MAC: Mines and Communities

Vedanta Update: Blow After Blow

Published by MAC on 2007-05-19
Source: Nostromo Research

Vedanta update: blow after blow

19th May 2007

Over the past fortnight - during which Vedanta Resources plc issued a highly optimistic provisional annual statement and accounts for the financial year 2006 - the London company has suffered two significant blows.

First, it has been forced to suspend its gold operations in Armenia following a storm of protest at the company's allegedly criminal activities and a government investigation. According to the Mining Journal (11 May 2007) Vedanta has been fined a "preliminary" penalty of US$46 million; the official Armenian news agency reports that this could become larger.

Second, it has not been able to secure permission from India's Supreme Court to proceed with mining of the Nyamgiri Hills in Orissa, in order to feed bauxite to its refinery in Lanjigarh.

As long-standing readers of this website will know, the controversy over this twin-project has not only figured as one of the key "development" and environmental issues in India, but also become emblematic of similar conflicts elsewhere in the world. (Please refer to the numerous updates on Vedanta on our “Company” page).

Essentially the Supreme Court has voted to postpone a judgment until August. This has been accounted a temporary victory by opponents of the mine who feared that the court would be swayed by a massive propaganda campaign on the part of Vedanta - which has allegedly also bribed government officials and the media onto its side over the past four years. Now, the company will continue to suffer the loss of more than a quarter of a million dollars a day (or so it claims) for the next ten or so weeks.

It is by no means certain that environmental and social (including tribal) rights issues will win the day when the court reconvenes this summer. By then the decision will have effectively been taken by the central government, acting on the advice of the Ministry or Environment and Forests (which to date has tended to act in favour of Vedanta.)

It is also to be regretted that, last week, the Supreme Court accepted there was no case to be made out against the Lanjigarh refinery itself - now close to commercial production. This is despite the fact that the court's own Central Empowered Committee (CEC) in September 2005 declared this project to be illegal.

Nonetheless, left wing parties have already declared that, from mid-June, they will blockade the refinery site.Another caucus of opposition parties promises that, from the first of that month, they will observe a 'mines, water, land, forest and livelihood week' in which a ban on the mining of Nyamgiri will be central to their demands.

A long hot summer is clearly in store.

[Comment by Nostromo Research, London 29 May 2007]

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