Mining firms set up shop in Orissa

Lanjigarh block, Kalahandi, Orissa, May 17: At its summit, the northeastern ridge of the Niyamgiri hill range has a bald patch, typical of hilltops with bauxite deposits. A dense tree cover that provides a welcome shade to climbers struggling some 8 km up the steep forest path gives way to a vast stretch of open grassland. A full-grown leopard silently pads across the open expanse. Up here, all is at peace. For now.

Down below, in Lanjigarh and in the faraway plains of Bhubaneswar and New Delhi, a battle is being fought over this hilltop. On one side are environmental, political and human rights activists and local people who wish to preserve this hill, its forests, and a way of life. On the other, is a multi-million dollar company, Vedanta Resources Plc, powerful enough to bend rules, which wants to tear open the hilltop for what lies beneath, and a state government eager to hand over its mineral treasures to private companies. The final decision rests with the Supreme Court. Stakes are high, on all sides.

MAUREEN NANDINI MITRA visited Lanjigarh to understand the project, its promoters, its proponents and opponents and what all this holds for the environment and economy of the country

By Maureen Nandini Mitra
Published: Sunday 15 July 2007

Mining firms set up shop in Orissa


The key element in this story is bauxite, the principal raw material for a much-in-demand metal—aluminium.

Widely used in construction, as packaging material and for making automobile and aircraft bodies, global aluminium consumption increased from 32 million tonnes in 2005 to 35 million tonnes in 2006. It is expected to grow at similar levels in 2007, spurred largely by Chinese demand.

At the same time, environmental regulations and a costly, power-intensive production process—it takes 2-3 tonnes of bauxite to produce a tonne of aluminium—have led to scaling down of aluminium production in the West. But in India, which has a fifth of the world's bauxite sources, matters are different. Here, the industry's capital costs are among the lowest, and environmental compliance, more often than not, only gets lip service.

Over 50 per cent of India's bauxite resources are found in the hills of southern Orissa, including the Niyamgiri range in Kalahandi—the setting for our story. This story begins on June 6, 2002, when a land acquisition and a gram sabha notice was issued to villagers for the "proposed Lanjigarh alumina refinery project". It was said that the project would be set up by the London-based industrialist Anil Agarwal's Sterlite Industries of India Limited—the company had a memorandum of understanding (MoU) for a mining project with the Orissa government, dating back to 1997. The notice of the district administration proclaimed that when the project materialised, 12 villages would be razed, 60 families displaced and 302 families would lose their farmland.

Protests were immediate because many feared losing their lands, and partly because the mostly tribal villagers of this region venerate this hill. Media reports of the time say that nearly 1,000 people gathered at the district revenue office soon after the notice was issued and submitted a memorandum opposing the project. Another 200 individual protest petitions were filed. In April 2003, 250 anti-project demonstrators were attacked by about 100 armed men. A People's Union for Civil Liberties' report on the incident noted: "The people are terrorised, and believe (perhaps rightly) that their attackers enjoy police support."

In July 2003, the district administration evicted 64 tribal families of Jaganathpur village from their land. This, say activists, was done in violation of constitutional provisions against alienation of tribal land. Villagers were given no compensation, because their fields were listed as government revenue land. "What kind of government is this, which takes our land away instead of protecting us?" asks Khumti Majhi, who lost his fields and now is a leader of the Niyamgiri Surakhya Samiti, one of three citizens' group—along with Green Kalahandi and Sachetan Manch—fighting the project.

More on MOUs

On June 7, 2003, the Orissa government signed a fresh MoU with Sterlite. The deed envisaged a 3 million tonne per annum (TPA) bauxite mine on top of the northwest ridge of the Niyamgiri hills, a 1 million TPA alumina refinery with a 75 MW captive power plant at the foot of the hills and a 500,000 TPA alumina smelter. The aluminium oxide processed in the Lanjigarh refinery would be transported some 300 km away to Brindamal in Jharsuguda district where it would be converted into aluminium.

Sterlite estimates that the project will cost about Rs 4,000 crore. But this does not take into account the cost of land. The company says it requires 1,444.67 hectares (ha), split into 721 ha for the mine and power plant and 723 ha for the refinery. Most of the latter was privately cultivated. But tribals tilling this land had little proof of ownership—as in most of tribal Orissa, where land records are virtually non-existent. So, the land was officially recorded as state-owned revenue land.

The land needed for the refinery also includes 58.943 ha of forestland, which consists of 29 ha of village forest ("gramya jungle jogya") and 30 ha of reserve forest, according to the Central Empowered Committee (CEC)—the Supreme Court-appointed body which looks into encroachments on forests, which came into the picture later. The land needed for mining includes 672 ha of forest land in two forest divisions—Rayagada and Kalahandi south—and privately cultivated land, according to the project's EIA.


By February 2004, the state had acquired 232.5 ha from cultivators for "public purpose" under the Land Acquisition Act, 1894. People told this reporter that Sterlite began clearing land for the refinery the same month. Very soon, a colony emerged. Many villagers were shifted into Vedantanagar, a gated rehabilitation colony with concrete box-like houses at the base of the Niyamgiri hills, which this reporter visited. Villagers told her that while some of those who were moved were there because they had accepted the one-time cash compensation for their land, others were there because they had no choice. Jaswant Majhi of Kinari village told this reporter that he had been forcibly taken to Vedantanagar. "We have no land to till, the district collector forced us to give it up," said Jogi Majhi, also originally from Kinari. Majhi says he was given Rs 4 lakh as compensation for his 2.5 ha. He invested the money in post office savings schemes and his family of six has been living off it since. But without any other income, his savings have dwindled to Rs 2 lakh. His options will run out soon. His son has been promised a job at the refinery, but that hasn't happened yet.

The colony, villagers say, was initially manned by armed company guards who didn't allow them to speak to outsiders. When this reporter visited Vedantanagar, she was questioned by at least eight young men on motorbikes in VAL uniforms. The villagers she was talking to fled the scene, immediately.


In March 2003, Sterlite applied to the Union ministry of environment and forests (MoEF) for environmental clearance for the proposed refinery. The application made no mention of the 58.9 ha of forestland it required. It filed a separate petition for clearances under the Forest Conservation Act (FCA), 1980, on August 16, 2004, through the Orissa Industrial Infrastructure Development Commission—according to the MoU between Sterlite and the government, the latter has to secure clearances. Later, in its affidavit to CEC, the company explained its position: "Gramya jungle jogya [suitable for village forest] land within the alumina refinery is not a forest land since it is still in the custody of the Revenue Department. It is described in the revenue records only as 'suitable for village forest' and not as forest land… Further since the proposal for the diversion of 30 ha was for 'mine access road' and 'conveyor corridor' it could also be included in the mining proposal."

On March 24, 2004, MoEF informed the company that as the refinery would be dependent on the mining proposal being cleared, the ministry would consider the two proposals together. The next day, the mining company sent MoEF another application arguing that while it would take three years to build the refinery, only a year was required to open the mines. Six months later, on September 22, 2004, MoEF reversed its decision and granted the refinery environmental clearance on condition that Sterlite got mining clearance before "operationalising" the refinery. The approval letter also stated: "The project does not involve diversion of forest land." This, despite the fact that another division of the ministry had received an application for FCA clearance for the refinery.

In October 2004, Sterlite, which by now had transferred the project to its subsidiary, Vedanta Alumina Ltd (VAL), and started construction, signed a mining lease agreement with the state-owned Orissa Mining Corporation (OMC). The agreement gave VAL 74 per cent stake in a joint venture with OMC, a right to have four of its representatives on the six-member board of directors, as well as the positions of managing director and chairperson—a departure from the convention of a government representative holding the chairperson's post in joint ventures. VAL would control day-to-day mining operations, and would get sole rights over the mined bauxite. OMC's only role in this collaboration would be to get the requisite clearances.

CEC in picture

A month after the lease was signed, Orissa's forest department sent Vedanta a show-cause notice for encroaching on 10.41 acres (4.21 ha) of village forestland for its refinery. It also notified MoEF of the encroachment. Around the same time, Sreedhar Ramamurty, director of the Academy for Mountain Environics, Dehradun, which works on mining issues, Biswajit Mohanty, Orissa-based environmental activist, and Prafulla Samantara, human rights activist, separately petitioned CEC to halt the company's operations.

"This is one of the dirtiest examples of how a corporate can violate laws with government connivance," says Mohanty. The main issues raised by the petitioners were: inadequate environmental impact assessment, violation of forest conservation and environmental laws; violation of Schedule V of the Indian Constitution protecting tribals from land alienation; and destruction of an important cultural landmark.

In December 2004, CEC sent a two-member team to Lanjigarh. Its September 2005 report to the Supreme Court recommended that mining not be permitted on Niyamgiri hill. The report was a scathing indictment of the project and questioned the integrity of the authorities involved. In February 2006, the apex court referred the matter to MoEF's Forest Advisory Committee (FAC)—which looks into diversion of forestland for non-forest purposes—and asked for a report in three months.

A report is revised

FAC, in turn, asked the Wildlife Institute of India (WII) and Central Mine Planning and Design Institute Limited (CMPDIL), a subsidiary of Coal India Ltd, to assess the project for soil erosion and impact on water resources. CMPDIL, according to Vedanta's lawyers' statements during Supreme Court hearings on May 16 and May 18, 2007, cleared the project of all water-related concerns. But WII's report submitted in June 2006, a copy of which is with Down To Earth (DTE), warned that "bauxite mining in Niyamgiri plateau will destroy a specialised wildlife habitat". However, following a special presentation by Orissa forest officers, the institute tagged on a supplementary report in October 2006, which included a Rs 42-crore plan for mitigation of impact on wildlife. Zoologist Sushant Chowdhury, one of the authors of the report, told DTE that "there was always a way to mitigate impact on wildlife. The supplementary report is not a revised report but a response to objections of the Orissa government". He refused to elaborate saying the matter was sub judice.

Anyhow, based on the two reports, FAC recommended diversion of forestland for the mining project. But there was a hitch. In another matter, the Supreme Court had already ordered a review of clearances granted by FAC after September 15, 2006. This included the VAL project. On December 8, 2006, the court asked CEC to file more comments. When the matter was heard on May 16 and 18, 2007, CEC iterated its stand that MoEF had acted irresponsibly and with "undue haste" in granting Vedanta clearances. It added that the company had been "conveniently shifting its stand" to keep the project running. Towards the end of this hearing, the court observed that once destroyed, the ecosystem could not be regenerated easily. Vedanta and CEC were asked to propose alternative mining sites. The matter will be heard again when the court reopens.

Amidst all this, VAL has been on track. The power plant was commissioned in February 2007 and the refinery has been on a trial run since the last week of March 2007. "We are sourcing bauxite from our mines in Chhattisgarh and from Gujarat. We are planning to keep our equipment ready for when the clearances come through," says Umesh Mehta, VAL's vice-president (commercial) at Lanjigarh.

A hundred yards from the refinery, villagers of Bandhaguda recount how the first night the refinery fired up its machinery, a host of confused animals ran down the hills.


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