Agarwal Accused Of Violating Armenian Laws

Agarwal accused of violating Armenian laws - while Vedanta continues its rampages through India

by Nityanand Jayaraman, Special to Corpwatch USA

15th November 2005

Anil Agarwal, executive chairman of Vedanga Resources plc, was last week cited for yet another string of major violations - this time for his operations (through Sterlite Gold) in Armenia.

It could hardly be worse: the Armenian government's Ministry of Nature Protection is charging him with " violations of land allocation; uncertified laboratory work; improper control of drill samples; and underground mining termed "illegal"." The ministry also alleges that Sterlite has under-estimated gold reserves at Zod "by more than 2 times".

The news came in a story published on November 17 by Mineweb, the mining industry's leading electronic news service, based in South Africa.

In London Vedanta's PR outfit says it is their "understanding" that the operations are separately owned by Agarwal and not Vedanta. In fact the Zod gold mine was included in the inventory of assets offered to investors when Vedanta made its London float in late 2003. Four years earlier, First Dynasty - a company then controlled by the notorious Robert Friedland - had sold a major stake in Zod to Twin Star, the holding company owned by Agarwal, which also has 54% of Vedanta Resources plc. Agarwal was made chairman of the Zod gold mining company in 1999.

One of the options open to Agarwal, in order to extricate himself personally from Armenia is to arrange a fire sale of the failed gold mine and its companion operation, using Vedanta itself to make a bid.

Vedanta Undermines Indian Communities

A tribal temple on Shervaroyan Peak in the hills of Yercaud in Southern India recently developed several large cracks. Built several centuries ago, the temple has withstood colonization and independence. But of 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 been strip mining this and nearby peaks for bauxite, the ore that yields aluminium used in products from throwaway soda cans to aircraft bodies.

From where he stands, K. Babu can see the deep red gashes ripped into the hillside barely 100 meters from the temple. He and other community activists charge that MALCO is a heavy weight player in the local economy and politics, and a significant contributor to environmental degradation. “There’s a limit to exploitation. Nothing is sacred any more,” says the president of the local youth federation. “Their only botheration is to excavate more and more. Maintaining ecology is not at all an issue.”

MALCO’s operations in the southern Indian state of Tamilnadu span more than 60 kilometers – from the mist-clad Yercaud and Kolli hills to the impressive earthen dam and reservoir on the averi River in Mettur.

On the banks of the huge reservoir, MALCO operates a smelter and a refinery complex where locally mined bauxite is converted into aluminium. A mountain of toxic red mud – a by-product of aluminum production – is separated from the reservoir by a flimsy embankment.

MALCO is a small cog in the giant wheel that is Vedanta Resources, a company set up by British billionaire businessman Anil Agarwal. Born in eastern India, he started out as a scrap metal merchant in Mumbai, before moving to London 30 years ago. Agarwal’s fortunes soared as the small Indian company he set up in 1988 rode the telecom boom, supplying copper cables to telecom companies in India. Vedanta in India

Today, Vedanta is a vertically-integrated behemoth with an impressive international portfolio comprising copper, bauxite (aluminium), zinc, lead and gold. It has raised almost $1 billion on the London Stock Exchange and has started to snap up mines in Zambia and Australia.

In India, which remains its production base, the company runs a giant copper smelter in the coastal town of Tuticorin in the southern state of Tamil Nadu, and aluminium smelters in the central and east Indian states of Chattisgarh and Orissa. According to the company’s annual report, it plans to start a massive captive mine in the Niyamagiri hills of Orissa, a smelter in nearby Lanjigarh, and a refinery also in Orissa.

According to activists, the projects threaten densely forested areas that are home to tiger, Indian bison, bear, and elephant. The effected human population includes impoverished tribal communities, some of whom charge that Vedanta’s projects are illegal, and that the state and central governments are colluding with the company to circumvent environmental protections.

“Nobody wants to take on Sterlite. They have built entire plants within their copper complex [in Tuticorin] with no permission from any of the authorities and without fear of reprisal," says Fatima Babu, a women’s activist and fisher leader from Tuticorin. "The government machinery has not just tolerated Sterlite’s violations but facilitated it.”

Faced with community opposition, Sterlite has set up a foundation to address local needs and sited seven of its 18 centers in Tuticorin, Sterlite Copper’s hometown.

"We don't do anything extraordinary," S. Chaamundi, country head of the foundation’s child welfare program told India’s Financial Express. "But the glow in the eyes of the children when they feel that they have someone to bother about them, the shine in the face of the poor parents when they report their child also say 'sorry' and 'thank you,' like the children in the homes they work as housemaids or coolies, make us feel we are doing something worthwhile."

Telling Tales from Tuticorin

These social welfare programs have done little to blunt a long history of opposition to Vedanta or to counter evidence that it has polluted the environment, poisoned locals, and colluded with officials to bypass environmental protections.

In less than 8 years, 139 people have been injured and 13 killed by accidents or pollution from the Tuticorin smelter complex, according to documented reports and testimony from workers. [See box on “Occupational Injuries and Deaths at Sterlite”]

Complaints about the company began mounting in the mid-1990s, when protesters in Ratnagiri in the western state of Maharashtra cited environmental concerns to block Sterlite from building a smelter and to force the state to revoke the company’s license. Shortly after, a Tamil Nadu government invitation to Sterlite to build a plant in Tuticorin sparked massive protests by residents
-- particularly fisherfolk.

But the Tamil Nadu project had the blessing of Chief Minister J. Jayalalithaa Jayaram, who laid the foundation stone for the complex. Less than four months after applying to build the smelter, Tamilnadu Pollution Control Board (TNPCB) granted conditional licenses to construct a 140,000 ton-a-year copper smelter and associated plants.

That license stipulated that the unit be at least 25 kilometers from the Gulf of Mannar Marine National Park in order to protect the region’s ecology – its famed coral islands and exotic species such as dugongs, sea turtles, and pearl oysters -- from sulphur dioxide, arsenic and lead emissions.

In 1995, ignoring the TNPCB’s instructions, Sterlite erected the smelter complex– including a mothballed smelter scavenged from the U.S.– 16 kilometers from one of the protected islands. Rather than act on the violation, the pollution board granted the company an operating license to manufacture up to 40,000 tons of blister copper.

In 1996, local resistance came to a head when fisher folk used an armada of small boats to prevent ships carrying Sterlite’s raw material – copper concentrate – from entering the Tuticorin harbour. But resistance waned after the government conceded to one of the protesters’ demands: to prohibit disposing the effluents at sea.

Within two years a spate of accidents and gas leaks from the factory spurred the Madras High Court to commission a report on pollution by Sterlite. NEERI – a national environmental engineering laboratory – faulted the company for discharging dangerous levels of pollution into the environment and recommended the company’s closure. Barely three months later, the same court reversed itself, cleared Sterlite, and recommended its reopening.