UK reprimands Vedanta over Orissa mining project

S Kalyana Ramanathan / London October 13, 2009

Company accused of overlooking local community’s interests.

The UK government today pulled up metals major Vedanta Resources over its controversial mining project in Orissa, stating that “a change in the company’s behaviour is essential”.

The UK National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises upheld Survival International’s allegation that Vedanta Resources has not complied with Chapter V(2)(b) of the guidelines. The UK NCP concluded that Vedanta failed to put in place an adequate and timely consultation mechanism to engage the Dongria Kondh, an indigenous community whose health and environment would be directly affected by the company’s plans to construct a bauxite mine in the Niyamgiri Hills in Orissa.

The UK NCP also concluded that Vedanta failed to engage the Dongria Kondh in adequate and timely consultations on the construction of the bauxite mine and it did not consider the impact of the construction of the mine on the rights and freedom of the community, or balance the impact against the need to promote the success of the company.

The verdict came after a nine-month investigation into a complaint submitted by Survival International against Vedanta’s proposed bauxite mine on the Dongria Kondh’s sacred mountain. The complaint, upheld by the government, was brought under the OECD Guidelines on Multinational Enterprises — the key principles for ethical corporate behaviour.

Human rights campaigners have been up in arms against Vedanta’s mining project in Orissa that has allegedly affected the lives of tribals in the state. Apart from holding pickets outside the company’s annual general meeting venue in London, campaigners had also recently forced investors like the Church of England to reconsider their position in the company.

A Survival International spokesperson said the UK government’s latest stand on this issue was a moral victory for campaigners, though it may have no obligatory impact on the way the company conducts its business. Survival International’s Lindsay Duffield said, “Public opinion can have a very serious impact on the company’s operations. We do hope that the OECD guidelines would have more serious impact in the long run.” Duffield further said that after nine months’ investigation, Vedanta did not provide a “shred of evidence” to vindicate its position in the Orissa project.

Vedanta Resources did not answer the queries raised by Business Standard following the UK government’s statement.

In July this year, after persistent campaigning by human rights activists, the Church of England’s Ethical Investment Advisory Group agreed to meet the management of Vedanta Resources to assess for itself if it should continue to stay invested in the company. The Church of England’s investment in the company is valued at an estimated £2.5 million. The results of this investigation, however, is yet to be made public.

Though the possible divestment by such groups cannot have a direct impact on the company, they can create strong public opinion against the company.