Vedanta Resources: the world's most hated company?

Date of publication: 
29 July 2010

Vedanta Resources’ highly successful financial year, and its annual meeting, were overshadowed yesterday when more than 100 protesters, some dressed as characters from James Cameron’s Avatar film, came to object to what they say is the company’s shocking human rights and environmental record.

Police stopped protesters storming the meeting, as pressure groups and celebrities lined up to attack the mining group’s record over its treatment of the Dongria Kondh tribe, which, they claim, will be devastated if Vedanta’s planned bauxite mine in India’s Orissa state goes ahead.

But it is all nonsense, says the FTSE 100-listed group, and the Church of England, state pension funds from Norway and the Netherlands, the Department for Business, Innovation and Skills and even BP, whose pension fund trustees have reduced their stake in the miner, are all wrong in their criticism: that Vedanta puts the pursuit of profit ahead of human rights.

In an interview earlier this week, MS Mehta, Vedanta’s chief executive, described accusations against the group as “lies and hoax,” adding that the planned mine and an alumina refinery in the Lanjigarh region are not damaging to the environment, and, in fact, are good for the people that live in the forests neighbouring the sites.

Pressure groups argue that the group’s refinery and the proposed mine in the Niyamgiri mountains, will destroy the local environment and effectively end the way of life of the tribe, which has lived in the region for generations. Survival International, Action Aid and Amnesty International also claim that the mountain that will be mined is sacred to the Dongria Kondh.

Until this week, Mr Mehta and the rest of the Vedanta board had repeatedly rejected requests for interviews. However, faced with yesterday’s protests and a move by Pirc, the activist investor group, to unseat several board members, Vedanta has realised its policy of ignoring the criticism is not working. Aviva was one institutional backer to vote against the group on three resolutions at yesterday’s meeting.

Issuing a statement to coincide with the AGM, the group said: “Vedanta strongly denies any allegations of pollution of the environment in Lanjigarh or of any violation of human rights. Vedanta is working closely with 2.5 million people spread across 425 villages in India and will be benefiting the lives of another 1.6 million underprivileged children in the coming 2-3 years through its various [corporate and social responsibility] programmes.”

Mr Mehta said: “Maybe we’ve been naive not to talk more in the past, but I would not like to hazard a guess about why Vedanta is targeted in this way. The region is one of the most backward in India. We have provided schools, hospitals and infrastructure for the Dongria Kondh and have offered financial support far beyond the necessary levels.” Vedanta says that 3 per cent of the tribe live within 2 miles of the mine, and the, “applied forest area for the mining project is neither a wildlife sanctuary nor a national park nor a biosphere reserve”.

Mr Mehta argues that because of the limited drilling involved with bauxite mining, it is considered “eco-mining” and there was “hardly any impact” on the water supply. There is also “no proof that the mountain is sacred,” the group says.

Vedanta claims that it has always been open with investors, a point refuted by a number of non-City backers. Earlier this month PGGM, the Dutch health sector pension fund sold its Euros5.8m stake, saying that efforts to discuss the Orissa project had failed for two years. PGGM’s comments echo those of the Church of England, which in February said: “After six months of engagement, we are not satisfied that that Vedanta has shown, or is likely in the future to show, the level of respect for human rights and the local communities that we expect of companies in whom the Church investing body holds shares.” The Church also sold its holding in Vedanta.

Vedanta claims that representatives of the Church spent 3 days touring the Orissa sites, and that the visitors had been impressed.

Yesterday, the Church said that its comments referred to Vedanta’s facilities, and specifically not the social impact of the company’s operations. “The Church’s Ethical Investment Advisory Group recommended disinvestment from Vedanta Resources after six months of research into the company’s operations and several meetings with the company. We took into account both the facilities shown to us by the company and the accounts of villagers affected by Vedanta’s operations, during a week-long visit to India,” said a spokesman.

“We continue to monitor the company’s approach and will be pleased to review our recommendation to the Church investing bodies if the company addresses the issues we raised. To date our concerns have not been addressed.”

The actor Michael Palin, and other celebrities, including Bianca Jagger, who delivered a petition signed by 30,000 people on behalf of Amnesty, and Joanna Lumley all made protests at yesterday’s meeting. Mr Palin, said: “I’ve been to the Nyamgiri Hills in Orissa and seen the forces of money and power that Vedanta Resources have arrayed against a people who have occupied their land for thousands of years… The tribe I visited simply want to carry on living in the villages that they and their ancestors have always lived in.”

Survival, which Vedanta refused to meet, says it will continue to protest, but despite saying last year that Vedanta had failed, “to put in place an adequate and timely consultation mechanism fully to engage the Dongria Kondh,” the Department for Business, Innovation and Skills confirmed yesterday that Vedanta’s ethical record will not be discussed during the UK Government’s high-profile trade trip to India this week.