Vedanta's rocky roadPublished by MAC on 2006-07-21
Vedanta's rocky road
21st July 2006
As Vedanta Resoures plc heads for its third annual general meeting in London (on August 2) the company has a lot to boast about. Its growth over the last quarter (FY1 2007) has been spectacular - nearly three times what it chalked up in the first quarter of financial year (FY) 2006.
Vedanta's prize expansion project remains its controversial alumina refinery in Lanjigarh, Orissa. Anil Agarwal, the company's executive chairman, recently said it would open for for "test trials" in August, even though its very construction was condemned as illegal by an Indian Supreme Court sub-committee last September.
However, even if the plant does open on schedule, Agarwal faces the knotty problem of sourcing bauxite on a scale sufficient to bring the refinery into commercial production.
From the outset of the Lanjigarh project, he's planned to obtain the raw material from the adjacent Nyamgiri hills. As readers of this website will be aware, that has sparked massive and vociferous dissent from local Adivasi (tribal) communities, a wide range of Indian politial parties, and from outside the country.
In February this year, the Supreme Court asked the Ministry of Environment and Forests (MoEF) to evaluate the environmental consequences of mining Nyamgiri.
Last week the Wildlife Institute of India (WII) published a damning report on the proposal.
Morever, Orissa's main opposition party has accused, both Vedanta and the state's Chief Minister, of having brokered a fraudulent agreement which would effectively lease these bauxite resources to Vedanta at a dirt-cheap price.
The road for Mr Agarwal will clearly - at least in the short term - be a rocky one even if investment bankers, JP Morgan, are highly optimistic about Vedanta's prospects over the next six months (as they were in an analysis delivered last week).
But then they would be, wouldn't they? For, as the Financial Times recently revealed, the man who brought this reprobate outfit to the London Stock Exchange in late 2003 was none other than JP Morgan Cazenove's executive director - a "tough SAS reservist who spent time working the Gulf."
Niyamgiri mining fraught with danger
Statesman News Service, BHUBANESWAR
18th July 2006
The Wildlife Institute of India study on the impact of bauxite mining in Niyamgiri hills as proposed by the OMC-Vedanta project has observed that it will lead to "irreversible changes in the ecological characteristics of the area", posing a threat to the unique wildlife habitat and water sources.
The study carried out during May this year was ordered by the ministry of environment and forests which acted as per instructions of the Supreme Court.
According to reliable sources, the WII report has dealt in great detail with the impact of mining on biodiversity including wildlife and its habitat in the area proposed to be mined. Niyamgiri is important both for its biological richness and for its functional role as a link between the forests of Kandhamal district and to those of Rayagada, Kalahandi and Koraput districts.
The contiguity is critical for the movement and conservation of elephants. The future of endangered wildlife in the region like tiger, leopard, wolf, pangolin, giant squirrel, mouse deer, barking deer, four horned antelope etc are directly linked to landscape level conservation , the report is said to have observed.
The latest study has debunked an earlier assessment of the environmental impact of Lanjigarh bauxite mining which had noted that some areas being unproductive and devoid of trees, were not useful for wildlife.
WII maintained that the areas which had been marked as unproductive by the earlier EIA were in reality very productive plateaus with high occurrence of herbivore and carnivore species. Elephants visit the area during monsoon when grass is abundantly found and it also acts as breeding and fawning ground for the four horned antelope, barking deer etc.
Niyamgiri hills are the source of Vansadhara and Nagaveli rivers. Nearly 36 streams originate around the hill and apprehensions are rife that removal of the bauxite layer will adversely impact on ground waters in the region and consequently the quality of forested habitats will deteriorate.
The mining plan proposes excavation of 78 million ton of ore and 17.9 million ton of overburden and the gap in the material created by the extraction will create a void for backfilling . The plan states that the present topographic level after restoration will be lowered by 10 to 15 meters.
WII is said to have observed that this may lead to soil erosion and impact adversely on drainage and forest productivity as well. It is apprehended that blasting and disturbances to the forest habitat over 25 years will adversely affect the movement of elephants and increased human population at the site will cause conflict with wildlife.
The bauxite mining in Niyamgiri plateau will destroy a specialised kind of wildlife habitat, dominated by grasslands and sparse tree species. The preparation of the mine site and access to the top of the hills through roads involve removal of prime vegetation cover which harbours giant squirrels , a highly endangered species. It is said to have taken the cost benefit ratio for the project and observed that compromising long-term economic returns for short-term gains is unwise.
The Vedanta project, particularly after its mining tie-up with OMC has been under fire. Congress MLA Mr Lalatendu Bidyadhar Mohapatra raised the issue which has since been a major controversy and is pending adjudication of the Supreme Court. A team of the Central empowered committee had carried out a study and the latest in this sequence is the WII report.
Congress leaders like Mr Mohapatra, Mr Debasis Patnaik , several social activists and environmental agencies had raised a hue and cry at the alleged destruction of the forest cover.
As per the proposed mining the state has proposed diversion of 660.749 hectare of forest land for bauxite ore mining in favour of OMC which in turn has entered into an agreement with Vedanta, a subsidiary of Sterlite Industries for captive mine to supply ore to its refinery. The total mine lease areas involves 721.323 hectares of land which includes 672 hectares of forest land .
Cong salvo at Naveen
Statesman News Service, BHUBANESWAR
20th July 2006
The Orissa Pradesh Congress Committee today charged chief minister Mr Naveen Patnaik of colluding with Anil Agarwal to "hoodwink" and "deflect" public attention from the scandalous Vedanta - OMC bauxite deal by announcing the project for a university of international standard.
Addressing a press conference here OPCC president Mr Jayadev Jena and former union minister Mr Srikanta Jena raked up the mining issue and said that undue favour had been shown by OMC to VAL in contracting a lopsided agreement. The agreement provides valuable bauxite to Mr Anil Agarwal's company at a price of a meagre Rs 64 per ton as against the actual rates which would be around Rs 2500 per ton.
If one looks deep into the bauxite deal it will be evident that the state would lose at least three times the amount being proposed to be invested in the university, MoU for which was signed yesterday, charged the Congress leaders.
They challenged Chief Minister Mr Naveen Patnaik to debate on the issue with them on any public platform. The undue favours shown to Mr Anil Agarwal and his company, they argued, was causing huge loss to the state exchequer.
They asked why there were no tender for the bauxite in Lanjigarh and what had prevented the government from going global over such deposits. "We demand scrapping of the agreement between OMC and Vendanta for the bauxite mining at Lanjigarh and also a probe into the case.
Raising doubts over the proposed Vedanta University, the two Congress leaders said that the foreign varsity bill is in the draft stage and has not yet been put up to the cabinet. They also alleged that the area identified for the university is too close to a sanctuary. Mr Srikanta Jena recalled that in the past some hoteliers showed interest to acquire the same stretch of land but environmental issues were raised and the project was shelved.
"There has been fierce opposition to even 10 percent divestment of Nalco and here the Naveen Patnaik government is virtually divesting the entire state and all public properties", remarked Mr Srikanta Jena.
Vedanta set to be fifth success for ‘Citizen Solider’ Hannam
Financial Times Jun 3-4 3006
The entry of Vedanta Resources into the blue chip club would be the fifth FTSE 100 success notched onto the belt of lan Hannam, the "citizen soldier" executive director at JPMorgan Cazenove, writes Robert Orr.
Mr Hannam, a tough SAS reservist who spent time working in the Gulf, is head of capital markets at JPMorgan and was in charge of the flotation of Vedanta in 2003 when Brian Gilbertson, former BHP Billiton chief executive, was chairman.
He was also behind last year's initial public offering of Kazakhyms, the miner that went straight into the blue chip index, while helping to build Xstrata into the FTSE 100 company it is today.
Before that, he organised the London listing of two South African companies, SABMiller and BHP Billiton.
Mr Hannam began his banking career on Wall Street with Salomon Brothers in the 1980s -at a time when John Meriwether ran the bond trading desk, a period made famous in the book Liar's Poker.
Back in London, he had a falling out with Salomon in 1991 after taking the blame for the disappointing float of Mirror Group Newspapers and joined Robert Fleming, the investment bank. There, he led the book-building exercise on what was at the time a significant £4.2bn placement of medical charity Wellcome Trust's holding in Wellcome, the drugs company.
When Fleming was bought by Chase Manhattan - just before the Chase merger with JPMorgan - Mr Hannam, then head of capital markets, was one of only a handful of Fleming executives to escape the axe.
More recently, he is credited as one of the architects of the "partnership" deal that helped meld JPMorgan's Wall Street culture with British institution Cazenove.