MAC: Mines and Communities

Court between the devil and the deep blue sea

Published by MAC on 2007-11-15

Court between the devil and the deep blue sea

Last week, India's Supreme Court delivered its long-awaited verdict on Vedanta Resources' application to mine bauxite from the top of the Nyamgiri Hills in Orissa.

With only partial information available at the time, the immediate response from the project's opponents verged on euphoria.. Certainly they were justified in chalking up victory of a kind. In theory, and after four years of machinations which varied from inducements, intimidation, misrepresentation and outright breaking of the law, the UK-based company was told it wouldn't be allowed to trespass on the sacred mountain.

However, when the full judgment was released a few days later, it became clear that the Court wasn't against mining per se. On the contrary the project was backed as an income-generator for local tribespeople, despite their massive, four-year long, opposition to any form of extraction of their mountain..

Worse still, the Supreme Court's verdict now seems to allow the UK-based company into the project through the back door. It has wrongly (willfully?) portrayed Sterlite Industries India Ltd (SIIL) - with which it's ready to negotiate access to Nyamgiri - as a separately managed entity from Vedanta Resources plc.

But there's no question that this is precisely what it is not.

The Court has now proposed a Special Purpose Vehicle (SPV) to take control of the mine. This would be floated by the Orissa state government, and its accounts audited by the state's own mining company, with SIIL invited to come on board However, the key investment in this SPV will derive from Vedanta Resources, and it's to the British company that the majority of ill-gotten gains will flow.

One cause for celebration (albeit now diluted) is that the Norwegian government's disinvestment from Vedanta earlier this month played a significant role in the Court's decision.


The flip-side to this achievement is that the Court not only ignored the manifest direct connections between Vedanta and its subsidiary SIIL. It also passed completely over accusations made by the Norwegian Council on Ethics, that the blacklisted company violated human rights and environmental precepts through several other of its key operations in India.

Also repudiated by the Court was any recognition that, while vaunting "Sustainable Development", this concept cannot possibly be reconciled with excavating the top of a mountain that hosts a unique biosphere reserve and is sacred to the Dongaria Khonds dependent upon it.

In this respect the Court has gone completely against detailed and painstaking studies by its own Central Empowered Committee. Moreover, the Court didn't grant even a hearing to a related submission, brought in October, citing Schedule 5 of the country's constitution, which supposedly guarantees Indigenous Peoples rights not to have their land whisked from under them by a private company.

[Comment by Nostromo Research, 26 November 2007]

Indian Court Bars Vedanta From Mining Bauxite

PlanetArk INDIA

26th November 2007

NEW DELHI - India's Supreme Court barred Britain's Vedanta Resources Plc on Friday from mining bauxite in sacred, forested hills in the east of the country where tribal people and voluntary groups strongly oppose it.

But it left a window ajar for the project by asking Vedanta's Indian unit, Sterlite Industries to come back with a fresh proposal on safeguarding the rights of local tribal people through a new investment firm.

"Adherence to sustainable development is a constitutional requirement," a three-judge bench said in its order. While the country needed to focus on its present development needs, it had to be done "without compromising the needs of future generations", the court said.

"We are not against the project in principle," it said. "We cannot risk handing over this important national asset to a company unless we are satisfied about its credibility."

Vedanta wants to dig open-cast mines in the Niyamgiri hills in Orissa state to feed an alumina refinery it has already built in the area, as part of an US$800 million project expected initially to produce 1 million tonnes of alumina per year.

Thousands of tribal people say the mine will destroy hills they consider sacred, force them from their homes and destroy their livelihoods, which are based on farming millet, hunting and collecting fruits and spices from the forests.

Environmentalists say the open-cast mine would also wreck the rich biodiversity of the remote hills and disrupt key water sources that supply springs and streams in the area and feed two rivers that irrigate large areas of farmland.

Vedanta said the court had "given certain directions" on how the mining project could be pursued and it would follow the terms set by the court.

"We are committed to the cause of bringing social upliftment through responsible industrialisation and creating employment opportunities in the state of Orissa," the company said in a statement.


Last month, the court set new conditions for Vedanta and Sterlite before allowing them to mine in the region.

The conditions included paying 5 percent of its annual profits from mining throughout India to the state government to be ploughed into developing the region.

It was also asked to deposit 500 million rupees (US$12.65 million) with the state government, and specify how many local people would be employed in the project.

Sterlite returned to the court saying those conditions were acceptable.

But on Friday, the court said that from the various legal documents it had received from the two firms, Sterlite seemed to be an associate company of Vedanta and not a subsidiary.

It also said the new firm Sterlite needed to float would have to make fresh financial commitments to ensure the development of tribal people and submit an account of its expenses to the court, among other terms.

The state and central government both back the mining plan, as part of efforts to industrialise and exploit the mineral resources of underdeveloped eastern India.

The court order drew mixed reactions from those opposed to Vedanta, the latest in a series of controversial industrial projects across India that have symbolised the conflict between development and the rights of local people.

Jubilant tribal people, armed with bows and arrows, rushed out of their houses in Orissa's Niyamgiri hills as reports of the order reached the region.

"The people of Kalahandi and tribals of Dongria Kondh community salute the verdict of the court," said Bhakta Charan Das, a former MP who is spearheading the anti-Vedanta campaign. "The apex court has come to the rescue of the people."

Voluntary groups that supported the campaign were, however, cautious.

"We are very apprehensive of this special purpose vehicle," said Babu Mathew, country director of ActionAid India, referring to the court's idea of a new firm for the project.

"There have been too many such arrangements that have failed in the past," he said. (Writing by Y.P. Rajesh; editing by Alistair Scrutton)


SC bars Vedanta from mining at Niyamgiri

Rakesh Bhatnagar

24th November 2007


*Says it can't risk handing over an "important national asset" to a company*

NEW DELHI: The Supreme Court on Friday barred UK's Vedanta Resources Plc from mining bauxite in the forested Niyamagiri range of south Orissa, inhabited by a large number of tribals, who feared elimination in the event the mining major along with home-grown Sterlite Industries was allowed open-cast extraction of the mineral.

The court said it could not take "the risk" of handing over an "important national asset" to a company unless it was satisfied about its credibility.

*However, the court asked Vedanta's India partner, Sterlite, to come back with a new proposal for the project, citing the safeguards for the tribal population. It also asked Sterlite to set up a new firm to handle the investment in the project.*

Vedanta intends to dig open-cast mines in the hills to feed an alumina refinery it has already built in the area, as part of an $800 million project with a turnover of 1 million tonnes of alumina annually. The apex court move has come as a big boost for the tribals and environmental groups opposed to mining in the area. The tribal people fear the mining activities would destroy the "sacred" hills and render them homeless. Also, they would lose their livelihood, which is based on farming millet, hunting and collecting fruits and spices from the forests.

Analysts have said that open-cast mining would wreck the rich flora and fauna of the remote hills. It would also wreck key water sources that feed the springs and streams in the area and also supplement two rivers that irrigate large areas of agriculture land further down.

However, the Orissa government and the Centre support the Vedanta plan as part of efforts to industrialise and exploit the mineral resources. In fact, the Union environment and forest ministry had said that open-cast bauxite mining would only affect a marginal amount of forest land.

At an earlier hearing, the judges had refused to consider Vedanta's promise to invest Rs 112 crore to develop the poor region. They wanted this commitment to be made by the firm's Indian unit, Sterlite Industries. "What is Vedanta?" the bench said. "Vedanta is not listed in India. So let Sterlite give an undertaking." The judges had also asked Sterlite to deposit Rs 50 crore with the Orissa government, and specify how many local people would be employed in the project.

SC throws out Vedanta from Orissa bauxite mining project

Dhananjay Mahapatra ,TNN

24th November 2007

NEW DELHI: The Supreme Court on Friday threw out Vedanta Alumina Ltd (VAL) from the Rs 4,000-crore controversial Lanjigarh bauxite mining project saying sensitive national assets could not be placed in the hands of companies with doubtful credibility.

In shutting out VAL from the project, red-flagged by environmentalists on the ground that it would severely hurt the eco-sensitive Niyamgiri hills in Orissa's Kalahandi district, the court took into account the Norway government's decision to black-list its controlling company, UK-listed Vedanta Resources, for several reasons, including poor labour handling.

The project started as a joint venture between Vedanta Alumina Ltd and Sterlite Industries India Ltd (SIIL), both Vedanta Group companies, and Orissa Mining Corporation (OMC) had got all clearances from ministry of environment and forests but the statutory Central Empowered Committee (CEC) had raised several green objections to the project.

Even though VAL lost it, Vedanta's other associate company SIIL still remains in business as far as the Orissa alumina project is concerned.

The court said it would consider permitting SIIL to operate the mines attached to the alumina project provided it agreed to stringent conditions, important among which are:

l Giving Rs 55 crore as NPV (to be used for afforestation and forest preservation in the area) l Giving Rs 52.5 crore for the protection and preservation of wildlife l Giving Rs 12.5 crore for tribal welfare l Forming a Special Purpose Vehicle (SPV) with the Orissa government and the OMC for scheduled area development of Lanjigarh l Contributing 5% of the net profit before taxation to the SPV annually l Committing to the number of locals who could be given permanent employment

"If SIIL agrees to all these conditions and files an affidavit to that effect, we will consider permitting them to start bauxite mining operations in Niya-mgiri Hill areas for the alumina plant," said a bench comprising Chief Justice K G Balakrishnan and Justices Arijit Pasayat and S H Kapadia.

The court said in granting permission to projects like the alumina plant and mining operations in Lanjigarh, the state governments should scrupulously follow the principle of sustainable development, whi-ch meets the need but protects the environment for future.

The ouster of VAL from the project was because of its dithering commitment to give permanent employment to local tribals and the scheduled caste coupled with the indictment it received from the Norwegian government.

The apex court, which generally does not attach much credence to media reports, appeared to have relied heavily on recent reports published in The Times of India and some economic dailies.

Business development head of SIIL, C V Krishnan, told TOI that the conditions spelt out by SC were routine and would be agreed to. "These conditions were discussed during the hearing and hence, not surprising. The judgment is a positive development as it would allow all-round development of one of the most backward areas of Orissa." He said Orissa is endowed with rich bauxite mines and through sustainable development India could be the leading producer of aluminium products. *


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