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  • 8/8/2019 Rough Vedanta



    An unhappy Patnaik also said that Ramesh, Environment Minister, had given no indication ofTuesday's decision not to give clearance to the group's proposed $1.7 billion bauxite miningproject in the state when he met him in Delhi on Tuesday. "He (Ramesh) had never mentioned

    on Monday this (rejection of clearance to Vedanta's mining project)," Patnaik told. Askedwhether there was any politics behind the Centre's action, Patnaik said, "I certainly hope there isno politics." Ramesh, on his part, said no politics or prejudice against the Biju Janata Dal-ruledgovernment was involved in his ministry's decision. "There have been no emotions, no politicsand no prejudice involved in the Vedanta's case. The decision is purely on the basis of the properlegal approach," which Ramesh said was based on the Saxena panel report, auditor general'sreport and recommendations of the FAC. Ramesh said he has no prejudices against the Orissa

    government as his ministry has cleared an important irrigation project in the state for

    which the in-principle approval was accorded on Monday. "While rejecting this (Vedanta)

    project, I have also cleared an important irrigation project in the state in which over 1500hectares of forest land is involved," the minister said. He also denied that Congress leader

    Rahul Gandhi has played a part in his decision. Patnaik said his government would undertake a'detailed examination' of the Environment and Forest Ministry's refusal to grant environmentclearance to the project. "The state government would undertake a detailed examination of theUnion Environment and Forest ministry's rejection order and would take correct and appropriatesteps on the matter," he said. On the N C Saxena panel finding fault in implementation of forestrights act, forest conservation act and environment protection act, he said the state governmentworked on the directives of the Supreme Court while making progress on the mining project."These investments in Orissa were meant to generate jobs for the people and add to the state's

    revenue. Therefore, they should be given go ahead," he said, adding that tribal dominatedbackward district like Kalahandi had never received such a huge investment in the past. Rameshalso dismissed reports that rejection was a sort of deal in lieu of clearance to the Korean steelgiant Posco's proposed Rs 54,000-crore (Rs 540-billion) project in the state. The two cannot beequated as the violations of forest dwellers by the latter at the site were also being investigated,he said.

    The government's position is shaped heavily by the report of a committee set up by the Ministryof Environment & Forests to study whether Vedanta had complied with environmental laws andhad therefore passed the test that would give it a "Stage 2" or final clearance from thegovernment. Headed by NC Saxena, the committee submitted a damning report last week inwhich it suggested that the company had broken the law for its mining project as well as itsRefinery plant at Lanjigarh. The Committee suggested that the Vedanta operations endangernearly 750 square km of forest land. The NC Saxena Committee was critical of the Orissagovernment's decision to clear the project; its report stated that government officials colludedwith Vedanta to allow illegal activity including encroaching upon at least 26 hectares of villageforest land within its refinery. From its original plans of refining 1 million tons of bauxite,Vedanta has, Ramesh says, illegally expanded its operations to handle 6 million tons. Rameshhas now said the company must explain why its refinery shouldn't be shut down. In 2004, theOrissa government committed to 150 million tonnes of bauxite for Vedanta's alumina refinery; italso stated that the initial supply - upto 78 million tones - would come from the Niyamgiri mine.In the light of Ramesh's emphatic rejection of that, the company claims ,"In view of the ongoing

  • 8/8/2019 Rough Vedanta


    delay in approval of the Niyamgiri Mining, the Government of Orissa is actively consideringallocation of alternate source of bauxite to Vedanta's alumina refinery, from the state ofOrissa." The Chief Minister of Orissa, Navin Patnaik, expressed his disappointment with theunion government's stand. "I certainly hope this is not politics because this has to do with thedevelopment and the progress of the state. After all, when these big investments come, the state's

    revenue goes up, our young people get many jobs, infrastructure is built in very backward areas.After all, Kalahandi has never received major investment before this alumina plant." In 2007, aPublic Interest Litigation challenged Vedanta's mining project in the Supreme Court. A yearlater, the court cleared the project, but said the government would make the final call "inaccordance with law".

    VEDANTAS REPLY: --- Vedanta has offered in its defense the promise that it plans to mineonly 3.5 square kmeters of the 250-km Niyamgiri Range. The company also says that there isconsiderable local support for the project: 5000 locals helped to build its alumina refinery. InVedanta's estimate, its mine will bring Rs. 1,000 crores to the region every year, and will providejobs for 600,000 locals.


    Charges of environmental damage and human rights violations are forcing Vedanta group tochange. Founder Anil Agarwal has to ensure the changes are more than cosmetic. Controversy isnot new to Agarwal, a 56-year-old businessman from Patna who started his career bringingtogether a variety of family businesses nearly 35 years ago. In fact, he thrives on them, havingbecome known more for running some of the worlds lowest cost producers of various metalsand minerals than for running eco-friendly plants.But with his increasingly globalizing businessnow listed on the London Stock Exchange, he is facing more scrutiny outside his homelandwhere implementation of environmental standards could be lax. At Vedantas head office on 16,Berkeley Street in London, however, the reaction to all the criticism is that it is primarily aperception problem. As a result, Agarwal and his generals have set out to correct theperception with a counter public relations strategy.The stakes are getting higher every day.Agarwal still needs an approval from the environment ministry without which his bauxite projectwould be stalled. A multi-billion dollar fund-raising exercise is on the way. Word is out that afew more investors could pull out of Vedanta, though this remains purely speculative as of now.But more importantly, bad reputation could come in the way of Agarwals dream to makeVedanta one of the top five mining companies in the world. But the big question that Agarwalmust ask himself is if all this enhanced criticism he is facing is just an image problem or does hisgroup need soul-searching on the price it pays for chasing ever lower costs of production. Just a

    few weeks after Church of England and three other investors sold their stakes in Vedanta,

    Agarwal met Niira Radia, the Delhi-based head of Vaishnavi Corporate Communications,

    a leading public relations firm that has Tata Group companies and Reliance Industries as

    its clients. Agarwal wanted Radia to handle Vedantas public relations portfolio.

    Vaishnavi had successfully handled Vedantas affairs when the legal case on the miningproject was being held in the Supreme Court. Though Agarwal had not felt the need tocontinue with Vaishnavi after he won the case, now he wants them. Now, Agarwal expects theprofessional team to take his message across to the outside world.

  • 8/8/2019 Rough Vedanta


  • 8/8/2019 Rough Vedanta


    an integrated aluminium plant. Not everyone is convinced it is a good plan. High profileinvestors including the Pension Fund of Norway, and the Church of England, sold their

    shareholding in Vedanta citing environmental concerns and human right violations at theupcoming plant. Groups such as Survival International, Amnesty and ActionAid, have poundedthe company with similar allegations.According to activists, the projects threaten densely

    forested areas that are home to tiger, Indian bison, bear, and elephant. The affected humanpopulation includes impoverished tribal communities, some of whom charge that Vedantasprojects are illegal, and that the state and central governments are colluding with the company tocircumvent environmental protections.

    Other example of environmental degradation by Vedanta----- 1)A tribal temple onShervaroyan Peak in the hills of Yercaud in Southern India recently developed several largecracks. Built several centuries ago, the temple has withstood colonization and independence. Butof late, a new mine threatens to destroy this historic site. Vedanta, a fast-growing British

    company, owns a subsidiary Madras Aluminium Company Limited (MALCO) that has beenstrip mining this and nearby peaks for bauxite, the ore that yields aluminium used in productsfrom throwaway soda cans to aircraft bodies. Community activists charge that MALCO is aheavy weight player in the local economy and politics, and a significant contributor toenvironmental degradation. Theres a limit to exploitation. Nothing is sacred any more, saysthe president of the local youth federation. Their only botheration is to excavate more and more.Maintaining ecology is not at all an issue. On the banks of the huge reservoir, MALCO operatesa smelter and a refinery complex where locally mined bauxite is converted into aluminium.

    2) Social welfare programs have done little to blunt a long history of opposition to Vedanta or tocounter evidence that it has polluted the environment, poisoned locals, and colluded withofficials to bypass environmental protections. In less than 8 years,