MAC: Mines and Communities

London Calling! August 27 2004

Published by MAC on 2004-08-27
Source: London Calling ()


London Calling! August 27 2004

The Madness of King Patnaik

Several major iron and steel and bauxite-alumina projects have recently been slated for the Indian state of Orissa. Only last week, BHPBilliton and South Korea's Posco announced a huge new steel plant in the state, vying with a proposal made by the Indian company, Tata.

Then on Tuesday Vedanta - the most disreputable band of mining renegades we've seen for some years (well since Robert Friedland got mob-handed in the 1990s) - got in on the act. The London-based front company for Sterlite Industries said that it, too, will construct a steel plant, along with a port and iron ore mine, all expected to cost a cool four and a half billion dollars.

Speculation is fast growing (at least we'd like to think so) that BPHBilliton and Vedanta are engaged in some sort of "boys own" rugby match, with the winner earning the kudos of the House and a pat on the back from the head master (the House being Orissa's state assembly and the headmaster the self-aggrandising Chief Minister Naveen Patnaik).

Late last year Vedanta promised to dump a major alumina refinery and bauxite mine on Orissa's Kalahandi district (see article below: "A struggle to save Nyamgiri hills"). Lo and behold!! - BHPBilliton was soon threatening similar disaster - and in the same district too. Personal rivalries surely come in to play here. Brian Gilbertson led Vedanta to the Londom market in December 2003 not long after he'd been unceremoniously booted out of BHPBilliton (he's now heading SUAL, Russia's second biggest aluminium company). It's not hard to picture Chip Goodyear, Gilbertson's replacement at BHPBilliton, gleefully rubbing his hands in anticipation of the bumper-to-bumper duel his company 's now about to fight against Brian's former corporate vehicle on Indian soil.

Goodyear recently declared his intention to use Orissa as a testing ground for his company's "new" corporate responsibility policy, where he clearly think's BPHBilliton is mines ahead of any other company. There's definitely plenty of dirt he could throw against Sterlite/Vedanta for its flagrant denial of adivasi (Indigenous Indian) rights, and its appalling legacy of mismanagement in India. However, some of the mud is likely to stick on BHPBilliton as well. For most of Orissa's bauxite reserves lie on tribal territory and in protected forests - the very areas on which Goodyear swore last year that his company would never trespass.

Vedanta certainly seems the much weaker party. It hasn't even raised the more than one billion dollars required to build its Lanjigarh alumina refinery and mine in Kalahandi - let alone shown it can triple this amount in order to venture into iron and steel. Nor does Vedanta have any experience in the sector, in contrast to BHPBilliton, one of the world's biggest iron and steel producers. Not surprisingly, just after announcing its new venture, Vedanta's shares fell yet again...

So is Vedanta merely posturing? After five years trying to launch a bauxite mine and refinery in Orissa, the much more powerful Utkal consortium (Alcan and Hindalco) is still teetering, having been fiercely rebuffed by local people, battered by international human rights groups, and abandoned by its erstwhile partner Norsko Hydro, after state-sponsored murders of unarmed demonstrators in 2000.

Rio Tinto also thought it was in for a relatively free ride when it linked up with Orissa's biggest iron ore company several years back. But it withdrew in 2002, declaring the quality of ore not high enough and probably also shaken by local suspicion of its intentions and accusations that it would be operating in a forest zone.

However this is Orissa, where normal rules of market competition, precepts of prior informed consent and decisions on constitutional rights affirmed by the Supreme Court of India, are blatantly ignored. Meanwhile the World Bank and Britain's overseas development agency, DFID, uncritically bolster one of the nation's biggest purloiners of the Commons, Naveen Patnaik.

It's India's Wild East - a bargain basement of real estate and mineral wealth. Almost anything goes in the state.

And - judging from recent history - almost everything soon will.

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