UK government under the Organisation for Economic Co-operation and Development guidelines for multinational companies, which in turn helped persuade many important shareholders, including the Church of England, to disinvest on ethical grounds from a company that had become notorious for the Niyamgiri project.

In 2010 the Indian government blocked Vedanta's bid to build the mine. And, finally, last April, India's supreme court ordered that affected communities must be consulted about the project before it could go ahead. In what was described as the country's first environmental referendum, the Dongria unanimously rejected Vedanta's proposal during 12 village consultations in August.

The central government and the supreme court bucked the trend of siding with industry, and defended the Dongria's right to their lands, their livelihoods and to determine their own future. And the environment ministry's decision to block Vedanta should serve as a warning to any company intent on extracting resources from tribal land without members' informed consent.

Vedanta has learned this the hard way. It opened a refinery to turn Niyamgiri's bauxite into aluminium before receiving approval for the mine, and has lost millions of pounds as a result.

Some commentators are angry that such a small tribe has been able to derail a major industrial project. But the benefits of the scheme would have lined the pockets of very few, while the devastation of the Dongria and their homeland would have been irreversible.

The landmark decision also flies in the face of those who believe that so-called backward or primitive tribes should be "developed" and join the mainstream.

Vedanta tried repeatedly to insist that the mine would help bring "development" to the Dongria, but seemed to overlook the fact that the construction of an open-pit mine would devastate their mountain, therefore achieving little in the form of development for the tribe. The initiatives that would accompany the projects were all oriented towards permanently altering the Dongria's way of life and independence.

As the Dongria leader, Lodu Sikaka, put it: "We'll lose our self-esteem if they take away our hills and forests. Other Adivasis [India's tribal peoples] who have lost their homes are dying of desperation; they are being destroyed. Earlier they used to till their land but now they are only drinking without working. They have become kind of beggars."

The Dongria case was about much more than the community and their homeland. India has been studying the events closely as a litmus test for its democracy. It raises the following questions: when citizens reject such projects strongly, peacefully and tirelessly, should the state be allowed to bulldoze ahead with its agenda? Should the rights of the people trump the interests of industry or vice versa?

The ministry's decision to ensure that some places can - and must - be off limits to mining restores hope that India will not abandon human rights in the pursuit of foreign investment - the rights of its people will - at least sometimes - be upheld.

Jo Woodman is a campaigner at Survival International, the global movement for the rights of tribal people. She co-founded the Proud not Primitive campaign that helps shape how tribes in India are perceived, discussed and treated


Tribal people seek complete closure of Lanjigarh alumina refinery

The Hindu

17 January 2014

The Niyamgiri Surakshya Manch (NSS) has demanded that the Lanjigarh alumina refinery of the Vedanta Alumina Limited (VAL) in Kalahandi district be completely closed.

The demand was made at a public meeting organised in Munikhol of Muniguda block in Rayagada district on Thursday to mark the success of the NSS in thwarting the attempts to mine bauxite in the Niyamgiri Hills.

The Ministry of Environment and Forests recently refused to give its nod for mining bauxite from the hills. The decision was taken after the VAL proposal was rejected in 12 gram sabhas organised in Rayagada and Kalahandi districts last year.

‘Vijay Divas'

Tribal people in their traditional attire and holding weapons gathered in strength for the victory celebration, which they termed as ‘Vijay Divas'.

Tribal people of Dongria Kondh and Jharania Kondh communities hailing from 100 villages and hamlets as well as Dalits living in the Niyamgiri Hills area participated. They started heading towards Munikhol on the outskirts of Muniguda since early in the morning. They took out a rally raising slogans against any attempt to destroy environment in the area. The rally reached Muniguda and returned to Munikhol, where a public meeting was held.

The jubilant tribal people were led by NSS president Lada Sikaka and its working committee members - Dadhi Puchika and Bari Pidikaka. Sarpanches of Kurli, Munikhol, and Parsali panchayats of Rayagada district and Trilochanpur panchayat of Kalahandi district also took part in the rally and public meeting.

Activists of the Lok Sangram Manch (LSM), a tribal organisation, and national committee member of the All India Khet Mazdoor Sabha (AIKMS) B.C. Sadangi attended the rally and public meeting to express their solidarity with the NSS.

At the public meeting, the leaders were of the opinion that the threat to the Niyamgiri Hills and the Mali Hills in Koraput district remained till the Lanjigarh refinery existed.

They feared that the State government and the VAL would make every attempt to provide bauxite to the refinery.

"To safeguard environment of the Niyamgiri Hills and the Mali Hills, we should continue our fight till the refinery is closed down completely," Mr. Sikaka said.

Basic amenities sought

Mr. Sadangi said, "The State government is promoting bauxite mining in the Niyamgiri Hills area under the pretext that it would lead to development of the area. As the mining proposal has been turned down, it is high time the government showed its sincerity and took up development projects in the area."

The villages and hamlets in the Niyamgiri Hills area do not have basic amenities such as proper medical facility, schools, electricity.

Lessons from the Vedanta case: what next?

The Dongria Kondh victory in a decade long battle to prevent mining in their sacred hills should alert company directors to their responsibilities towards communities

Gordon Bennett, barrister, Lincoln's Inn

30 January 2014

In early January India's minister of Forests and Environment vetoed a $1.7 billion mining project in the Nyamgiri Hills, Odisha. His decision marks the extraordinary culmination of almost a decade's worth of effort by a very determined community - aided and abetted by hard lawyers, soft lawyers and a host of NGOs. With the right kind of help, David can sometimes slay the corporate Goliath.

Goliath on this occasion assumed the form of Vedanta Resources plc, a multi-billion dollar mining giant listed on the London exchange. Cast in the role of David was the Dongria Kondh - a supposedly "primitive" tribe whose sacred hill sits astride a 72 million tonne bauxite deposit.

In April 2013 the Indian Supreme Court ruled that Vedanta could not mine the deposit until the Dongria had been asked for their approval. In a series of meetings over the summer, they unanimously refused it. The minister has now bowed to the inevitable and withheld forest clearance. An ancient way of life has apparently been saved.

When Vedanta first sought clearance in 2003 it regarded the outcome as a foregone conclusion. So confident was the company that it spent over $1 billion on a refinery at Lanjigarh to service the deposit. Until almost the end, its directors continued to assure bemused shareholders that its plans were on track, and that work on the mine would begin very shortly. How did it all go so spectacularly wrong?

Vedanta's problems began in Nyamgiri itself, where Dongria barricaded the access road, and organised numerous protests and demonstrations. News of their resistance spread beyond India, attracting the support among others of Amnesty International and Survival International.

Survival's London office lodged a complaint against Vedanta under the OECD Guidelines on Multinational Enterprises. Remarkably, notwithstanding that it is an English company it insisted that the UK National Contact Point lacked jurisdiction. This left the NCP no choice but to proceed on the evidence that Survival had put before it, and in September 2009 it concluded that:

"Vedanta [had] failed to engage the Dongria Kondh in adequate and timely consultations on the construction of the bauxite mine; it did not consider the impact of the construction of the mine on the rights and freedoms of the Dongria Kondh, or balance the impact against the need to promote the success of the company... [It] did not respect the rights and freedoms of the Dongria Kondh consistent with India's commitments under various international human rights instruments, including the UN International Covenant on Civil and Political Rights, the UN Convention on the Elimination of All Forms of Racial Discrimination, the Convention on Biological Diversity and the UN Declaration on the Rights of Indigenous People."

Vedanta ignored the ruling, and rejected the NCP's recommendations on how it should now consult the Dongria. If it believed that its intransigence would have no repercussions, it was wrong. Within months of the ruling the Church of England had sold its Vedanta holdings because "we are not satisfied that [it] has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect". The Rowntree Trust among other investors was quick to follow suit.

Mounting criticism of Vedanta coincided with two important developments. One was the growing recognition, both in UN circles and in the international community at large, that indigenous communities must be asked for their "free, prior and informed consent" to any large scale project on thelr lands. And as the president of the International Council of Mining and Metals has remarked, "the need for building effective relationships with the communities with whom one comes in contact - whether that be in exploration or through a development of the mine project, has now come to be understood as an absolutely critical, critical issue."

The other development was India's enactment of the Forest Rights Act, which gives belated recognition to the customary rights of its scheduled tribes.

The upshot was the minister's decision in August 2010 to refuse forest clearance for the Nyamgiri mine in terms that explicitly recognised "the enormous interest and concern that [Nyamgiri has] generated both nationally and internationally". It was the attempt by Vedanta and others to reverse this decision that led finally to the Supreme Court judgement in April 2013.

What next? In India, proceedings may now be brought against Vedanta's subsidiary for violations of the Forest Rights Act and other legislation. It might also be possible to launch proceedings in England.

Perched uneasily between hard and soft law, Section 172 of the UK Companies Act requires directors to "have regard to" the impact of their decisions on the reputation of their company and on the communities affected by its operations. The UK government has insisted that the latter expression means "thinking about"; it is absolutely not about just ticking boxes. If "thinking about" leads to the conclusion, as we believe it will in many cases, that the proper course is to act positively to achieve the objectives in the clause, that will be the directors' duty.

There is scant evidence that Vedanta's directors "thought about" the impact of their proposals on the Dongria Kondh, or about the "positive action" they should take to avoid or ameliorate that impact - or even about the likely impact on Vedanta's reputation, which its chairman has described as its "most valuable asset."

These failings have cost the company dear. Its "blatant disregard" for the interests of the Dongria Kondh was cited as a crucial factor in the original decision in 2010 to refuse clearance. The expansion of the Lanjigarh refinery with the board's approval may prove an equally expensive mistake. In the wake of a High Court ruling that the expansion was illegal, the refinery now operates at about 50 percent capacity and faces a highly uncertain future.

The section 172 duty is owed to the company itself, and the Vedanta board is hardly likely to sanction proceedings against its own members. But institutional shareholders could apply to the Court for permission to sue in the company's name, by way of a so-called "derivative action." The defendants would be those individual directors whom the shareholders had good cause to believe had acted in breach of their section 172 duty, and whose breaches could be shown to have caused significant losses to the company.

Various safeguards that have been built into section 172 mean that it is still largely untested; but might the Nyamgiri debacle afford an opportunity to show that it can provide an effective remedy against the excesses of senior management?

Note: Gordon Bennett drafted the Survival International complaint to the OECD.

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