Vedanta Close Out Audit Report - Vedanta Corporate Websitesu .Vedanta Close Out Audit Report FINAL

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  • Vedanta Close

    Out Audit

    Report

    FINAL REPORT

    October 2013

    47059086.STG5

    UNITED KINGDOM & IRELAND

    Prepared for: Standard Chartered Bank as Agent to the Lenders

    47059086.STG5

  • IESC AUDIT REPORT

    October 2013 47059086.STG5

    i

    Limitations

    The conclusions and recommendations contained in this Report are based upon information provided by

    others and upon the assumption that all relevant information has been provided by those parties from whom

    it has been requested and that such information is accurate. Information obtained by URS Infrastructure &

    Environment UK Limited (URS) has not been independently verified by URS1, unless otherwise stated in

    the Report.

    The methodology adopted and the sources of information used by URS in providing its services are outlined

    in this Report. The work described in this Report was undertaken before, during and after the site visits in

    KCM Zambia, Val Lanjigarh (Orissa) and Sterlite Tuticorin (Tamil Nadu) during September 2013 and is

    based on the information available during the said period of time. The scope of this Report and the services

    are accordingly factually limited by these circumstances.

    Where assessments of works or costs identified in this Report are made, such assessments are based upon

    the information available at the time and where appropriate are subject to further investigations or

    information which may become available.

    URS disclaim any undertaking or obligation to advise any person of any change in any matter affecting the

    Report, which may come or be brought to URSs attention after the date of the Report.

    Certain statements made in the Report that are not historical facts may constitute estimates, projections or

    other forward-looking statements and even though they are based on reasonable assumptions as of the date

    of the Report, such forward-looking statements by their nature involve risks and uncertainties that could

    cause actual results to differ materially from the results predicted. URS specifically does not guarantee or

    warrant any estimate or projections contained in this Report.

    1. Note that following its acquisition by URS and consequent integration into the main Group, the Scott

    Wilson / URS Scott Wilson brands have now been discontinued and the company that undertook the original

    Sustainability Review is now named URS Infrastructure and Environment UK Ltd.

    Copyright

    This Report is the copyright of URS Infrastructure & Environment UK Limited. Any unauthorised

    reproduction or usage by any person other than the addressee is strictly prohibited.

  • IESC AUDIT REPORT

    October 2013 47059086.STG5

    ii

    TABLE OF CONTENTS

    1 EXECUTIVE SUMMARY ................................................... 1

    1.1 Introduction ...................................................................... 1

    1.2 Validation of implementing IESC recommendations ... 1

    1.3 Vedanta Sustainability Framework ................................ 3

    1.4 Effectiveness in implementing the Vedanta Sustainability Framework ........................................................................ 7

    1.5 Audit conclusion and recommendations .................... 10

    2 INTRODUCTION AND BACKGROUND ......................... 12

    2.1 Vedanta resources ......................................................... 12

    2.2 Terms of reference ........................................................ 13

    2.3 Purpose of the audit ...................................................... 14

    2.4 Audit criteria ................................................................... 14

    2.5 Scope of the audit .......................................................... 15

    2.6 Declaration of interests ................................................. 15

    3 VEDANTA CLOSE OUT OF IESC RECOMMENDATIONS16

    3.1 Corporate level recommendations............................... 16

    3.2 Company level recommendations ............................... 28

    3.3 VAL Lanjigarh specific recommendations .................. 33

    4 VEDANTA SUSTAINABILITY FRAMEWORK COMPLIANCE ................................................................. 39

    4.1 PS 1: Assessment and management of environmental and social risks and impacts ........................................ 39

    4.2 PS 2: Labour and working conditions ......................... 40

    4.3 PS 3: Pollution prevention and resource efficiency... 43

    4.4 PS 4: Community health, safety and security ............. 45

    4.5 PS 5: Land acquisition and involuntary resettlement 46

    4.6 PS 6: Biodiversity and sustainable management of living natural resources ........................................................... 50

    4.7 PS 7: Indigenous People ............................................... 53

    4.8 PS 8: Cultural heritage .................................................. 55

    4.9 ICMM Principles ............................................................. 57

    4.10 OECD Guidelines for Multinational Enterprises ......... 62

    5 EFFECTIVENESS OF VEDANTA SUSTAINABILITY FRAMEWORK ................................................................. 68

    5.1 KCM ................................................................................. 68

    5.2 Lanjigarh Refinery India ................................................ 82

    5.3 Sterlites Tuticorin Copper Smelter India .................... 95

    6 AUDIT CONCLUSION AND RECOMMENDATIONS ... 107 APPENDIX A AUDIT PLAN ......................................................... 109

  • IESC AUDIT REPORT

    October 2013 47059086.STG5

    iii

    LIST OF TABLES

    LIST OF FIGURES

    Table 1-1: IESC recommendations close-out status ...................... 2

    Table 1-2: VSF compliance against IFC performance standards .. 3

    Table 1-3: Summary assessment of VSF implementation effectiveness by audit site .............................................. 7

    Table 1-4: IESC Close Out Audit recommendations ..................... 11

    Table 2-1 - Overview of Vedanta sites visited during the progress reviews and final audit .................................................. 14

    Table 3-1: Final status of Vedanta implementation of IESC recommendations .......................................................... 16

    Table 3-2: Overview of Vedanta Sustainability Framework documentation ............................................................... 21

    Table 3-3: Final status of Company implementation of IESC recommendations .......................................................... 28

    Table 3-4: Final status of VAL Lanjigarh implementation of IESC recommendations .......................................................... 33

    Table 1-4: IESC Close Out Audit recommendations ................... 108

    Figure 2-1: Overview of the Updated Group Structure ................. 12

    Figure 3-1: Sustainability Organisation and Competency ........... 18

  • IESC AUDIT REPORT

    October 2013 47059086.STG5

    iv

    ACRONYMS

    ASM Artisanal and Small Scale Mining/Miner

    CAPA Corrective and Preventative Action Plan

    CDP Carbon Disclosure Project

    CEO Chief Executive Officer

    CSO Chief Sustainability Officer

    CSR Corporate Social Responsibility

    DMP Disaster Management Plan

    EBRD European Bank for Reconstruction and Development

    ESIA Environmental and Social Impact Assessment

    ESMP Environmental and Social Management Plan

    ESP Electrostatic Precipitator

    FPIC Free, Prior and Informed Consent

    GN Guidance Note

    H&S Health and Safety

    HSE Health, Safety and Environment

    IBAT Integrated Biodiversity Assessment Tool

    ICMM International Council on Mining and Metals

    ICP Informed Consultation and Participation

    IFC International Finance Corporation

    IESC Independent Environmental and Social Consultant

    IP Indigenous People

    KCM Konkola Copper Mines

    LPARDF Lanjigarh Project Area Development Foundation

    LTI Lost Time Injury

    MS Management Standard

    OECD Organisation for Economic Cooperation and Development

    OHSAS Occupational Health and Safety Assessment Series

    PAPs Project Affected Persons

    PS Performance Standard

    QRT Quick Response Team

    SPV Special Project Vehicle

    TDP Tribal Development Plan

    TNEB Tamil Nadu Electricity Board

    TNPCB Tamil Nadu Pollution Control Board

    TP Tele Presence (Teleconferencing)

    TS Technical Standard

    UNFCC United Nations Framework Convention on Climate Change

    VAL Vedanta Aluminium Ltd

    VSF Vedanta Sustainability Framework

    VSAP Vedanta Sustainability Assurance Process

  • IESC AUDIT REPORT

    October 2013 47059086.STG5

    1

    1 EXECUTIVE SUMMARY

    1.1 Introduction

    This report presents close-out audit findings related to Vedanta Resources plc (Vedanta). Vedanta is a FTSE 100 diversified resources company with interests in zinc, lead, silver, oil and gas, iron ore, copper, aluminium and power. In September 2010 Scott Wilson Ltd Scott Wilson (now URS) was appointed by Standard Chartered Bank as the Independent Environmental and Social Consultant (IESC) to review Vedantas approach to sustainable development. The original Independent Review Report (IRR) set out a number