: A History of Vedanta’s Legal Misadventures
Since 22 May, 2018, at least 11 people have died after the Tamil Nadu police opened fire on those protesting against the expansion of Sterlite Industries’ copper smelter complex in Tuticorin. The Madras High Court has stayed the construction, but the protestors continue their agitation, demanding the closure of the Vedanta subsidiary’s copper unit, which they allege have violated environmental laws and caused a number of health problems due to gas leaks.
For UK-based Vedanta Resources Plc and its group of companies, of course, this is not something new but just the latest in a line of cases against them in India and abroad for environmental violations, which has not only seen them face legal censure, but also disinvestment by shareholders, and a loss of goodwill. On top of this all, it has also been at the centre of controversy over political donations to both major parties in India.
Vedanta signed up for a joint venture in 2004 with the Odisha Mining Corporation Ltd (OMCL) to mine bauxite from the Niyamgiri hills which would supply their alumina refinery located at nearby Lanjigarh. The Kondh tribes in the region were opposed to the project from the start, but in 2008, the Supreme Court granted clearance to deforest the area to conduct the mining.
However, this was subject to getting approval from the Ministry of Environment and Forests (MOEF), which gave its Stage I clearance in 2009, but with a number of conditions, including getting a forestry clearance.
Subsequently, based on the findings of the expert Saxena Committee, the MOEF found that:
- There had been blatant violations of the rights of the tribes under the Forest Rights Act 2006 by Vedanta and OMCL, and even the rights of Dalits not protected under that Act.
- Vedanta had committed significant violations of the Environmental Protection Act 1986 when it came to the refinery, which had been expanded without getting environmental clearances.
- There had been repeated violations of the Forest Conservation Act 1980, with Vedanta wilfully concealing information about the project.
As a result, the MOEF refused to grant the Stage II forestry clearance required for the project. This was challenged by the companies and the Odisha government in the Supreme Court. The apex court in 2013 held that the community and religious rights of the Dongria Kondh tribes had not been properly assessed since under the Forest Rights Act 2006. This had to be done by Gram Sabhas of the locals, which hadn’t taken place here.
The Gram Sabhas set up to look into the matter unanimously rejected the project in 2013 itself, taking into consideration the community rights of the Kondh tribes, and their religious sentiments about the Niyamgiri hills. OMCL tried to get these decisions overturned but their petition was dismissed in May 2016.
The Fallout for Vedanta
The companies have tried to argue that not allowing them to operate is a loss for development. The Odisha Government was not happy with the decision since it affected plans to allow several mining projects, and the BJP Government’s Ministry of Home Affairs tried to smear one of the main Dongria Kondh grassroots organisations as a Maoist front.
Despite all this, the project has not been allowed, and Vedanta has ended up losing over Rs 4,000 crores at the refinery. It also faced international condemnation for their role in the fiasco, with the Church of England, state pension funds from Norway and the Netherlands, the Department for Business, Innovation and Skills and even BP disinvesting from the company over their concerns.
2. Korba, Chhattisgarh
BALCO, another Indian company in which Vedanta has a 51% stake, used to operate a power plant in the town of Korba in Chhattisgarh.
The first problem at the power plant was the collapse of an under-construction chimney at the power plant in September 2009, which led to the deaths of over 40 people, and the maiming of several others. BALCO officials as well as representatives from the Chinese and Indian contractors working on the project were arrested and cases registered against them.
In 2012, the state-appointed judicial commission that probed the incident found that it was caused due to the negligence of BALCO, the contractors and relevant government agencies. The commission held them responsible for the incident and indicted them, including the Vedanta subsidiary. In 2013, the Chhattisgarh High Court stayed taking action against them, and there has been no progress on the case since.
However, this wasn’t the end of Vedanta’s troubles here.
In September 2017, the Chhattisgarh Environment Control Board (CECB) instructed BALCO to shut down the power plant for violation of the Water (Prevention and Control of Pollution) Act 1974. BALCO was reportedly pumping polluted water into a nearby canal (which drains into the Hasdeo river) after the ash dyke at the plant was damaged.
The Fallout for Vedanta
BALCO’s aluminium rolling operations in the same complex are heavily reliant on the power plant. If the power plant is shut down, it would be a significant blow for the rolling mill, which had to close operations for 11 months in 2015-16 due to spiralling power costs.
Vedanta owns a majority stake in Sesa Goa Pvt Ltd, which used to conduct large-scale iron ore mining operations in Goa. Sesa Goa is now Vedanta Limited.
In 2014, the Supreme Court quashed all mining leases in Goa since they had expired by 2007, holding therefore that all mining which had taken place from 2007 to 2012 in Goa was illegal. Mining across the state had been suspended by the apex court in 2012 following the report of the Justice Shah Commission which had found that there had been gross violations of environmental laws by the mining companies, including Sesa Goa.
Following a misguided Bombay High Court decision, some leases, including some of Sesa’s, were renewed in 2015 by the Goa government – proper environmental clearances were not obtained for any of the mining operations.
The leases were all quashed again in February 2018 by the Supreme Court, and they ordered all mining operations to be stopped till new leases are granted based on a comprehensive policy and requisite environmental clearances. This process could take months, if not years.
The Fallout for Vedanta
According to Bloomberg Quint, the total banned capacity in Goa stands at 20 million tonnes of iron ore a year – Vedanta used to operate 5.5 million tonnes of that, making it the largest iron ore operation in the state.
Based on estimates by a Vedanta director and Goa Ministers, the Vedanta group stands to lose about US$ 165 million or about Rs 1,000 crore in revenue as a result of this decision. Since operations between 2007 and 2012 were illegal, the profits earned by the mining companies are also recoverable under the court order – the amount recoverable from Vedanta Limited is estimated at Rs 20,924 crore, according to the Economic Times.
Through its subsidiary Sterlite Industries, Vedanta owns Hindustan Zinc Limited (HZL), which was allotted a lease for rock phosphate mining in Rajasthan.
Rock phosphate can only be mined in Rajasthan by the Rajasthan State Mines and Minerals Limited (RSMML), a state government undertaking. The Rajasthan government had granted a mining lease to HZL because it was a state-owned company, and imposed a condition that it could only sell to RSMML.
In April 2002, after the lease was renewed for 10 years, HZL was acquired by Sterlite, meaning it was no longer a state-owned company. The Rajasthan Anti-Corruption Bureau (ACB) has since filed an FIR in which it claims that former mining secretary Ashok Singhvi allowed HZL to continue with its lease despite the sale to Sterlite, resulting in a Rs 600-crore loss to the exchequer. Singhvi actually revoked the lease because of the change in ownership, but when taken to court by HZL and Sterlite, he agreed to restore the lease.
The ACB also alleged that the company subsequently conducted mining operations without the requisite environmental clearances, and sold rock phosphate to buyers apart from RSMML.
The Fallout for Vedanta
The probe into the case by the ACB had been dragging on for years. In February, the Rajasthan High Court had demanded that the investigation needed to be completed by 21 March 2018, but there has been no news on the status of the case since then.
5. Chingola, Zambia
Vedanta owns a Zambian company called Konkola Copper Mines Plc (KCM), which owns and operates the Nchanga copper mine. The mine is located in the Chingola region of Zambia.
Residents of Chingola filed civil cases against Vedanta and KCM in the English courts, claiming that they were negligent and violated Zambian environmental laws. Waste from the mine is alleged to have polluted the local waterway and caused personal injury and damage to property.
Vedanta tried to argue that the English courts couldn’t hear the case as it related to claims in Zambia, but the English Court of Appeal rejected these claims, and allowed the claims of the 1,826 Zambian villagers to proceed.
The Fallout for Vedanta
The main case hasn’t yet been decided, but an interesting consequence of this decision is that people who have suffered harm at the hands of Vedanta’s subsidiaries abroad – including India – can actually file cases against the company in the English courts.
Presumably, this could mean the residents of Tuticorin could also file cases against the Vedanta parent company in England, where the company may actually find itself subject to a higher duty of care than in India, and therefore have to pay larger sums in damages.
6. Tuticorin, Tamil Nadu
Which leads us back to Sterlite Copper operations (by Sterlite Industries) in Tuticorin. The current protests are not even the first time there’s been legal trouble for Vedanta’s subsidiary over this operation.
Sterlite’s Tuticorin copper operations have been plagued by irregularities from their start in 1994, including the grant of an environmental clearance by the MOEF without the required Environmental Impact Assessment, violation of the required distance between it and the Gulf of Mannar, failure to develop a greenbelt, contamination of groundwater, gas leaks, and more.
Notwithstanding this, Sterlite somehow managed to keep operating, with court-appointed investigators suddenly reversing findings, the Tamil Nadu Pollution Control Board ignoring violations of the conditions it had laid out for the complex to allow expansions, and the MOEF granting new environmental clearances.
In 2010, however, the Madras High Court finally found that enough was enough, and ordered the plant’s shutdown. The Supreme Court stayed the closure, and eventually allowed it to continue to operate even after finding it had caused serious damage to the environment in 2013. The apex court ordered the company to pay Rs 100 crore as compensation, and even held that there had been willful misrepresentation and suppression of material facts by Sterlite.
The Fallout for Vedanta
The Supreme Court’s indictment of Sterlite was damning, but it was allowed to keep functioning since the plant makes a significant contribution to India’s copper production as a whole and employed a lot of people. Continued operations were allowed provided it adhered to the TNPCB’s conditions, but this was a questionable decision since at the time the judgment was passed, the TNPCB had ordered closure of the plant over a gas leak which had caused severe health problems.
The TNPCB’s failure to enforce previous conditions had also been lackluster, to say the least. Their enforcement of conditions subsequently has also evidently been a problem, as the current protests demonstrate.