The Writing on the Wall

Goa’s mining sector poses new environmental challenges under the sway of globalised capital, says VIDYADHAR GADGIL

The Rs1,750-crore deal transferring all shares in V S Dempo & Co Pvt Ltd to Sesa Goa has been greeted surprisingly positively in Goa, with some commentators being positively gushing in their praise, making it somewhat difficult to distinguish between their reactions (“A bold and forthright decision”) and PR handouts from the concerned companies.

Regarding its plans, the Dempo Group has only said that it will be diversifying into “new age industries” and “the knowledge sector”. This is an extremely wide characterisation, and indicates nothing really about their plans. The Chairman of the group has asked the government to support its plans for this diversification, but the public does not really know what this involves. Rs1,750 crore is a sizeable pile of cash. It remains to be seen exactly what the group does with it, and what the implications will be for the Goan economy.

Just as there is no justification for the ecstasy over the sale, there is little basis at present for the dark predictions floating around, including rumours that Dempo-owned publications are up for sale or that retrenchment of employees in sections of the Dempo empire is round the corner. Frankly, this is unlikely and, anyway, the fact is that as of now nobody knows – except, possibly, the company top brass. And they aren’t telling.

But about the other end of the deal – the buyer – quite a lot is known. Despite the statements issuing forth from the Dempo group that they have sold to Sesa Goa – a Goan company “rooted in Goa itself” – Sesa Goa is not, and has never been, a Goan-owned company. Sesa Goa has changed ownership a number of times since it was set up in 1954 as Scambi Economi SA. This has included German owners and the Italian company Ilva, after which it passed into the hands of the Japanese company Mitsui, around 1997. In 2007, Sesa Goa was acquired by Vedanta Resources plc, whose headquarters is in London, not India. So much for it being a Goan company! Not that such issues make much of a difference in these days of globalised capitalism. The ‘Goan’ Dempo Group itself owns mines in other parts of India, with plans for global diversification.

Sesa Goa is generally considered to be the mining company in Goa with the best environmental record. But this record has been built up over the years, from the time before it was acquired by Vedanta. Vedanta, on the other hand, is a company with a truly appalling environmental record, even by the lax standards of the mining industry. In a long-lasting environmental conflict, Vedanta’s Lanjigarh project in Orissa, to set up an alumina refinery project together with a 75 MW coal-based captive power plant and an associated bauxite mining project at Niyamgiri Hills, has been embroiled in an environmental battle. The area is inhabited by the Dongria Kondh tribe, which considers the Niyamgiri hills sacred. The project has resulted in widespread environmental devastation and threatened the livelihood of the Dongria Kondhs.

A Supreme Court empowered committee, in its review of the Lanjigarh alumina refinery project, found that environmental clearances were wrongly granted on the premise that the refinery and a proposed open-cast mine would not encroach on protected forests. The reports highlighted the collusion between the Ministry of Environment and Forests (MoEF) and the State of Orissa in rushing through environmental clearances. It indicted the Ministry for violating basic tenets of environmental clearance procedure, violation of fundamental provisions of forest clearances, raised critical issues of perjury against Vedanta, MoEF and the Orissa Government, highlighted how the Ministry has deliberately overlooked field reports of its own Regional Office that had called for a detailed assessment prior to according clearances, and exposed the abhorrent violation of human rights of the affected communities, merely for seeking information and asserting their right to participate in Statutory Environmental Public Hearings.

Given these adverse remarks, the Supreme Court stated that it could not take the risk in handing over the mining operations to Vedanta. But the Court, in a bizarre twist, allowed Sterlite Industries, Vedanta’s subsidiary, to form a Special Purpose Vehicle (SPV) with the Government of Orissa and the Orissa Mining Corporation to work out the best formula for mining, and then inexplicably granted its approval to Sterlite to mine in the Niyamgiri Hills!

In the Kolli Hills of Tamil Nadu, Vedanta’s subsidiary, the Madras Aluminium Company Limited (MALCO) was forced to suspend its illegal mining operations in November 2008, following a PIL presenting evidence that its bauxite mines had no permission under various environmental laws. Also in Tamil Nadu, Sterlite’s Tuticorin smelter complex is surrounded by fly ash and gypsum dumps. Official reports of the Ministry of Environment and Forests and the Supreme Court Monitoring Committee (SCMC) on Hazardous Waste Management also point to numerous violations by the plant. It is reported that over 100 people have been injured and more than a dozen killed by accidents or pollution from the Tuticorin complex.

Similarly, in Chhattisgarh, there is evidence that Vedanta subsidiary BALCO has caused considerable environmental pollution at its aluminium complex and the mines at Kawardha-Daldali. Vedanta’s environmental violations aren’t confined to India. In Zambia as well, Vedanta Resources-owned copper mining firm Konkola Copper Mines (KCM) has been linked to violations of environmental guidelines.

One could go on listing Vedanta’s sins, but in the limited space available, it should suffice to mention that in 2007, the Norwegian Council of Ethics assessed Vedanta Resources and its Indian subsidiaries to judge whether the group was in breach of the council’s Ethical Guidelines for investment. Following this, the Council had withdrawn its funding, citing severe environmental damage and human rights violations linked to the group’s operations in India. The Norwegian government has excluded Vedanta from its national pension fund investments “due to an unacceptable risk of complicity in present and future severe environmental damage and systematic human rights violations”. The Norwegian government’s conclusion: “[Vedanta’s] violations against the environment and human rights… are recurrent at all the subsidiaries subject to investigation and have taken place over many years, indicating a pattern in the company’s practices where [they] are accepted and make up an established part of its business activities. Such a pattern of conduct constitutes an unacceptable risk that the company’s unethical practices will continue in the future.”

Vedanta is expert at greenwashing its activities. Interestingly, the company was recently declared the winner of the Golden Peacock in Environment Management by the UK-based World Environment Foundation and the New Delhi-based Institute of Directors (the seriousness with which the assessments for these awards are made can be gauged from the fact that Satyam was earlier given an award for Corporate Governance and Coca-Cola got an award for social responsibility!). Following strong protests, the award has now been withheld and is “under review”.

That is the company which now owns Sesa Goa, the biggest player in the mining business in Goa. The Dempos have, in a way, seen the writing on the wall and bowed to the worldwide consolidation of the iron and steel business that has been taking place over the past few years. Others may soon follow. There are already rumours that the mining interests of the Chowgules and Timblos are on the block...As the mining industry in Goa moves from the semi-feudal style of the big mining families to the brave new world of globalised corporate capitalism, the state will be faced with a whole host of new challenges, not least of which will be how to exert control over a behemoth like Vedanta. The ongoing struggle against Sesa Goa in Advalpal, which led to an order from the High Court against its dumping of mining rejects, is perhaps a portent of things to come.

Herald June 26, 2009, Panaji