India: Vedanta update

India: Vedanta update

31st December 2006

Mine? What mine? Ah, yes, the mine.

Mining in Niyamgiri Hills

India Together (Bangalore) December 2006

December 2006, Supreme Court of India, New Delhi. The deliberations on the controversial case of bauxite mining by M/s Vedanta Alumina Ltd in Niyamgiri Hills, Orissa are underway. The project is being undertaken based on an MoU with the Government of Orissa and is being implemented through M/s Sterlite Industries (India), a successor company for M/s Vedanta. * Mukul Rohtagi, senior counsel for the company rises to convince the court about the importance of the project. He highlights that the bauxite reserves in Orissa and Niyamgiri Hills are largest in the world and that they want to exploit this resource scientifically. Further, the company has already invested in the area by setting up schools and colleges, as well as a refinery. However, the company does not have mining rights, and Rohtagi explains to the Court that the refinery cannot function without mining in Niyamgiri Hills.

If that's true, then it's a complete volte-face for the company, contradicting its own earlier claim made in arguments before the Central Empowered Committee (CEC), a monitoring body set up by the Supreme Court on forest matters. The company had previously delinked the one-million-tonne-per-annum capacity alumina refinery at Lanjigarh in Orissa's Kalahandi district, and the associated bauxite mining project at nearby Niyamgiri Hills. Indeed, its application for environment clearance for its refinery did not even mention the proposed mine.

Nonetheless, the MoEF evidently understood that the two were related. The ministry granted environmental clearance for the project on 22nd September 2004, and in its letter clearly specified that the source of bauxite for the refinery would be the Niyamgiri bauxite mine near Lanjigarh.

This led to a furore among environmentalists who cried foul; the Niyamgiri Hills are pristine forest land, and also a Schedule V area defined by the Indian Constitution (which prohibits transfer of lands inhabited by adivasis to non-tribals). This means that in addition to the environment clearance granted by the MoEF, forest clearance too would be needed. Since mining is plainly not permitted in the Niyamgiri Hills, this could only be brought about if the ministry reclassified the areas as non-forest land. At the time the environment clearance was granted, two separate proposals for conversion of forest land related to this project were pending before the MoEF: the first was for the conversion of 58.943 hectares for the refinery component, and another was to convert 72.018 hectares for the mining component.

Did the company deliberately decide to separate out the two projects to seek faster clearances, when they were inherently linked? When the Environment Impact Assessment Report and pre-clearance correspondence clearly state that the refinery is linked with the mining on forest lands, why did the MoEF grant clearance stating that no diversion of forest land is involved? Did the ministry presume that the territory would be converted into non-forest land to facilitate the company's mine?

In 2004, this bundle of contradictions was presented and challenged before the CEC through 3 applications filed by three groups; Biswajit Mohanty of Wildlife Society of Orissa, Prafulla Samantara, and Academy of Mountain Environics against the establishment of the project. Through these petitions it was pointed out that the company had started construction work without the requisite clearances being in place, and by distorting the facts to its convenience. There were several deliberations before the CEC, and two site visits were also undertaken by the empowered committee. Subsequently the CEC presented a comprehensive report on 21st September 2005, presenting its findings. (See: http://www.indiatogether.org/direct/2005/cdr-000079.html).

The constant change of stance by Vedanta during the last two years is noteworthy. In earlier hearings the company has argued that in fact the mining and refinery components of the project are not linked, and also that the functioning of the refinery is not dependant on the mining in Niyamgiri Hills. I distinctly remember being witness to this question being raised by the CEC at the hearings (including the hearings on 18th January 2005 and 28th March 2005), and the counsel for Vedanta responding that the projects are not dependant on each other. The CEC report also refers to this submission of Vedanta, and states, "the concept of the mining project being integral to the alumina refinery project is inaccurate. In case, the mineral from Lanjigarh mines are not available it would obtain bauxite from other sources." From where this would happen, was not specified!

The company has also vacillated on another claim in this case. At first, the company had sought conversion of nearly 59 hectares of forest land for its refinery, but following a series of arguments, it took the view that its refinery could be located on non-forest land, and withdrew its application to the MoEF for the grant of clearance of conversion of the forest land. The MoEF has allowed withdrawal of its proposal.

The response of the Orissa State government reveals another interesting dimension. The mining lease for Niyamgiri Hills, Lanjigarh has been approved in favour of the Orissa Mining Corporation (OMC) by the Department of Mines, Government of India on 3rd September, 2004. An agreement between the OMC and M/s Vedanta Alumina Ltd. was signed on 5th October, 2004 for the use of the bauxite deposits by a Joint Venture Company, managed by M/s Vedanta Alumina Ltd. On record for seeking forest and environment clearance, this would appear to be two separate projects as forest clearance is applied for by OMC for mining, and M/s Sterlite Industries (India), a successor company of Vedanta for the refinery, but infact they are the same project. The Orissa government also admits that these two projects are complementary to each other.

After assessing the various facts in question, the CEC report concluded, "the MoEF accorded the environmental clearance to the alumina refinery project by delinking it with [sic] the mining project. In case the diversion of the forest land for the mining project is not approved under the Forest Conservation Act or the mining project is not found suitable for environmental clearance, the alumina refinery, after incurring an expenditure of about Rs.4000 crores, will be left without any commercially viable amount of bauxite though the main reason for selecting the project site was its proximity to the bauxite mine." This extremely strong wording, pointing to all the discrepancies and twisted stances, was submitted to the Supreme Court.

After the CEC submitted its report, the Supreme Court in February 2006 referred the matter to the Forest Advisory Committee (FAC) at the MoEF and ordered detailed assessments to be completed in three months. Following this, assessments by two institutions - Wildlife Institute of India, Dehradun (on Wildlife aspects) and Central Mine Planning & Design Institute Limited (CMPDI), Ranchi (on mining aspects) - were carried out. CMPDI is a subsidiary of Coal India Limited. Based on these two reports, the FAC recommended the diversion of forest land for the project, subject to conditions.

UU Lalit, amicus curiae (friend of the court), noted during the hearing that the report of the CEC clearly argued against the grant of forest clearance for mining. This was because the proposals were full of manufactured details, data and permissions. This fact can be established in the court. He also added that the as per the 30.11.2006 order of the Supreme Court, all earlier decisions of the FAC are subject to review by a freshly constituted FAC, as the earlier one was not properly constituted. The decision on mining in Niyamgiri Hills is one such decision which requires a review by the newly constituted FAC. Following the arguments in court, it was finally decided that all the reports, including the first one by CEC, the ones done by WII, CMPDI and CEC's comments on it, will be presented before the newly constituted FAC, following which they can consider the matter.

Now the Supreme Court is on the verge of deciding whether forest clearance for the mining project can be granted, which is where we find the counsel for Vedanta vehemently arguing how important the mining clearance is for the refinery, and that the company has already made a substantial investment in setting up schools, colleges and also the refinery itself. A project that, judging by the law, should not have begun in the first place, is now sought to be justified on the grounds that substantial investments have already been made.

* NOTE: Sterlite Industries is the predecessor, not successor, to Vedanta Alumina which is wholly-owned by Vedanta Resources plc, based in the UK