Vedanta updatePublished by MAC on 2007-08-04
4th August 2007
Vedanta: beseigned by accusations
August 1st saw the largest demonstration yet at Vedanta's 4th Annual General Meeting in London. Several activists had travelled specially from Orissa, India. Kumuti Majhi and Phulme Majhi spoke strongly in Oriya inside the meeting (with interpreters) about the danger to their livelihood from mining Niyamgiri and the mafia Raj that makes their life hell - a total contrast to the company's claimed commitment to "enhancing the communities' quality of life".
R.Sreedhar (geologist) pointed out that every Vedanta project is operating at the margins of the Law, starting construction without proper clearance and with major court cases looming against the company for gross breaches of law. Specifically mentioned was the company's illegal expansion of its Tuticorin copper smelter in south India, the pollution it had caused in Zambia, and heightened prospect of a major penalty for Vedanta's operations of its gold mines and processing plant in Armenia, now closed by Government order, which awaits confirmation by an Armenian court - possibly later this week. [see below]. Orissa journalist, Samarendra Das, also raised the question of Vedanta's donations to political parties (of which the right-wing Hindu nationalist party, the BJP, is known to be the main but not the only recipient).
Prafulla Samantara, a leading Orissa activist with people's movements, refused to go into the meeting as a shareholder/proxy but spoke to journalists outside. He highlighted the dire threat to Orissa's resources and communities posed by the company, and the way Vedanta is manipulating the truth at every turn, in order to get hold of India's resources, He also accused the company of bribing politicians and bureaucrats and using improper influence to secure mining rights to Niyamgiri.
Under questioning from one shareholder activist at the AGM, Anil Agarwal incidentally revealed that Vedanta is indeed getting its bauxite for Lanjigarh from its mines at Bodai-Daldali in Chattisgarh, and sending it back there (to Korba) to be smelted: this is despite an earlier order that bauxite mined in Chattisgarh state should be processed there. As some shareholders pointed out, the Bodai Daldali and Mainpat mines (in Kawardha and Surguja districts) are of questionable legality on numerous fronts, while extremely harsh conditions prevail there for the Gond and Baiga tribal whose land has been taken for the bauxite mines, which are still expanding at villagers' expense. [see below]
Representatives of Action Aid asked searching questions about the company's claims that it has provided exceptionally good rehabilitation to villagers moved to the new Vedantanagar colony in Orissa, to make way for Vedanta's Lanjigarh alumina refinery. They supported Phulme Majhi's statement that the life quality of those people has seriously declined, and that they often come begging for food to the villages which still grow their own food. Vedanta's lawyer at the Indian Supreme Court hearing last May had claimed that the company was offering people in the district " two square meals a day". The reality is, those living near the refinery have completely lost their food security.
At one point, and in order to counteract the negative impression of his company's activities, created by over an hour of activist questions, Kuldip Kaura (Vedanta's Chief Executive Officer) read out excerpts from Vedanta's Sustainable Development report, with a long list of money spent on various "good works" educational & health projects. But, no accountability at all has been provided, to check the data or determine how the stated sums were really spent. As Dai Singh Majhi, another tribal activist, has pointed out: the company's strategy is "to flood us out with money", while corruption is rampant.
Executive chairman, Anil Agarwal, let questions proceed for longer than he would have liked, and it was only following pressure from the "dissdent shareholders" that he allowed the two tribal representatives to speak (as proxy shareholders). His replies seemed urbane, yet in reality demonstrated a complete inability to give convincing answers to the relentless questioning of Vedanta's integrity and legality. Vedanta Resources plc is one of the fastest-expanding mining companies on the planet. Currently it is trying to raise an extra 7-10 billion dollars to diversify into the power sector.
Among the roughly thirty protestors inside and outside the AGM were: Kumuti Majhi and Phulme Majhi of Niyamgiri, Prafulla Samantara of the National Alliance of People's Movements, R.Sreedhar of Mines Minerals & People and the Environics Trust, Samarendra Das of the SJP (Socialist People's Platform), Bratindi Jena from Kalahandi Nagarik Satchetan Manch, Amit Srivastava from the India Resource Centre (US), Roger Moody, Andy Whitmore and Richard Solly (shareholders) and others associated with the London Mining Network, as well as several representatives of Action Aid.
[Report from Felix Padel, with a contribution from Roger Moody, 2 August 2007]
Indian tribes take mine protest to shareholders
3rd August 2007
NEW DELHI (Reuters) - Indian tribal people fighting a mining firm project said on Friday they would keep up protests after returning from a shareholder meeting in Britain this week with an offer that the chairman could visit the area.
London-listed Vedanta Resources Plc wants to mine the lushly-forested Niyamgiri hills in Orissa in the east of the country for bauxite to feed the $900 million alumina refinery it recently built nearby.
Thousands of tribal people living in the area say the project will force them from their homes and destroy their livelihoods, which are based on farming millet and harvesting fruits and spices in the forests.
Vedanta says that it is giving more generous compensation than the law requires, has built rehabilitation camps for the displaced villagers, and that much of the area's water sources and rare plants and animals will be protected.
"We are not going to allow this to happen," 55-year-old Kumuti Majhi, a local villager, told a news conference in New Delhi after returning from the shareholder meeting in London.
"We have been living in this mountain range for generations, and we worship Niyamgiri as a living god."
Majhi and another villager had left their mud and wood huts in Niyamgiri to travel to the British capital to protest against the project. Activists had earlier bought five pence shares so they could gain access to the annual meeting.
Activists supporting the tribal people said the concerns of the villagers were listened to at the meeting and a Vedanta spokesman said the firm's chairman, Anil Agarwal, would be "very happy" to visit the controversial area with the villagers.
The tribes people said some villagers had been beaten and threatened with jail by government officials who support the project if they refused to cooperate, and had also been tricked into signing land transfer documents.
The firm's spokesman, who asked not to be named, said none of the claims had been substantiated. He said it was not the company's policy to intimidate people and there was "no incentive" to use such tactics.
The mining project has been stalled by legal wrangles, with a Supreme Court committee saying that the government had violated its own guidelines by allowing the firm to build the refinery without getting clearance to mine the hills.
In May a top Indian government panel said it had backed the plan. Activists say largely illiterate tribal people would not be able to make good use of cash given as compensation.
Knocked Out by Bauxite
11th August 2007
The lives of tribal communities in Orissa’s Niyamgiri have been disrupted by the greed for bauxite. Stuart Freedman reports
Kado Dei’s eyes fill with tears as she talks of the day her husband didn’t come home. “My husband had gone to distribute leaflets for a meeting against the company. He had gone to five or six villages. When I put the water to boil for cooking, I got a message that there was a dead body on the road, so we rushed there. It was Sukru, my husband.” Her husband had been run over by a car allegedly driven by employees of Vedanta Alumina Limited (VAL), a company that her husband, and much of the area, was campaigning against.
“Before, the company people had asked us to vacate the village asking how much money would we take for our land but we said that we would not leave our Mother Earth. The company has come here to kill us — they are not worried about killing people. The driver bribed the police and the matter was dropped.”
“For food, I have to go from one door to another… I don’t have food all the time and I am dependant on the village, they call me and give…”
According to Bratindi Jena, an activist who works with the tribe Kado and her husband belong to, there have been several incidents of violence against those vocal in opposition to “the company”.
Near Kado’s village is a stream, part of the Vamsadhara river, one of the two that flow from Niyamgiri mountain in the Karlapat Hills of Orissa — one of the least developed states in the country. The area is home to an extraordinary range of wild, and largely endangered, species and protected under Section 18 of the Wildlife Protection Act. It is also home to the Dongria Kond, Kutia Kond, Majhi Kond and Jharania Kond who live in about 200 villages and they worship the mountain as a living god.
VAL senior counsel Mukul Rohtagi told the Supreme Court earlier this year that the bauxite reserves in Orissa and Niyamgiri Hills (on the border of Rayagada and Kalahandi districts) are the largest in the world, which is why val spent several years building an enormous aluminium refinery in Lanjigarh village in the Niyamgiri plains and now plan to mine bauxite from the mountain.
Vedanta Resources, a UK-registered ftse-100 company headed by nri Anil Agarwal, has so far spent more than £400m on the project. The company claims to have invested heavily in the community through training schemes and schools and even a resettlement village where those who lost their land to the development were re-housed. The Vedanta ‘village’ is a compound of mostly empty concrete two-room houses surrounded by barbed wire where displaced tribals were resettled after their land was acquired for the initial plant work. On a recent visit, it is clear the occupants have left, unable to cope with their loss of land and traditional way of life.
Now, Lanjigarh is a dusty town and at the guarded gates of the plant, tin shack liquor stores sell local hooch to villagers. Inside the perimeter, one can see a huddle of tree tops — all that’s left of the forest.
In Kankasarpa village, Dabu Majhi, a formidable woman in her fifties, sits with other women in her mud and straw home. “When the factory starts, the company will take over our forest; smoke will fill our skies,” she says. She and her son recently travelled to Damonjordi, an area in Orissa close to the nalco factory. “There was ash falling on the fields and the people did not sleep well because of the noise. I saw skin diseases on the children and the adults…”
“We know that there is a lot of property (sic) inside the mountain that the company has come to loot. They will kill the lions and the tigers and destroy the forest to get into the mountain. We do not know exactly what is in the mountain but we know that it is precious… This is our place, we have been here for ten generations… if we leave, where will we go? Who will take us? We will become beggars”.
Indeed, as Arirudha Dutta, a senior investment analyst with the clsa, a leading equity brokerage has said the problem has always been between to create industrial growth against decades of government indifference to it’s people.
“Tribal people do not have the education to get jobs at these plants. They sell their land at government determined prices and then end up working as contract labourers,” Dutta says.
Vedanta has claimed that it has sent at least 40 youths to college. Locals add that not one has found employment subsequently. “They are making fools of people,” says Sidharth Nayak, a local lawyer and chair of the Sachetan Nagarik Manch.
The United Nations Development Programme says 1 lakh families have been displaced in Orissa since Independence and about 20 lakh have been affected in varying degrees by industrial projects. In this post-displacement landscape, women and girls often end up working as daily wagers, domestic helps or prostitutes. The women also have to cope with alcoholism and domestic violence.
These concerns are voiced by more than 40 women speakers who have gathered under the banner of the Adim Adhikar Surakshya Manch near Bijapur.
Frail women address the overwhelmingly female audience, some of whom have walked 25 km just to be here. The women’s shrill voices cause the microphone to squeal and pitch but the message is clear. Says Maladi Dei, 38, from Amguda village: “Since the company came, liquor has been flowing much more.”
Gater Dei, 40, from Palaberi village follows her: “We don’t have enough to eat because the men are getting drunk…”
Currently, there are three complaints against Vedanta being heard by the Central Empowered Committee (cec) of the Supreme Court, set up by the court in 2002 with the approval of the Ministry of Environment and Forests (moef) and the Solicitor General. Its task is to monitor and ensure compliance of Supreme Court orders on forest conservation issues.
Both the Wildlife Society of Orissa and Academy and Mountain Environics filed petitions in 2004. Activist Prafulla Samantara filed the third petition. All three petitions alleged environmental violations on a range of counts. Key amongst these is the illegal diversion of forest land and construction of roads in a wildlife sanctuary for bauxite mining and questions over the initial “permission” for setting up the refinery violating the Forest (Conservation) Act 1980.
The initial MoEF permission indicated that there was no diversion of forest land for refining. Evidence is different on the ground. Fifty-eight hectares of forest land has been diverted for non-forest use for which the company has allegedly not sought clearance. Furthermore, in 2002 the district collector stated that 118 hectares of forest land was required for the project and steps had begun for its acquisition.Under the Forest Conservation Act, it is mandatory to have Central government clearance before commencing any project involving forest land.
It seems the Orissa government had given environmental clearance despite these violations. That Vedanta has constructed the refinery already may be in violation of the law. The mining, smelting and aluminium plant parts of the project are linked as one feeds the others yet Vedanta has sought separate permissions for all three, thereby allegedly underselling the environmental impact of its plans.
Indeed, the CEC report in September 2005 on forests stated: “The casual approach, the lackadaisical manner and the haste with which the entire issue of forests and environmental clearance for the alumina refinery project has been dealt with smacks of undue favour/leniency and does not inspire confidence with regard to the willingness and resolve of both the state government and the moef to deal with such matters keeping in view the ultimate goal of national and public interest.”
Twenty-six-year-old Jagadi Maji Dei, who was recently elected sarpanch, says she was elected because she studied till Class viii in a region where people are most often illiterate. She says she will move a gram sabha resolution soon opposing any further activity by Vedanta.
According to Babu Mathew, director of anti-poverty agency ActionAid, the Vedanta case is part of a wider trend of evictions and displacement.
“While the national economy is booming, the poor are being displaced from their homes, land and livelihoods. The encouraging thing is that these very people are coming together to resist such attacks. In Chhattisgarh, for example, tribal women have prevented their forest from being felled and now have the backing of the courts,” he says.
“Communities resisting Vedanta have enlisted the support of local and international lawyers and activists. Let’s hope we can soon celebrate similar success here,” says Mathew
Government Presses Fraud Case Against Indian-Owned Gold Firm
By Emil Danielyan
1st August 2007
[www.armenialiberty.org ] Prosecutors pressed on Thursday fraud charges against Armenia's largest, Indian-owned gold company, in a move that will likely speed up its takeover by another foreign investor.
The Office of the Prosecutor-General said it has formally asked the country's Economic Court to strip the Ararat Gold Recovery Company (AGRC) of all operating licenses and fine it almost $22 million for tax fraud and other violations of the law.
The development follows a criminal investigation that has forced AGRC's owner, Vedanta Resources, to put the company up for sale. The company, which develops Armenia's largest gold deposits, has stood idle ever since prosecutors raided its offices last January.
AGRC's Indian top executives have rejected the charges as baseless and accused the Armenian government of illegally forcing Vedanta to leave the country. Vedanta is already looking for buyers for its Armenian subsidiary, which it had purchased in 2002. The Russian financial-industrial group Promyshlennye Investory is reportedly close to gaining ownership of AGRC.
It is not clear if the takeover can be formalized before a court ruling on the lawsuit brought by the prosecutors. The latter also want the Economic Court to freeze AGRC assets worth the amount of the demanded compensatory damages pending a verdict on the case.
DELVING INTO VEDANTA'S MURKY RECENT HISTORY
The Base Alchemist
BY ROGER MOODY
I' m sometimes asked which mining company I consider to be the "worst", after my quarter-century's examination of the industry worldwide.1 Until recently my response was that "none of them is beyond reproach and each is as bad as the other".
However, over the past two years, I've been driven to the conclusion that one company distinguishes itself from its contemporaries - not just for the number and extent of the accusations leveled against it, but for the utterly cynical, and systemic, fashion in which it continues to flout the law, and violate environmental regulations in several different countries. That it's "Indian", yet based in the UK; a publicly listed company, yet dominated by just one man, his close family and a tight group of powerful friends, should not surprise us greatly. Switzerland's Glencore, the world's biggest private trader in metals, and owner of numerous mining interests, doesn't even have a board of directors; its finances are a closely guarded secret; and its main corporate "vehicle", Xstrata, is based in London.2
But what distinguishes Vedanta Resources plc, even from such highly dubious stable mates as these, is the speed at which it has amassed a fortune for its effective owner, Anil Agarwal, and enabled his enterprise - in just three years - to become the fourth most powerful mining company registered on the London Stock Exchange. Add to this the astonishing degree to which its US and European financial backers, in collusion with the British Financial Services Authority (FSA), have set aside their early qualms about the company's provenance and integrity, which enabled a rank outsider to ensconce itself at the heart of the world's most vibrant capital market.
The Tatas, Jindals, and Ambanis are only now striking out into foreign mineral joint ventures. (Notably with Tata's 2007 merger acquisition of UK- Dutch steelmaker, Corus; Jindal's 2006 ownership of the huge Mutun iron- ore deposit in Bolivia; and Essar Steel's takeover of Canada's third largest steelmaker, Algoma, in mid-April this year.) Agarwal was digging himself stakes in Australian copper mines, in Central Asian gold, and in exploration ventures in Mexico, Russia and Burma, a full decade ago. In terms of an "Indian" global spread, his only superior so far has been Lakshmi Mittal. But, both Agarwal and Mittal are in fact UK-based Non Resident Indians (NRIs). The pastures have clearly proved "browner" on the other side.3
Whereas Mittal has so far escaped any major scandal, Agarwal and his confederates have long been mired in dubiety. As I write this article, Vedanta's subsidiary, Sterlite Gold, stands accused of a raft of criminal acts in Armenia, including mining more gold than permitted by the government, deliberately under-valuing its reserves, and failing to properly dispose mine wastes.4 Last November, in Zambia, Vedanta was indicted for willfully using a defective pipeline to dispose of highly toxic tailings from the country's largest copper mine, KCM, purchased two years earlier. It had also been constructing Zambia's premier copper smelter without obtaining official permission from the Zambian government.5
In India, too, Vedanta expanded its massive Tuticorin copper smelter without proper authorisation by Tamil Nadu's State Pollution Control Board, and in the teeth of orders from the Supreme Court's Hazardous Waste Monitoring Sub-Committee to desist (see below). It has proceeded with the building of a major alumina refinery at Lanjigarh in Orissa, despite a damning report of September 2005 by another Supreme Court sub-committee, which confirmed it had destroyed protected forests and was therefore operating illegally. Moreover, this January, research by the Delhi-based VV Giri Institute (affiliated to the ministry of labour) showed it to have broken virtually all the terms of an agreement it made with its workforce when it took control of the publicly owned BALCO in 2001.6 The following month, the Orissa State Pollution Control Board ordered the company to halt the building of a huge aluminium smelter in Jharsuguda, intended to receive alumina from the illegal Lanjigarh refinery. Just six months before, the company and its shareholders had been made fully aware that this construction was illegal, when members of the London-based Vedanta "dissident shareholders" group produced photographic evidence of the fact, supplied by leading Oriya human rights activist, Prafulla Samantara.7 Yet, 10 days later, the ministry of environment and forests blithely acquitted the company of malfeasance by hastily supplying retrospective environmental clearance. This provided yet another example of the collusion between key domestic decision makers, the Agarwal cabal, and its hangers-on.
The Rise and Rise of Anil Agarwal
Vedanta Resources plc was launched on the London Stock Exchange in December 2003 with an International Public Offering (IPO) engineered by HSBC, Citigroup, Australia's Macquarie Bank, Deutsche Bank, ICICI Securities India, and JPMorgan Cazenove, which, between them, reaped around 13 million pounds in joint service fees.8 Their efforts rewarded the new company with an initial market capitalisation of well over a billion dollars. It was the second biggest offering on the UK Exchange that year, and a first for any Indian-based company. Thanks to a US$ 700 million bond issue made the following year by ABN Amro, Barclays Capital and Deutsche Bank, the company embarked on a US$ 2.2 billion expansion programme, aimed at making it India's biggest copper and aluminium producer (it has for some years produced most of the country's lead and zinc).
Many urban Indians have heard of Sterlite Industries; few (as I've discovered in my travels) are yet aware that Vedanta now controls 82 percent of Sterlite itself. In effect, the London listing gave Agarwal unprecedented access to foreign investment, while also serving to re-capitalise Sterlite's Indian mines and downstream processing plant. As of the beginning of 2007, Anil Agarwal and his family held 54 percent of Vedanta and therefore gobbled up the same proportion of its corporate profits.9
Born into the Marwari traders' caste 55 years ago (but now ensconced in a 10 million pound mansion in London's fashionable Mayfair) Agarwal had, over the previous three decades, moulded a small Indian copper manufacturing unit into a family holding company which now wields control over two of India's former state-owned minerals enterprises, Hindustan Zinc and BALCO (Bharat Aluminium Company). He has also forged close personal relationships with the chief ministers of three mineral-rich Indian states; PD Chidambaram was a director of Vedanta just before quitting to become India's powerful finance minister.
"I understand the Indian psychology!" Agarwal announced for the benefit of potential global investors in early 2005. Certainly he knows how to pull strings. When chairperson Michael Fowle suddenly resigned in March that year, swiftly followed by Jean-Pierre Rodier, head of Vedanta's health, safety and environment committee, Agarwal promptly made himself the executive chairman. This flew in the face of UK corporate good governance rules which frown on the head of a company being its biggest single shareholder.10 Agarwal has also steered close to the wind in appointments to his board. One of the early conditions imposed on the company by the UK listing authority, and insisted upon by the JP Morgan investment bank, was that a majority of directors should be "independent"of the Agarwal family and its Trust. Currently, only one board member is non-Indian. Two of the three executive directors are Agarwals and the third, Kuldip Jaura, has worked for Sterlite since 2002.11
Breaking the rules
Controversy has dogged Agarwal since the mid-1990s, with accusations recurring that he has offered political or judicial bribes and financially backed India's rightwing Hindutva agenda. Nothing has been proven though questions were raised in the Lok Sabha earlier this year over donations made to Indian political parties by the "charitable" Vedanta Foundation and which, on the face of it, seem to be a breach of domestic legislation banning foreign companies from doing so.12 Certainly Sterlite was found guilty in 1998 of participating in a massive self-serving shares' scam. As a result the Bombay Stock Exchange regulator, Securities and Exchange Board of India (SEBI), banned it from trading for two years (although the order was soon rescinded by the government when new evidence offered by SEBI was refused).13
Of longer-standing concern has been the plight of communities and workers at the company's Tuticorin operations in Tamil Nadu. Imported from Australia in 1994 as a second-hand, decommissioned plant (Agarwal freely boasts he got it on the cheap), the smelter was rejected by the state government of Maharashtra as too dangerous and was finally set up nine kilometres from the Gulf of Mannar Special Biosphere Reserve, in violation of marine protection rules.
Within its first year's operation the smelter was closed three times by government order, but allowed to re-open, though manifestly unsafe and brimming with toxic materials. On a visit paid in September 2004, the Indian Supreme Court's Monitoring Committee on Hazardous Wastes was horrified to discover a "mountain" of phospho-gypsum dumped at one end of the site, and "several thousand tonnes of arsenic bearing slag" at the other, all open to the wind and rain. Not only was an urgent order to remove these wastes ignored by Vedanta, but an expert team, reporting to the Supreme Court the following month, found that the company had nearly doubled its design capacity, illegally bringing new facilities on-stream and thus contributing further to the overload. Several visits to the smelter, carried out by Indian investigators and myself between 2004 and 2006, confirmed that Vedanta had done nothing to reduce the volume of these hazardous wastes.14
Meanwhile, Agarwal was ramping up Vedanta's ambitious bauxite mining operations, along with new aluminium refining and smelting capacity in both Orissa and Chhattisgarh. Sterlite's 2001 acquisition of state-owned BALCO sparked one of the major Indian political controversies of that year.15 It was not the first time Agarwal had tried appropriating an Indian aluminium major. He earlier bid for Indal by soliciting shares from its investors, but then couldn't pay up: it took an order from the Delhi High Court four years later to force him to produce the money. The hasty sale of 51 percent of BALCO-India's third biggest aluminium company was seen by some as a "pre-budget maneuver" to balance the government's shaky books. Allegations were widely made that India's Bharatiya Janata Party-led government deliberately prevented BALCO from modernising successfully on its own terms and with its own funds. In any event, the company was grossly undervalued; according to some estimates Sterlite secured assets worth up to 10 times what it actually paid for them. The immediate victims of this BALCO "fire sale" were members of its workforce, threatened by redundancies and loss of benefits. Seven thousand workers in the newly formed "indigenous" state of Chhattisgarh came out on a lengthy strike and AM Ansari, the working president of the Bharat Aluminium Employees Union (a member of CITU), was summarily dismissed by Sterlite's management on the pretext of his bad behaviour some three years earlier.
In January 2007, a report by the VV Giri Institute confirmed the cavalier treatment which Vedanta/BALCO meted out to its labour force from the time of the handover, revealing that the company had flouted most of the provisions in the privatisation agreement.16
India possesses around an eighth of the world's untapped, higher-grade bauxite, the raw material for the so-called "green metal". However, these reserves are found only on peaks above 1,000 metres, inaccessible except by narrow roads and tracks that cling precariously to the hill sides. Despite widespread deforestation over the past 20 years, as tourism and plantation economies have taken their toll, these remain some of the richest areas of biodiversity in the subcontinent. They are home to thousands of adivasis, tigers, elephants, bison, deer and rare medicinal plants, as well as (in Tamil Nadu) the unique shola forests, which cover deep ravines.
I have inspected virtually all of Vedanta's major bauxite sites, spread across the states of Chhattisgarh and Tamil Nadu. Without exception, I discovered the company to be violating even minimal environmental standards, while exploiting its workers to a degree which would be unacceptable to many homegrown Indian companies, let alone a "world-class" enterprise. In 2005, at Mainpat, the biggest single bauxite mining complex in Chhattisgarh, I met around 30 workers, un-helmeted, clad in shirts and sarees under a blazing sun, as the lateritic overburden was blasted. They then moved in with a few iron pikes and hammers, to break and sort the ore before loading it by hand onto waiting trucks.
All of Vedanta's bauxite miners are contract labourers. If it's been a good day at Mainpat, they can earn just over Rs 60 (around US$1.50 - it's less for women) for delivering one tonne of ore. Their habitations are small thatched hovels, perched over the quarry, deprived of electricity and adequate water. "There's only one hand pump to serve 150 families," a young tribal woman worker, Mati Shahu, told me. "The company provides no medical facilities and if someone's injured we have to take them ourselves by taxi down to the plains." At another slightly better-appointed settlement close by, villagers complained that, day and night, the silica-laden dust from the mining blew into their windows, covering walls and floors.
In order to feed Vedanta's appetite at its expanded Korba Aluminium Complex in Chhattisgarh, and to stockpile bauxite for the opening of the Lanjigarh refinery in Orissa, Vedanta has started plundering a 10-kilometre hilltop at Bodai-Daldali in Kawardha district. This towers over the world- renowned Kanha National Park, whose forests were immortalised in Rudyard Kipling's Jungle Book. Last year, an Indian colleague and a British anthropologist checked these bauxite operations and discovered the conditions there were worse than those prevailing at Mainpat.
The Baighas, the Advasi inhabitants from two of the tribal settlements standing in the project's pathway, were ejected from their homes without due legal process and were dumped on the plains in the heart of a non-tribal community. They had to leave behind their crops of maize, oil seed, gram and mustard, abandon their cows, buffalos and goats and are now trying to survive on half the acreage they once possessed. Vedanta's largesse, the first project manager told me in 2005, had consisted of Rs 2,500 for new houses, a recently surfaced approach road, and a hand pump. Some compensation had been paid, but he admitted it was too low: "If the government tells us to pay more, we'll do so," he said. Clearly discomfited by the injustices exposed, he agreed that no more removals should take place, at least for the time being. Shortly afterwards he himself was shifted (to Mainpat); meanwhile other families have been forced off their land, or teeter precariously on the very brink of the mines, woken by early morning blasting and showered in dust.17
Further south, up in the breathtaking Shevaroyan and Kolli hills of Tamil Nadu, labour conditions for workers employed by Vedanta's MALCO subsidiary are marginally better. Here JCBs break up the ore before it's "dressed" by the manual workers; this is "semi-mechanisation" as it's euphemistically called. But the environmental impacts are worse. In Mainpat there has been a token effort at afforestation, albeit using fast growing exotic trees rather than hardier native species, and haphazardly mixing topsoil with overburden before chucking it in the pits. No such pretence is made by Vedanta in these hills, where the peaks have methodically been hemorrhaged, vast raw-red gashes standing out against the clouds. The workings descend in large steps, almost vertically down the mountain sides; wastes and top soil are simply pushed over the edge. The consequences were vividly described to myself and a colleague Nityanand Jayaraman, by Pastor Arul Anandan, who manages a coffee plantation operated by tribal people: "One of our hills has been sliced off 200 feet by Vedanta. Now they've started a new mine on the opposite peak. Wild bison have charged through the trees, frightened by the blasting. The company did plant some seedlings but they've mostly died. Worst of all, when it rains, water floods our land. But during the dry season, it's the opposite: perennial streams have simply been drying up."
Time and again, villagers, trying to till their fields below Vedanta's operations, made the same point. Since mining started, the once abundant springs have failed, and the explanation is not hard to find. These high- plateau bauxite deposits have a unique ability to store and release rainwater throughout the lower slopes, feeding the plains below. Vedanta seems woefully ignorant about this basic hydrology. In a statement of "corporate social responsibility", MALCO asserts that "bauxite does not support vegetation (while) mining helps improve forestation." But, on the contrary, as Dr Marimuthu, a naturalist who has studied the Kolli hills for many years, was at pains to point out: "These plateaus used to be home to India's mystical medicine men, the Siddhars, and the country's largest known reserves of medicinal plants. Remove the topsoil, dig beneath, and these resources will never return."18
The lush Niyamgiri ranges of Orissa are sacred to the Dongaria Konds, and are the sites of Vedanta's most important target mine. (Ironically the British geologist who "discovered" these rich deposits nearly a century ago dubbed them "Khondalite" in tribute to the people who guided him there.) If the project were allowed to advance to full design capacity, some 660 hectares of prime forest will be destroyed - more than 90 percent of the total reserve - and up to a 100 streams could dry up, threatening the vital rivers to which they are tributaries, in particular, the Vansadhara that irrigates the plains.
But, so convinced was Agarwal that the project would clear all legal hurdles that in 2003 he commissioned Worley Parsons, a major Australian engineering conglomerate, to fast track the building of an alumina refinery in order to process the Niyamgiri bauxite. Site clearance and construction started before the project got permission from the environment and forest ministry. Then, the majority of the Majhi Konds, close to the refinery site, rose up vociferously against the project, even more so after two of their villages were razed to the ground in 2004 and the occupants brutally removed by police to a concrete colony, swiftly dubbed by critics as a "concentration camp".
Had it not been for the zeal of Indian environmentalists and tribal rights advocates, the company might already be plundering these hills. In September 2004, geologist Dr Sreedhar Ramamurty, director of the Academy for Mountain Environics, joined by Orissa environmental activist, Biswajit Mohanty, and rights campaigner Samantara, petitioned the Supreme Court's Central Empowered Committee (CEC) to halt the company's operations. In response, two experts were sent to Lanjigarh at the end of that year in order to register the true situation. They concluded that Vedanta, with the complicity of the Orissa state government, had illegally destroyed protected forests and embarked upon the refinery construction without proper permits; and inhabitants had been removed from their homes and land without due process of a public hearing. In January 2005, the CEC asserted that Vedanta, with the Orissa government's help, had undoubtedly broken the law.
Five months later, a study by The Environment Protection Group Orissa (EPGO) asserted that the entire Niyamgiri deposit lies atop a protected forest area which is home to a variety of rare and threatened fauna and flora. The biodiversity is scarcely equaled in the rest of South Asia and includes 30 medicinal plants, at least 15 kinds of epiphytic orchids, 20 wild ornamental plants, over 10 kinds of wild relatives of crop plants (including some protected under an international undertaking); and tigers and elephants, leopards, elephants, sloth bears, palm civets and other animals, many of which are listed as endangered by the International Union for the Conservation of Nature (IUCN). There are also rare birds, the unique golden gecko lizard, and wild snakes, including a rare type of viper.19
The fourth CEC hearing in "the Vedanta case" took place in Delhi on April 28, 2005, where the company, through its chief lawyer, CA Sundarem, tried to argue that its work on the Lanjigarh refinery was minimal. This was a transparent falsehood, as confirmed not only by the CEC visit of December 2004, but by statements and photographs in Vedanta's own Annual Reports for both 2004 and 2005, and a declaration on its website by Worley Parsons, that the project was proceeding on "a very tight schedule".
Vedanta at this point said it would relinquish that part of the refinery site which falls on forest land, while claiming it had no designs on the Niyamgiri hills. According to Sundarem, it was now up to the Orissa Mining Corporation (OMC) whether or not to proceed with the application for a mine permit. This was highly disingenuous, to say the least. The CEC had already pointed to the impropriety of the state government indelibly linking the mine with the refinery and accepting just one environmental impact statement to cover both projects. Sterlite also has a Memorandum of Understanding (MoU) with the OMC, dating back to 1997, updated in June 2003, which obliges Vedanta to provide the majority of the capital and management expertise for a putative Niyamgiri mine, and grants the UK company first call on its output.
In September 2005, the CEC published a damning report on Vedanta's plan to plunder Niyamgiri.20 It was unequivocal: Niyamgiri should not be mined, while Vedanta had still to answer for illegally constructing the Lanjigarh refinery. But, instead of issuing a verdict, early in 2006, the court referred the matter to the Forest Advisory Committte (FAC) and ordered detailed technical assessments to be completed within three months. Two of these were duly performed, one by the Wildlife Institute of India (WII), Dehradun, on wildlife impacts, and the second by the Central Mine Planning and Design Institute Limited (CMPDI), Ranchi, covering technical aspects of mining. Although a leaked copy of the WII report left no doubt that this highly respected institute unequivocally rejected the mining of Niyamgiri21, the FAC in October approved the diversion of forest land for the project, subject to certain conditions.
The reports were finally submitted to the court in December last year, where the senior advocate for Vedanta, Mukul Rohtagi, asserted that the refinery could not function without mining on Niyamigiri, thus confirming what critics had known all along. He also indirectly confounded statements made by the company, both at earlier CEC hearings and in public statements. On several occasions after the Vedanta annual general meeting in August 2006, Vedanta has stated that it could operate the refinery without relying on bauxite from the Niyamgiri hills. It's known to have been stockpiling substantial quantities of imported ore at Lanjigarh since mid-2006. In the meantime, however, the court had determined that the FAC itself was improperly constituted since it failed to include independent members.22 At the time of writing, the new FAC has still not reported back.
Conclusion: "Our Vedanta"
No other global mining company has positioned itself in quite the same fashion as Vedanta. It has vaunted its Indian roots and has committed to assisting the country's industrial growth (with recent expressions of interest in building nuclear power stations, venturing into privatised coal mines, acquiring iron-ore mines 23, and bidding for Kolar Gold fields), it has also set its sights on further global ventures to supplement its existing forays into Australia, Zambia and Armenia. While claiming that his profit-taking benefits his fellow Indians, Anil Agarwal's trajectory has, in reality, been set in precisely the opposite direction: primarily lining the pockets of his own family and returning dividends to foreign institutional backers. No one, including Lakshmi Mittal or the Tata brothers, has so methodically and cynically denuded the land of their birth, exploited their workers, or ridden with such cavalier disregard over the rights of communities supposedly protected by the Indian Constitution. Equally, no other mining company over the past two years has enjoyed such remarkable growth in its financial returns, with a virtual doubling of profits during that period.
It's tempting (if hardly reassuring) to typify Vedanta as a peculiarly Indian phenomenon, and indeed it's difficult to escape the conclusion that Agarwal has deliberately shaped his company as a logical, but ostensibly secular, extension of upper caste Hinduism. His proposal to found a world-class Vedanta University "along the lines of Harvard", sited close to the sacred site of Puri in Orissa, provides one example of this - down to the specific undertaking that it will admit students on a "non-merit" basis (read places allocated specifically to sons and daughters of the middle and upper classes who pledge to support the Vedanta "project" in all its manifestations). But, even before the foundation stone has been laid for this particular edifice, the company has already appropriated - and cynically neutralised and despiritualised - Advasi notions of the relationship between people and nature.
Wherever the visitor now goes within the territory that has been flattened or mauled for the construction of the Lanjigarh refinery, they will find notice boards affixed to every village, blatantly proclaiming that it is part of "Our Vedanta".
This may not be unique: during the eighties there was a smattering of "Islamic" minerals outfits in the Middle East, and at least one "Christian" mining company set up by an Aboriginal group in Australia. But these made no secret of their sectarian origins and, perhaps for this reason, had a short life in today's hard-nosed business climate. In contrast Agarwal's enterprise has effected a remarkably successful, if bizarre, compound of Hindutva and neo-liberal orthodoxy. Disturbingly, this Janus-like face is one with which many Indians seem to have no problem, whether looking upon it themselves or showing to the rest of the world. ¦
1. Indeed, I was asked this very question while writing this article, by the Dow Jones UK mining correspondent
2. Glencore was set up to inherit the manifold deals of the disgraced commodities trader Marc Rich; along with the investment bank, Credit Suisse, it holds 40 percent of the equity in Xstrata, now the world's fifth largest mining company
3. Lakshmi Mittal is erroneously regarded by many Indians as a homespun entrepreneur, but he's nothing of the kind. His eponymous steel company (called Arcelor-Mittal after Lakshmi's acquisition of Luxembourg's biggest steelmaker last year) is registered in Rotterdam, and to date he has failed to secure any operational mine or plant in India itself, though not for want of trying
4. See: "Armenia may start prosecution of Vedanta-controlled Zod gold mine" by John Helmer, Mineweb, February 28, 2007. Sterlite Gold has been running at a loss for some time, despite Agarwal's attempts to circumvent the company's problems. His promise to raise a minimum of US$ 80 million for a new mill close to the mine site has gone nowhere; that's hardly surprising considering that investors would not be enamoured about pouring new money into a failing venture close to the politically fractious Azerbaijan border. Besides, Agarwal has made it clear he needs to site a refinery on the ecologically protected Lake Sevan, situated in the lee of sacred Mount Ararat. When he "backwarded" Sterlite Gold into Vedanta Resources plc in 2006, he and his family pocketed more than half the US$ 60 million that his UK company shelled out to purchase the Armenian enterprise. It was a scandalous piece of quasi-insider trading which merited not a single adverse comment from the UK financial press. Worse, the deal received the approval of that "responsible" accountancy firm, Ernst & Young (who also happen to be Vedanta's auditors). Agarwal's initial partner in the Zod mine venture was the infamous Robert "Toxic Bob" Friedland who fled the US in 1992 after his Summitville gold mine in Colorado began spewing masses of toxic wastes into local waterways from its leaking cyanide heap leach pads. Friedland was indicted for his criminal negligence, but has never served a day in court, let alone in jail
5. See: Alastair Fraser and John Lungu, For Whom the Windfalls: Winners and Losers in the Privatization of Zambia's Copper Mines, published by Civil Society Trade Network of Zambia, and the Catholic Centre for Justice Development and Peace, Zambia Episcopal Conference, Lusaka, March 2006. According to the report: "On November 6, 2006, the entire Chingola district [northern Zambia] was faced with a water supply crisis following pollution of the Kafue River by a spillage of mining effluents from the KCM plant. The two water companies that supply [water to] around 75,000 people in Chingola residential areas...were forced to shut down their plants when the Kafue River turned blue when a pipe delivering slurry from the tailings leach plant at KCM burst, releasing into the water effluents that raised chemical concentrations to 1,000% of acceptable levels of copper, 77,000% of manganese and 10,000% of cobalt."
"...Consuming water as polluted as that in the Kafue, eating fish from the river, or plants watered with polluted water is likely to have wide-ranging short-term and long-term health implications. Between them the chemicals spilled into the river cause lung and heart problems, respiratory diseases and liver and kidney damage. In the short term, a large number of residents are suffering from diarrhoea, eye infections and skin irritations. These are likely to be only the early signs of poisoning that will have long-term impacts. Exposure to manganese can cause 'manganism' a disease of the central nervous system affecting psychic and neurological functions. Brain damage effects in the local population may only show up in future generations."
The Environment Council of Zambia pointed out that this was an example of environmental neglect by KCM, whose plant had seen several tailings pipe bursts, resulting in some communities getting polluted water for over a year. An ECZ spokesman complained, "This is a clear indication of poor corporate social responsibility by KCM management in their environmental management." The full report is available at: http://www.minewatchzambia.com/reports/report.pdf
6. Impact of Privatisation of Labour: A Study of BALCO Disinvestment, published by VV Giri National Labour Institute, January 2007
7. "Vedanta asked to stop construction" The Hindu, March 11, 2007
8. It was not until mid-2006 that the UK Financial Times revealed the identity of the chief "fixer" in bringing Vedanta to the market. This was Ian Hannam, the so-called "citizen soldier" executive director of JPMorgan Cazenove, an ex-Gulf SAS (Special Air Services) officer who is head of capital markets at this global investment bank. Hannam had earlier organised the London listing of BHPBilliton, the world's biggest mining company, and Kazahkmys, now the third largest uranium miner. See Financial Times, June 3-4, 2006 9. Just before Vedanta's December 2003 listing on the London Stock Exchange, the Financial Times' enigmatic columnist, "Lex", acknowledged, "[Sterlite] has a complicated structure and a chequered corporate governance history." Whether or not the structure was designed specifically to conceal Anil Agarwal's dubious connections with even more shadowy figures from India's financial underworld, it's certainly far from transparent. Until that point, at the root of Sterlite's "complicated structure" was an outfit called Twin Star Holdings, located in the tax haven of Mauritius and assumed to have majority ownership of Sterlite Industries. Twin Star had made its first major move towards an offshore company in 1998, when it agreed to a major equity investment in Canada's First Dynasty Mines, founded by the highly controversial mining financier, Robert "Toxic Bob" Friedland. Through Twin Star, Sterlite agreed to invest US$ 7.5 million in First Dynasty, entitling the Indian company to appoint three of its own directors and eventually ending up with about 43 percent of the Canada-based company. Agarwal's main objective was to ease Sterlite into First Dynasty's Zod gold project in Armenia. He and two of his colleagues did indeed join First Dynasty's board and, soon afterwards, Twin Star's investment in First Dynasty was completed.
Little was then heard about Twin Star until 2003, when the company confirmed that the holding company held 55 percent of Sterlite stock, with another 7.13 percent owned by Sterlite's Madras Aluminium Company (MALCO), 80 percent of which is itself owned by Twin Star. Then, in October, just after Vedanta was being paraded for its first UK public inspection, Twin Star announced it wanted to raise its stake in Sterlite to 75 percent. Indian authorities expressed concern that BALCO and Hindustan Zinc might now pass to a new foreign owner; such a transfer had been specifically proscribed when Sterlite took over the companies. As the authorities tried coping with this dilemma, the finance ministry's foreign investment unit revealed that the real owner of Twin Star wasn't Agarwal after all, but a certain Vinod Shah. Yet another Non Resident Indian based in London, Shah had apparently acquired a 100 percent stake in Twin Star through his holding company, Volcan Investments Ltd
It wasn't clear then whether the provisions of SEBI's "Substantial Acquisition of Shares and Takeovers (SAST)" regulations had been violated. But certainly, by the time of Vedanta's listing, Volcan Investments Limited, had passed (back?) into the hands of Agarwal. In August 2006, in a sub-note to its interim Annual Report (September 30, 2006), Vedanta announced that yet another, previously unknown subsidiary, Welter Trading, had acquired 100 percent of Twinstar International Ltd.
10. While Michael Fowle appears to have quit Vedanta on good terms - no doubt encouraged by a fairly generous pay-off - Rodier has never divulged why he resigned. An educated guess would be that this high-profile professional, who previously worked for the French atomic energy agency and held a top position in Pechiney Aluminium, had become increasingly disturbed at the iron grip which Anil Agarwal was exerting over Vedanta, and Agarwal's lack of operational due diligence
11. See: Vedanta Resources plc Annual Report 2006, page 50
12. In fact this point had already been made at Vedanta's annual general meeting the previous year by Orissa-based journalist and activist, Samarendra Das. In response Agarwal promised to provide a list of the Indian political recipients of his "charity" but, to date, has not done so
13. SEBI condemned Sterlite, and two other private Indian companies, for insider trading, a decision Frontline columnist Praful Bidwai called "the greatest indictment by any statutory body yet of corporate malfeasance in the stock market". Sterlite was banned from accessing the market for two years; 34 brokers on Bombay's Stock Exchange (BSE) were also found guilty of collusion in the scam. Agarwal had allegedly collaborated in the share price rigging with a "promoter" called Harshad Mehta. Six years earlier, in April 1992, Mehta had been found guilty of helping himself to a cool five billion rupees from the State Bank of India by making a receipt "vanish". However, this had not prevented him from later launching a website to dispense stock tips and analyse market trends. Nor did it deter various newspapers from publishing his pretended "wisdom". Mehta also offered his dubious services to companies of precarious financial standing, among them Sterlite. Investigations by SEBI showed that, between April and June 1998, Sterlite's scrip price moved up 41 percent, just before the company made a failed bid for the Indal Aluminium Company, even though the actual conversion price was one the company couldn't afford. Despite limited access to funds, Mehta had set up a large network of front companies. Known collectively as the Damayanti Group, it soon acquired a hefty chunk of Sterlite's floating stock, 30,000 shares of which were provided by Sterlite as a loan, through its associate Madras (see: Business India, March 13, 2005). Faced with problems in repayment, Damayanti began "rolling over" its positions from one bourse (stock exchange) to another, transferring them among brokers through a system of credit notes. Since there was little money to call upon, Harshad Mehta inevitably went broke. When SEBI tried to identify the front companies and link them back to him, his cronies fudged their answers and tried covering their tracks. Finally, by tracing telephone bills, payments to lawyers and traffic with various brokers, SEBI managed to lift the corporate veil. The bureau discovered that the companies had lent Mehta funds in order to build up his concentrated position, leading to an artificial market boom and eventual implosion of the investments. In some respects, this was an earlier, Indian, version of the "Enron scam".
The key to Mehta's market manipulations were his dealings with three Indian companies, BPL, Videocon and Sterlite. They were barred from accessing the capital market for four, three and two years respectively. However, on appeal before the Securities Appellant Tribunal, Sterlite argued successfully that this order had no legal backing, and the company was given a reprieve from the ban. Purported new evidence provided by SEBI against Sterlite was regrettably disallowed by the Tribunal. Mehta died in 2001 of a heart attack
14. A chronology of Vedanta's violations at Tuticorin between 1994-1995 was prepared in October 2005 by Nityanand Jayaraman, a noted Indian environmental journalist, on behalf of the Corporate Accountability Desk of The Other Media, based in Chennai. In summary, the allegations are that:
* The smelter was sited only 14 km from the UN-designated Gulf of Mannar Special Biosphere reserve, despite regulations that all industrial plants should be at least 25 km beyond the reserve * No Environmental Impact Assessment had been prepared or approved before the company (then Sterlite) was allowed to open * A public hearing, which is mandated before the approval of such a plant, was not held until just before Sterlite passed into the hands of Vedanta in 2003, some seven years after the smelter began operating. Even then, key units for the expansion of the plant had not been authorised, the company had begun expanding production to four times beyond its legal permit, and without the permission of the Tamil Nadu Pollution Control Board.
In September 2004 (when Vedanta Resources plc had been in control of the Tuticorin smelter for nine months), the Hazardous Wastes Monitoring Committee of the Indian Supreme Court (SCMC) found the company was violating four key conditions of its NOC (No Objection Certificate). Of special concern was the illegal storage on-site of thousands of tonnes of arsenic-contaminated slag. A week later the SCMC recommended (to the Supreme Court) that the entire expansion of Vedanta's operation at Tuticorin should be ruled illegal
* Despite this, the Tamil Nadu Pollution Control Board (TNPCB) in April 2004 granted retrospective permission to Vedanta for the expansion * A month later (May 2005) the SCMC demanded an explanation from the TNPCB as to why a permit has been given for illegal operations. No satisfactory explanation has yet been provided by the TNPCB
15. "The [BALCO] deal is economically irrational, politically deplorable, legally unsustainable and environmentally unsound...it violates a fundamental rights verdict of the [Indian] Supreme Court in the landmark Samatha case, which vests ownership of Advasi land in tribal people..." (Praful Bidwai, Frontline, May 12-25, 2001)
16. According to the VV Giri report, employees had been "coerced" into opting for the Voluntary Retirement Scheme (VRS) while those who refused continue to face harassment to this day. One strategy adopted by Vedanta in enforcing VRS was to "humiliate workers by directly attacking their self-esteem and questioning their loyalty to the firm". Payment to those who opted for VRS was made in five instalments with a gap of six months between each payment. Out of the 1,302 employees who were granted VRS, nearly all (1,281) were paid under deferred terms. Even after accepting VRS, the company retained Rs 25,000 to Rs 50,000 from the payments admissible to voluntarily retired employees. A large number of employees in the New Delhi office and Bidhanbag unit was also transferred to the Korba Aluminium Complex and forced to accept voluntary retirement. When they protested against the transfer, "Their salaries and allowances were stopped and remained unpaid for more than seven months."
There was also a "visible decline in the school enrolment rates"; so much so that the junior school was closed and "now the company is using the junior school building as a warehouse/godown". (See: "BALCO staff 'coerced' into VRS", Akshaya Mukul, The Times of India, January 25, 2007). It should be noted that, in 2005, Chhattisgarh's revenue minister accused BALCO of having cut down 20,000 trees "without taking permission from the agencies concerned", in order to expand its Korba Aluminium Complex.
Vedanta was also accused in 2004 of having illegally forced villagers off their land when it raised the capital needed to complete the expansion. (See: "Land grab mud on BALCO", The Telegraph, Kolkata, June 18, 2005; The New Indian Express, June 24, 2005; IANS, July 13, 2005 and IANS, July 25, 2005
17. In mid-2005, the chief minister of Chhattisgarh, Ramon Singh, admitted that these early removals were unacceptable, after 20 of the affected families testified that the new mine had "totally devastated" their homes and agriculture. Singh reportedly ordered the district collector to ensure early and proper rehabilitation of the families, providing them with viable alternative land and accommodation, and appropriate compensation. On a field visit paid to the site in May 2006, a joint India-UK investigative team was unable to confirm that any such measures had been taken or were envisaged for others who would be forced to move during the future life of the mine
18. MALCO's integrated aluminium facilities at Mettur, in northern Tamil Nadu, display some of the worst health and environmental impacts of a notoriously polluting industrial sector, as well as toxicity from an unsafe coal-fired captive power plant. Vedanta claims it is disposing of MALCO's vast residues of "red mud" (caustic soda wastes) and fly ash by using them in bricks. In itself, this is a highly questionable "solution" and would, in all probability, take years to fully implement. Meanwhile, the red mud oozes onto agricultural land, contaminates water resources and kills animals. Emissions from the refinery and power plant blight the lives of numerous local residents, in particular Dalits.
In April 2005, many of those affected by MALCO testified before an "Investigation into the Environmental and Human Rights Violations of Chemplast Sanmar and MALCO Ltd", organised by the Indian People's Tribunal on Environment and Human Rights. The witnesses, some of them workers, spoke of suffering from a range of ailments, including serious respiratory, skin and eye diseases, stomach disorders, chest and limb pains
19. See: A Brief Report on Ecological and Biodiverstiy Importance of Nyamgiri Hill and Implications of Bauxite Mining, Environmental Protection Group, Orissa, June 2005
20. See: Central Empowered Committee report in IA No. 1324 regarding the alumina refinery plant being set up by m/s Vedanta Alumina Limited at Lanjigarh in Kalahandi district, Orissa; Delhi, September 21, 2005
21. See: Studies on impact of proposed Lanjigarh bauxite mining on biodiversity including wildlife and its habitat, Wildlife Institute of India, Dehra Dun, August 2006
22. Information from Forest Case Update, Delhi, December 2006
23. In late April 2007, Vedanta beat Lakshmi Mittal's Arcelor-Mittal in acquiring India's biggest exporter of iron ore, Sesa Goa. Rio Tinto (the world's second biggest iron-ore exporter) had dropped from the running a couple of months before. After over-reaching itself in the recent takeover of Corus (and now having to forage for new finance), Tata Steel wasn't even in the final running. (See "Vedanta buys 51 percent of India's Sesa Goa" by Mark Potter and Emi Emoto, The Scotsman, April 24, 2007.)
Vedanta says it will finance the Sesa Goa acquistion through "newly committed bank debt facilities of US$ 1.1 billion and existing cash resources". The obvious immediate question is where this leaves its further financing of the planned expansion of bauxite-to-alumininum facilities in Orissa (although Goa's iron ore has a high alumina content, and bauxite is also mined in the state). But, by waving its card as indisputably India's largest and most diversified mining company, and with the deal increasing its market capitalisation on the London Stock Exchange to around £4.1 billion, the company is not likely to be overwhelmed in trying to raise further debt funding from its old US and European banking accomplices
VEDANTA IN CHHATTISGARH (INDIA)
How Green Was My Mountain
BY NEERAJ AGRAWAL
F orty-five-year-old Jagardev Yadav, a resident of Mainpat, has some heartfelt if pithy advice for anyone planning to construct a house in Chhattisgarh. "First find out if the land is situated in an area rich in minerals such as bauxite or iron ore," he suggests.
Yadav, who was born in Mainpat, was recently jailed and beaten up by the Surguja police. His offence? He opposed Sterlite's bauxite extraction in Mainpat - though not for the first time and perhaps not the last. He refused
to vacate his land, which Sterlite had acquired for its mines, unless he was "rehabilitated". The administration typically reacted by picking up eight of his family members, including women and children. After a few residents intervened, the women and children were released from the police station, but not Yadav. He was illegally held in custody and his arm was fractured by the police. When he was finally released, he complained about the matter to the district administrative officers and the home minister, with the help of a non-government agency called Mainpat Bachalo Sangharsh Samiti. Everyone promised an enquiry but even a month after the ghastly incident, no action has been taken against the erring police officers. Yadav, who used to work as a casual labourer, now has to sit at home because of his broken arm. There is no money, or food, for his wife and children.
Yadav's is not a unique story in Mainpat, once known as the only hill station in Chhattisgarh because of its location 990 metres above sea level in Surguja district. At one time, there was a winter nip even in summer in this lush green area. Today, however, it would be hard to catch a wisp of those days in this region, which has been denuded of all its greenery. Noisy trucks forever ply on the town's wide, dusty roads, which were once narrow paths lined by 100-year-old trees. Black dust from the excavations, now being carried out all over Mainpat - spread across 28 square kilometres - fills the air. The trucks add to the dust and the pollution. Clearly, the sought-after bauxite under their homes has become a bane for Mainpat's residents.
The Bauxite Story
It's estimated that 57.54 million tonnes of bauxite can be mined from Surguja; this number amounts to 57 percent of all the reserves in the state. Out of these 57.74 million tonnes, 42.21 million tonnes fall under the "proved" category of reserves, 13.56 million tonnes under the "probable" category and the remaining 1.76 million tonnes under the "possible" category. The title of the categorisation reflects the likelihood of finding, and extracting, the bauxite reserves. About 51 million tonnes of the total reserves are of metallurgical grade, while the grade particular of the rest six million tonnes are not known. The deposits that can be most economically mined are located in the pat (the local name given to plateau or plateaux) region of eastern and southeastern Surguja, including areas such as Mainpat, Samari and Jamirapat.
On July 2, 1992, around 639.169 hectares of land in Mainpat was leased to the public undertaking Bharat Aluminium Company Limited (BALCO) for 20 years, for bauxite excavation. At that time, Mainpat was a part of Madhya Pradesh. Three hundred and twenty-five acres of the land that was leased to BALCO belonged to the Manjhi-Manjhwar tribes of Mainpat. The tribals and Dalits living in Mainpat were led to believe that BALCO would compensate them for their land with money; they were also promised employment, alternative land, and overall development in the form of schools and hospitals.
As has become the norm in most projects that involve displacement and rehabilitation in India, the promises were either half-met or entirely forgotten. Some people were given less than half the amount due to them for the land; for instance, BALCO gave some of the displaced a compensation calculated at the rate of Rs 12,000 per acre of land though the government-set rate of land in the area was Rs 50,000 per acre. Many people were not lucky enough to receive even this meagre amount. In 1992, around 112 people lost their land but only 50 received compensation. The rest were forced to run from pillar to post in search of an elusive justice. When nothing worked out, a few people even started working on daily wages for the same company that had occupied their land.
Many families that had been living in Mainpat for decades had to leave their homes and migrate in search of food and shelter. Those who continued to live here were forced to work for private contractors who did excavation work for BALCO. None of the displaced got a job in the real sense of the word. These workers did protest against the company's atrocities but BALCO and its patrons muffled their voices.
When Chhattisgarh was carved out of Madhya Pradesh on November 1, 2000, the tribals and Dalits hoped that their grievances would now reach the new state government. But a few days later, BALCO was sold to a private company - the Sterlite group (also see page 83). Sterlite bought a 51 percent stake in BALCO for about Rs 551 crores and took over the company's management. It was the first public sector undertaking to be disinvested under the National Democratic Alliance (NDA) government at the Centre.
After Sterlite took over, workers at BALCO's Korba Aluminium Complex were retrenched. Sterlite management also shrugged off its responsibilities towards the workers in Mainpat. But as the workers started to put pressure on the company, the Sterlite management made a few promises. These were clearly not meant to be kept; the management wanted the workers to excavate certain new parts of Mainpat so that it could expand its aluminium company at Korba.
Homeless in their Homeland
The farmers whose land was taken over by Sterlite were promised huge compensation. Instead, they found themselves at the mercy of private contractors. All this happened in the blink of an eye - the farmers didn't even realise when or why they had turned from being cultivators to workers. Not only did they lose their land and their houses, but they were also forced to live in small camps or rented houses.
Along with the agricultural areas, the crops also disappeared. The quantum of paddy produce reaching local co-operative societies for sale reduced rapidly. The situation was terrible this year; while the government could purchase thousands of tonnes of paddy from co-operative societies in every development block in Surguja district, not even a single kilo of paddy reached the
Even the few farms that weren't acquired by the Sterlite group weren't able to harvest a crop. Somnath Manjhi, a 70-year-old resident of Kudaridih, a village in Mainpat, says, "Deep-hole blasting is done for excavating bauxite, and this has a violent impact on the whole area. It creates cracks in the farm land, and farming cannot be done on cracked surfaces." The blasting has also caused an increase in health problems among the residents, with people suffering mainly from ophthalmic and otologic infections. Despite all this, the farmer-turned-workers do much of the work in Sterlite's mines. They earn meagre wages though they work in some of the most dangerous conditions in the mines.
The contractors, meanwhile, exploit the workers to the utmost. There have even been instances when the contractors, after employing the workers for months, settled their accounts with Sterlite and disappeared without paying the workers. (Sterlite has repeatedly given contracts to people who have a history of cheating workers. This is despite the fact that workers have complained to company officials about the contractors' fraudulent activities. Sterlite, however, claims that it's an issue to be settled between the contractors and the workers.)
Rambali Yadav of the Indian National Trade Union Congress, a workers' organisation, has a long list of workers who have been exploited. For instance, there is the case of a private group called Balaji Metal and Mineral Company, which excavated and transported bauxite for Sterlite on a contract basis. After collecting their payments, the company's officials vanished. The workers of this company have to be paid outstanding wages of Rs 1 crore and 80 lakhs. Worse still is the fact that the state government, though fully aware of the company's vile acts, tried to get Balaji to undertake contract work for its Chhattisgarh Mineral Development Corporation (CMDC). Says Rambali Yadav, "Not only was no action taken against the company, but government officials tried to make Balaji a contractor for the CMDC. Our strike forced them to postpone their decision on handing over the contract to this company, but from this very act, one can understand what the intentions of the people involved with Sterlite and the Chhattisgarh government are."
If statistics provided by Sterlite group are to be believed, around five lakh tonnes of bauxite can be excavated from Mainpat annually. According to the figures for 2005-06, Mainpat produced 565,301 TPA (tonnes per year) of bauxite. In spite of reaping such rich dividends, Sterlite never bothered to pass on even a few benefits to its workers.
Around 4,500 people are said to be working for the company, undertaking tasks ranging from excavation to logistics. But the workers don't get any of the benefits that are mandated under the company's own employment rules. For instance, the workers are entitled to receive bonuses, but they have never been given any. Pregnant women workers are supposed to get Rs 40,000 for their medical and delivery payments but not one of them has received any money for the past one-and-a-half years. Women workers are also entitled to maternity leave and are supposed to be paid during their leave period. But not one woman has received this benefit.
The company's rules prescribe that workers should get housing, and that educational facilities should be provided for the children. But the company has taken no steps in this direction. Besides, even the most basic of safety gear is not provided to the workers though this is mandatory. Workers don't have helmets, boots or caps, and people have lost their lives because of these reasons. There are no health facilities on or near the excavation sites either. There is no talk of compensation when a worker dies onsite. No one takes the onus for the loss of a life, least of all the company.
No Penalties, Only Rewards
It's ironical that Mainpat, once known by the sobriquet 'Shimla of Chhattisgarh', is so polluted that people have stopped visiting it. Its landmarks, such as Kudridih, Kesra, Barima and Sapnadar, are now mere mining spots of the Sterlite group.
Just like its predecessor BALCO, Sterlite has shown no concern whatsoever for the environment. Mainpat's climate itself has undergone drastic changes because of the deforestation in the area. Manoj Pingua, the then Surguja collector who was recently transferred to the post of director (tribal welfare), pointed out that the company had ignored all the rules and regulations while excavating bauxite. When the lease was initially inked with BALCO, over 9,000 sal trees stood on the land. When Pingua surveyed the area, he found that Sterlite had cut down 4,000 trees illegally, including sal and other trees.
In the light of the illegal tree chopping, Pingua recommended to the government that the lease agreement with Sterlite should be abrogated. The government instead ordered an investigation, which confirmed the already known fact of the illegal cutting of 4,000 trees. Pingua forwarded the report to the government, once again recommending that the lease be scrapped. However, in what has become a routine state of affairs, no action was taken against Sterlite.
In fact, while Sterlite indulges in illegalities such as chopping down trees, the government rewards it by increasing the production capacities of its mines. Permission was given to increase the production capacity by six lakh tonnes in the Kudam mines of Mainpat, by four lakh tonnes in Tati Jharia of Kusumi and five lakh tonnes in Samari. All this was done without the people of Mainpat knowing about it, though a 'public hearing' purportedly took place on the subject. The few who knew about it weren't allowed to participate in the so-called 'public' meeting.On the other hand, Suresh Chandra, the area officer of the Environment Conservation Board, claims that action has been taken against Sterlite for increasing its production capacity in one of its mines
- the Barima mines - without securing permission. The matter is now in court, he says. Chandra also adds that public hearings were held when the production capacities in the other mines were increased with government permission. According to him, no objections were raised at the meetings. Nevertheless, there have been several instances when government officials and Sterlite have been at loggerheads over issues such as illegal excavation of bauxite, and the company's failure to level mine surfaces or take steps for local development. On certain occasions, Sterlite has even had to stop its bauxite excavation work because of this conflict. However, no matter how many rules Sterlite violates - and this is indeed a common occurrence - things always work out in the company's favour.
Rules are for Others
The area in which Sterlite is carrying out bauxite excavation in Kabirdham, the home district of state chief minister Raman Singh, has also seen its fair share of controversies. No private company has been given the right to excavate bauxite from the mines in this area, but Sterlite seems to enjoy special privileges. The company excavates 300,000 metric tonnes of bauxite every year.
Over four decades ago, the Madhya Pradesh government declared that all the bauxite in Kabirdham (which was then in Durg district) was reserved for public undertakings. It even issued a notification to this effect (number 2918/ 2875/12) on June 16, 1969. It was on this basis that BALCO was granted the lease of this area. When BALCO's rights were transferred to Sterlite after its disinvestment on March 2, 2001, it should have been automatically understood that Sterlite, being a private and not a public company, would not have rights on the Kabirdham mine. However, Sterlite managed to retain control over the mines.
Does this mean that the Chhattisgarh government does not consider the Madhya Pradesh government notification valid? Far from it. After Sterlite was granted the lease of the Bodai-Daldali mines in Kabirdham, seven private companies applied to the government for permission to work in the bauxite mines in Banki area in Kabirdham district. But these applications, which the government received between 2003 and 2004, were rejected on the basis of the Madhya Pradesh government's 1969 notification. If, as the government says, private companies cannot mine minerals in this area, why has Sterlite been given special permission?
Moreover, it's widely believed that Sterlite has also mortgaged the mines in Kabirdham and Mainpat for loan purposes. For the company's version of events, this writer contacted Deepak Pachpore, the head of public relations of the company, several times, but was told that he was "busy" each time.
Chandra Shekhar Dubey, a Member of Parliament who is part of various mineral committees, says that Sterlite mortgaged the original mining lease deeds of Mainpat, Sarguja and Bodai-Daldali Kabirdham mines to the Infrastructure Leasing and Financial Services Trust Company Limited for a long-term loan in October 2004. This, he points out, goes against the lease agreements. Dubey demands that the government terminate the shareholder agreement with Sterlite because of the company's violations, and also ask the Central Vigilance Commission or the Central Bureau of Investigation to look into the matter.
Besides, Sterlite, which was granted a 30-year lease for excavation in an area spread across 591 hectares in Kabhirdham, started its work without rehabilitating the displaced people, many of them Baiga tribals. Fifty-two families had been displaced because of Sterlite's work at the time of writing.
When the Sterlite management acquired the Baigas' land in Semarsenta, Daldali, Rabda, Kesharmada and Munda Dadar villages, located about 100 kilometres away from the Kabirdham district headquarters, it made many promises to the tribals. But the company didn't keep its word. Instead, it now says that it's up to the Chhattisgarh government to provide land to the displaced tribals. Once the land is allotted, the company will fulfill its other assurances, it claims. The tribals had demanded relocation to an area with proper facilities, and jobs for at least one member of each displaced family. But, as the government takes its own time to reply to the land question, Sterlite is busy converting the farms of tribals into pothole-filled, barren land.
Displaced tribals say that Sterlite started excavating bauxite on January 1, 2004, after acquiring 591 hectares of land, 300 of which belonged to farmers. The Baiga tribals owned 100 hectares. According to Roop Singh Udde, a resident of Semersanta, the government and the Sterlite management relocated 50 percent of the displaced Baiga tribals in Semersanta village to Baijalpur, Tarsingh, Singhari villages in 2004. They were, however, not given any land for farming and were also deprived of basic facilities such as hospitals, schools and roads. As Udde says, "We had 12 acres of land in the name of my father. Sterlite started its excavation work on that very land, and it has been dug up completely. As compensation, the government relocated my father to Baijalpur. But no one has come to enquire about how we have been surviving." There is no question, clearly, of giving the displaced jobs, though their only source of income - their land - has been brutally taken away from them.
On January 7 this year, the tribals started a strike, demanding a ban on Sterlite's excavation. But after seven days, the government managed to convince the tribals to call off their protest by assuring them that the land was only being demarcated, and that excavation wouldn't start till they were compensated with alternative land. The district administration also assured the tribals that their problems would be sorted out in two months, but nothing has happened till now.
NS Chaudhary, the manager of the Daldali mining area of Sterlite, says that the government is handling the land issue. He adds that Sterlite has already deposited money with the government for acquiring land and that the relocation process is expected to start soon. But he has nothing to say about Sterlite's promise to give jobs to one person from each displaced family.
Apart from reneging on its promises and assurances to locals, and violating government rules with impunity, it's believed that Sterlite has also not been entirely truthful about the reasons why it has been increasing the capacity of its Mainpat and Bodai-Daldali mines. Its Korba Aluminium Complex, with a capacity of two lakh metric tonnes per year, is able to run on the bauxite from Mainpat (four-and-a-half lakh metric tonnes) and Bodai-Daldai (three lakh metric tonnes). However, Sterlite applied for permission to expand both these capacities, under the guise that it needed the boosted production for enlarging its Korba refinery. Sterlite wanted to increase its capacity by three lakh metric tonnes at Mainpat and at Bodai-Daldai by nine-and-a-half lakh metric tonnes. Incidentally, while kicking off the work at these mines in 2003, Sterlite had stated that it would use the bauxite for starting an alumina refinery and ammonium smelter with a production capacity of six lakh metric tonnes. But curiously, this refinery hasn't moved beyond the planning stage.
According to Dubey, Sterlite's real interest in expanding these mines has nothing to do with Korba. "Sterlite wants to run its refinery in Lanjigarh (in Orissa) with the bauxite from Mainpat and Bodai-Daldali," he says. But the mines themselves had been leased to Sterlite on the condition that the bauxite excavated would be used only in Chhattisgarh, Dubey adds.
A journalist questioning these discrepancies is told that no one in the Sterlite group has the time to clear the air. A local asking these questions often ends up in jail. Yadav, who was behind bars for no reason, is a prime example of the company's underhand ways.
[These two articles are chapters from a new publication by Panos South Asia:
"Caterpillar and the Mahua Flower; Tremors in India's mining fields".
Edited by Rakesh Kalshian: ISBN 978-99933-766-7-5
Panos South Asia (PSA)
D 302, 2nd Floor, Defence Colony
New Delhi 110 024, India
Reproduction is welcomed for educational purposes. A download of the complete book can be obtained at: http://www.panossouthasia.org/pdf/Caterpillar%20and%20the%20Mahua%20Flower.pdf]