See http://articles.timesofindia.indiatimes.com/2012-01-19/bhubaneswar/30642318_1_review-petition-vedanta-aluminum-alumina-refinery.

As 2012 opened, 2000 villagers in the POSCO concession area of Orissa protested against further repression against leaders of the local movement and pledged to halt the project. Elsewhere in Orissa, more than 2,000 tribal people organised a rally marking the sixth anniversary of the Kalinganagar massacre, in which 14 tribals, including three women, were killed.

See http://www.minesandcommunities.org/article.php?a=11407&l=1.

British-based investors in South Korean company POSCO include Barclays, Alliance Bernstein/Alliance Bernstein Global Wealth Management, Foreign and Colonial Investment Trust PLC, and Henderson Far East Income Limited: see http://moneytometal.org/index.php?title=Special%3ASearch&search=Posco&go=Go.

The attack was widely condemned by left wing politicians in Orissa, but according to PPSS – the peoples’ organisation formed by local villagers – further action is about to be taken by the state government against the movement’s leadership. Following an investigation on 22 December, a group of Indian civil society organisations has called for an immediate judicial enquiry into the attacks of 14th December 2011.

It is also demanding the withdrawal of all newly-filed and previous false cases against the  villagers and PPSS activists. See http://www.minesandcommunities.org/article.php?a=11400.

British-based investors in South Korean company POSCO include Barclays, Alliance Bernstein/Alliance Bernstein Global Wealth Management, Foreign and Colonial Investment Trust PLC, and Henderson Far East Income Limited: see http://moneytometal.org/index.php?title=Special%3ASearch&search=Posco&go=Go.

Now, a civil society organization (Odisha Water Initiatives – OWI) which pledges to protect water supplies for the people of Orissa (Odisha), provided evidence of numerous instances where the company illegally extracted water from rivers and reservoirs.

But, even when fined for these violations, the company failed to pay the penalties – now amounting to some US$2 million.

See http://www.minesandcommunities.org/article.php?a=11395.

See http://expressbuzz.com/states/orissa/why-waive-rs-9-crore-penalty-on-vedanta/344648.html.

See also Water tax waiver issue rocks Assembly at http://www.dailypioneer.com/state-editions/bhubaneswar/28643-water-tax-waiver-issue-rocks-assembly.html and Water Lootera Vedanta gets undue favour from Water Bureaucracy at http://climatecrusaders.blogspot.com/2011/12/water-lootera-vedanta-gets-undue-favour.html.

(One crore = ten million. Nine crore rupees is equivalent to over £1,080,000 sterling.)

See http://www.minesandcommunities.org/article.php?a=11286.

British-based investors in South Korean company POSCO include Barclays, Alliance Bernstein/Alliance Bernstein Global Wealth Management, Foreign and Colonial Investment Trust PLC, and Henderson Far East Income Limited: see http://moneytometal.org/index.php?title=Special%3ASearch&search=Posco&go=Go.

The Cuttack bench of the Orissa High Court backed the environment ministry and ordered that Vedanta would have to apply afresh for a clearance for expansion if it wants to.

See http://articles.timesofindia.indiatimes.com/2011-09-17/india/30168402_1_bauxite-mining-project-environment-clearance-vedanta.

See http://www.theaustralian.com.au/business/mining-energy/rio-tinto-and-partners-to-invest-us2-billion-in-orissa-iron-ore-project/story-e6frg9df-1226136193003.

The release of a wikileak (below) last week raises questions about the operations (and governance) of one of the largest companies recently registered on the London Stock Exchange – one which shot straight into the FTSE 100 on its Initial Public Offering (IPO) of 7 May 2010.

In fact, Essar Energy plc’s debut marked the largest-ever listing of an Indian company on London’s main trading market, priced at £1.3 billion (making it  more significant than that of Vedanta in December 2003); and smaller in recent years only to those of Glencore and ENRC.

As Dow Jones newswires (helpfully) pointed out at the time:

“A premium listing means the company is expected to meet the U.K.’s highest standards of regulation and corporate governance…However, the company was hit by volatility in stock markets following a wave of credit downgrades in Europe that rattled investor confidence and lowered the price for its stock offering to 420 pence, from its previous range of 450 pence to 550 pence, to ensure a more successful debut. Shares have continued to tumble since the IPO.

“As the IPO was being marketed, analysts had raised concerns about the company’s corporate governance.”

[DJN 7 May 2010].

In fact , over the past year, Essar Energy’s fortunes have declined further. Its market capitalisation (marcap) at the time of its listing was estimated at around £5.47 billion.

But on 6 September 2011, its marcap stood at only £3.064 billion.

Essar Energy was “spun off” from India’s  Essar Group, one of the three most powerful,  geographically extended, diversified (and controversial) power companies on the subcontinent, with investments in coal mining , oil and gas, and associated refining and power production.

Getting exposure to foreign markets through listing in London was a no-brainer for the Group. In the past year Essar Energy has brokered a refinery deal with Kenya’s state oil company and, inter alia, with Shell UK.  Most recently (in July 2011) Essar Energy acquired the Stanlow oil refinery at Ellesmere Port, Cheshire.

The company operates four power plants in India and one at Algoma in Canada – which powers the eponymous steel plant, wholly-owned by Essar Global Inc. This is the holding company for the  Essar Group’s 76% controlling shareholding in Essar Energy plc (see below).

Essar Energy plc’s  “diverse portfolio” includes 17 blocks and fields for the exploration and production of oil and gas in India, Australia, Indonesia, Madagascar, Nigeria and Vietnam.

Mining-related interests

In July 2010, Essar Energy plc’s subsidiary Essar Power Ltd (EPL) signed a binding agreement to acquire Navabharat Power Pvt. Ltd.–a coal power plant project in India. This is a. 2,250-megawatt coal-fired power plant project in the Dhenkanal district of Orissa on India’s east coast (DJN 13 July 2010).

In September 2011 Essar Energy said it planned to bid for coal-bed methane and shale gas blocks in Indonesia, and would also bid for “similar assets” in China at the end of the year [Business Standard 14 September 2010). S.R. Agarwal, director and chief executive officer of Essar Exploration and Production India Ltd commented that “This would be our first international foray into unconventional resources. Indonesia opens its CBM blocks auction next month and we would be bidding for the same. We would seek approval of the Essar Energy PLC board for the same," No further news is available.

Although Essar Energy plc’s direct involvement in mining and coal  is so far relatively minor, the ownership and governance of  the London-listed company is firmly in the grip of the Essar Group itself (though its subsidiary, wholly-owned Essar Global), with the brothers Ruia (Ravi and Prashant – respectively the chairman and vice-chairman of Essar Energy plc) between them holding 76.72% of the company’s share capital.  (The only other main shareholder is Bank of New York Nominees, with 3.35%).

When, therefore the Essar Group announced in March this year, that it “may jointly bid [with India’s JSW Energy] for Australia-based Hancock Holding Co.’s (HBHC) two coal mines worth $2 billion”  [Financial Express 28 March 2011] the prospects are high that, were a deal concluded, management of the mines would end up in Essar plc’s hands. (The point being that the Group may find it easier to raise the capital required to purchase and operate the mines more easily in London than in Mumbai).

In any case, the wikileaks revelation – though not a major surprise (Tata has also been accused of backing “both sides” in the war on tribal communities in Chhattisgarh) – does raise serious questions about Essar Energy plc’s governance, in light of the control exercised by the Essar Group itself; and specifically to what extent the UK Bribery act might be used against its UK subsidiary (if at all).

The extraordinary statement, accredited to an Essar Group spokesperson in the wikileak, that the company “sets different Maoist groups against each other to suppress the situation” must (if verified) surely be one of the most horrendous ever made by a major extractive company, anywhere.

At the very least, we should demand to know why two of the three executive directors of a London company (already criticised for its poor governance since listing) have apparently admitted to funding “terrorist” groups; albeit in a foreign country and in their capacity as directors of an Indian-based corporation.

Essar rejects allegations of paying Maoists protection money
http://www.moneycontrol.com/news/business/essar-pays-protection-money-to-maoistscgarh-wikileaks_583021.html

WASHINGTON: The Ruias-led Essar Group, which has mining interests in Chhattisgarh, pays protection money to Maoists to safeguard its operations in the state, a leaked US diplomatic cable said.

“A senior representative from Essar, a major industrial company with large mining and steel-related facilities in Chhattisgarh, told Congenoff (Consul General Office) that the company pays the Maoists ‘a significant amount’ not to harm or interfere with their operations,” a cable dated January 11, 2010, originating from the US consulate in Mumbai and released by WikiLeaks stated.

“When the Maoists occasionally break this agreement and damage Essar property or threaten personnel, Essar sets different Maoist groups against each other to suppress the situation,” it said.

The cable said the Maoists pose a real threat to development and security in the region and efforts to bring these areas back into the orbit of the government is warranted.

As the government prepared to initiate action against the Naxals in Chhattisgarh, the US consulate, based on the trip of its officials to the region, said that the potential for human rights abuses by the security forces in the state is high.

The Corus Group has also been looking at opportunities to set up aluminium manufacturing facilities in Orissa. Officials said Corus is examining the possibility of setting up a value added aluminium production facility in Orissa.

Rio Tinto has also been negotiating since 1995 with the state government to develop iron ore deposits in a joint venture.

See http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=134138&sn=Detail&pid=102055.

The Business & Human Rights Resource Centre invited Vedanta to respond.  Its response is available on the Business and Human Rights website.

Amnesty International then issued a follow-up statement.

See http://www.business-humanrights.org/media/documents/amnesty-rejoinder-vedanta-aug-2011.doc.

In this article, Times of India journalist Nitin Sethi confirms – if confirmation were needed – that India’s former environment minister “overlook[ed] the reservations about [the project's] violation of law by his own expert panel”.

See http://www.minesandcommunities.org/article.php?a=11119&l=1.

British-based investors in South Korean company POSCO include Barclays, Alliance Bernstein/Alliance Bernstein Global Wealth Management, Foreign and Colonial Investment Trust PLC, and Henderson Far East Income Limited: see http://moneytometal.org/index.php?title=Special%3ASearch&search=Posco&go=Go.

… In India, social unrest and conflicts over land acquisition for development and mining projects have increased in recent years. Adivasis defending their ancestral lands and community forests are often subject to threats and harassment, despite the existence of constitutional protections, Supreme Court judgments and progressive national legislation requiring consent of tribal communities, and community rights over forest use. In a positive development in 2010 the Ministry of Environment and Forests in India stopped the Orissa government and Vedanta, a multinational mining company headquartered in the United Kingdom, from mining in the Niyamgiri hilltop in Kalahandi district, since such an operation would severely affect the ecology of the area and the situation of the Dongria Kondh Adivasi people living in the mountains.

Read more at http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=11284&LangID=E.

Development must not trump indigenous rights in the Americas

Amnesty International has urged governments in the Americas to stop prioritizing development projects at the expense of Indigenous Peoples’ rights. The call came ahead of the International Day of the World’s Indigenous People on 9 August.

See http://www.amnestyusa.org/news/news-item/development-must-not-trump-indigenous-rights-in-the-americas

New trade union report

To mark the International Day of the World’s Indigenous People, the ITUC is releasing a new report entitled “The Alliance Between the Indigenous Peoples and Trade Unions in Latin America”. The report points to the discrimination, feudal exploitation, isolation and forced labour suffered by indigenous peoples in Latin America.

See http://www.ituc-csi.org/new-ituc-report-on-indigenous.html

photo: Kerima Mohideen

Vedanta bosses clash with protesters over pollution and human rights

Anger erupted inside and outside Vedanta’s annual meeting on Wednesday as campaigners protested against the mining company’s environmental and human rights record. The London Mining Network says Vedanta’s record has not markedly improved, with 26 fatalities at its mines reported last year and a waste dump in Goa overflowing this month. “As a result, millions of tonnes of mud and silt flooded into the [Goan] village of Mulgao, swamping farmland, choking rivers and threatening people’s livelihoods,” said an LMN spokesman. Vedanta has offered to compensate farmers.

See http://www.guardian.co.uk/business/2011/jul/27/vedanta-protests-annual-meeting-pollution-human-rights?INTCMP=SRCH.

Vedanta faces angry protesters at AGM

India-focused miner Vedanta faced two hours of angry questioning on Wednesday, as its board was forced to defend the company against accusations from investors and pressure groups that it has repeatedly breached health and environmental rules. Pressure groups including Survival International, Amnesty International and others have long opposed a projected bauxite mine in India’s Orissa state, planned for an area considered sacred by indigenous people, as well as proposals to increase capacity at Vedanta’s Lanjigarh alumina refinery to 6 million tonnes per year from 1 million.

See http://af.reuters.com/article/commoditiesNews/idAFL6E7IR2E220110727.

Protesters demand action against Vedanta

Shareholders of Vedanta Resources, a FTSE 100 company that has been embroiled in a row over its activities in India, were on Tuesday booed by protesters gathered outside the venue of its Annual General Meeting in Westminster. They called for its expulsion from India and an investigation into its trade practices and human rights record.

See http://www.thehindu.com/news/national/article2300115.ece

Read notes of the AGM from an eye witness.

photo: Kerima Mohideen

photo: Kerima Mohideen

Matters of grave concern: Vedanta Collapses

Taking place here today (27 July 2011) is the Annual Shareholders’ Meeting of one of the world’s 20 leading mining companies, London-listed Vedanta Resources plc.

This company stands apart from its peers by having the worst health, safety and environment record of any mining company based in the UK – indeed virtually anywhere in the world.

We invite you to examine some of the accidents and disasters occurring on Vedanta’s watch within the past five years; the latest just eleven days ago:

16 July 2011: A waste dump at a Vedanta iron ore mine in Goa (India) collapses in numerous places: millions of tonnes of mud and silt flood into the village of Mulgao, swamping farmland, choking rivers and threatening people’s lives.

5 April 2011: Toxic wastes cascade from a breach in Vedanta’s caustic red mud pond at its Lanjigarh alumina refinery in Orissa (India), contaminating the adjacent Vamsadhara River.
16 May 2011: There’s a “copycat” failure at the same pond. Amnesty International warns that “thousands of families in…Orissa are [now] facing serious health risks during the imminent monsoon season.”
In July 2011, the Chief Minister of Andhra Pradesh says the pollution has crossed the state border and “people in many mandals [administrative divisions] of Srikakulam district are facing health hazards due to contaminated drinking water.”

1 November 2010: Vedanta’s subsidiary, Konkola Copper Mines (KCM) in Zambia is fined for polluting the Kafue River, killing fish and leaving local inhabitants without tap water. This is the very river polluted by Vedanta four years earlier.
On 6 November 2006, acidified effluents cascaded from burst slurry pipelines at KCM. They gushed into the Kafue River, raising its copper concentrations to 1,000% of acceptable levels, concentrations of manganese to 77,000% (sic) of the legal limit; and those of cobalt to 10,000%. Domestic water supplies are cut off for 75,000 residents in the town of Chingola.
26 March 2010: Four workers die when ground collapses around them at Vedanta’s Nchanga copper mill in Zambia.

24 September 2009: A chimney, under construction for a coal-fired power plant at Vedanta’s Korba aluminium complex in India’s Chhattisgarh state, topples to the ground.  At least 41 workers are buried alive. Vedanta is accused by Korba’s police chief of illegally embarking on the construction at the outset. Three top Vedanta officials are arrested and charged with “culpable homicide” – one degree below murder.
In October 2010, Vedanta’s chairman, Anil Agarwal, is summoned to give evidence at the Korba District Court in answer to a charge of Criminal Trespass relating to the previous year’s events. He refuses to attend.

24 August 2009:  During heavy rains, a vast mudslide sweeps into underground workings of Vedanta’s Mt Lyell copper mine in Tasmania, Australia. The mine is closed, leaving 180 workers and their dependents stranded without paid leave.

Collapse of Vedanta’s credibility

Between November 2007 and 2011 a significant number of investment funds ejected Vedanta Resources from their portfolios, citing the company’s unethical behaviour and its failure to address human rights and environmental issues.

Among these were: Norway’s Government Pension Fund; the Church of England; PGGM (a major Dutch Pension Fund); the Joseph Rowntree Charitable Trust; and Northwest and Ethical Investments (Canada).

If you, your Pension Fund or Bank, currently finance Vedanta in any way, we urge that you seriously examine evidence of the company’s woeful failure to meet rudimentary operational standards, during the eight years since its admission to trading on the London Stock Exchange.

Norway’s Council on Ethics in November 2007 concluded that, continuing to invest in Vedanta would present “an unacceptable risk of contributing to grossly unethical activities.”

Since then, such activities have multiplied. So, too, have the reputational risks of backing a company that makes a mockery of “corporate social responsibility.”

For further information on Vedanta’s record, please see:
http://www.minesandcommunities.org/list.php?r=831

This leaflet was authored by Nostromo Research
for London Mining Network,
http://londonminingnetwork.org
Phone 07929 023214
Email contact@londonminingnetwork.org