Mine today, gone tomorrow

It was 23 November 2007, and the final judgment regarding bauxite mining in Niyamgiri Hills had just been read out. It was not the doomsday verdict that the petitoners feared, nor did it make the project proponents rejoice. It took time for all present in court that day to digest the facts. The written verdict would be available only later, but the crux was clear. Vedanta Resources Plc had not been granted clearance to mine in the hills. Nonetheless, the judgment had alongside provided a solution to its subsidiary - Sterlite Industries (India) Limited, one face of Vedanta in India - on how to proceed with its plans.

The Supreme Court judgment opens by stating that it was "M/s Vedanta Aluminuim Ltd. ... filed an application seeking clearance of the proposal for use of 723.343 hectares of land (including 58.943 hectares of reserve forest land) in Lanjigarh Tehsil of Kalahandi District for setting up an alumina refinery. The matter has been pending since 6.3.04". This isn't strictly true; Vedanta was actually brought to court by three petitioners, R Sreedhar, Biswajit Mohanty and Prafulla Samantara. They had filed applications before the Central Empowered Committee, a monitoring body set up by the Supreme Court, pointing out that the company had begun construction of its refinery at Lanjigarh without clearances for mining bauxite in nearby Niyamgiri Hills (see: earlier article).

Over the years, Sterlite has gone ahead with the construction of the refinery, first by insisting that it had nothing to do with the mining operations planned in the same area, and then seeking fait accompli clearance to the mine on the grounds that the refinery is dependant on it! (see earlier article). This switch-and-bait of the court has become important because, on its own the mining operation may not deserve environmental clearance. There have been several arguments in the court on the impacts of mining on the Niyamgiri Hills ecosystem and the Dongaria Kondh tribal community who have a deep spiritual and livelihood dependence on it.

Norway notes ethics violations

The SC judgment says, "It is not in dispute that in this case that mining of bauxite deposits is required to take place on the top of Niyamgiri hills". The court also noted that the Ministry of Environment and Forests (MoEF) has already granted environment clearance for the refinery. However, the CEC had vehemently opposed the grant of permission to mine, leaving the refinery in limbo. Since the court appeared to believe that mining was necessary, it was anticipated that Vedanta's fait accompli argument would carry the day.

Meanwhile an interesting development occurred. The Norwegian Council of Ethics recommended to that country's pension fund that it withdraw its investments in Vedanta and its subsidiaries. The council gave numerous reasons, including 'misinformation and breaches of laws and procedures', 'severe environmental damage', and 'involvement in human rights violations'. Against this development, and the subsequent media attention it received, the SC took an ambivalent stance. Its judgement states, "We do not wish to express any opinion on the correctness of the said report. However, we cannot take the risk of handing over an important asset into the hands of the company unless we are satisfied about its credibility."

A simple reading of this would assign the same lack of faith to any of Vedanta's subsidiary companies, especially as these were also included in the Council of Ethics' indictment. But the SC did not seem to think so; instead it has proposed a way by which the mining proposed by the company could still be allowed. In doing so, it is also to be noted, the judgement goes beyond the brief of the court.

A new option

The court has now allowed Sterlite and Orissa Mining Corporation (OMC) Limited to move the court jointly through a proposed 'rehabilitation package', which would presumably satisfy the remaining concerns. A few of the conditions of this package are:

• The government of Orissa will float a Special Purposes Vehicle (SPV) for scheduled area development of Lanjigarh Project, with the State, OMC and Sterlite as stakeholders. This SPV shall be incorporated under the Companies Act, 1956.

• Sterlite will need to deposit annually commencing from 1 April this year 5 per cent of its annual profits before tax and interest from Lanjigarh mining project or Rs. 10 crores, whichever is higher, for scheduled Area Development with the said SPV. The CEC has the powers to monitor this utilisation.

• Sterlite shall pay Rs.55 crores and Rs.50 crores respectively for conservation and management of wildlife around the Lanjigarh bauxite mine, and Rs.12 crores towards tribal development. Sterlite shall also bear expenses towards compensatory afforestation.

• Sterlite will need to file a statement with the CEC within eight weeks of the judgement date, stating the number of persons who shall be employed in the company on a permanent basis, including land-losers.

The court, while noting that it would need to be satisfied about Vedanta's credibility, appears to have not addressed that at all in dealing with Sterlite, a principal operating company of the Vendata group in India. The basis for this distinction is not clear, especially when one considers that the Norwegian indictment was focused on the India operations of the group. Sterlite has already indicated its satisfaction with this proposed new direction, and accepted the conditions of the judgement.

But if Sterlite has found this resolution favourable, there are others who disagree. A review petition has been filed by Sidhartha Nayak. Nayak and his lawyers had earlier moved the court independently on the ground that mining would have serious negative impact on the Dongaria Kondh tribals (see earlier article). The main argument of this petition is that the issue before the court is not that of the refinery but the impacts of mining, which has not been considered and argued yet. It re-iterates the irreversible damage that mining will cause to the biodiversity of Niyamgiri Hills and the lives of the tribal community dependant on it.

The petition also reminds the court that London-based Vedanta Resources Plc still holds a 76 per cent stake in Sterlite, and avers that the recent judgement amounts to nothing less than condoning all the violations by Vedanta, the Government of Orissa and also the MoEF. (Many of these have been referred to in the earlier articles in this publication by the author, see highlight box for links).

And so the battle continues.