U.K. Agency: Vedanta Project Violates OECD Standards

WALL Street Journal, Oct 13, 2009

LONDON -- A U.K. government agency said Vedanta Resources PLC violated international standards when it failed to respect the rights of an indigenous group when planning a bauxite mine in the Indian state of Orissa.

"Vedanta failed to put in place an adequate and timely consultation mechanism fully to engage the Dongria Kondh, an indigenous community who would be directly affected by the environmental and health and safety impact of its plans to construct a bauxite mine in the Niyamgiri Hills, Orissa," the U.K. National Contact Point for the OECD Guidelines for Multinational Enterprises said in a statement Monday.

The agency, part of the Department for Business Innovation and Skills, promotes voluntary guidelines for multinational companies adopted by the Organization for Economic Cooperation and Development.

Vedanta rejected the agency's conclusions.

"Vedanta refutes the conclusions of the U.K. NCP and has complied in all respects with the required Indian regulations including consultations with the local community and committed to work closely for the development in the areas of health, education and livelihood," the company said in a statement.

The U.K. office recommended that Vedanta "immediately and adequately engage with the Dongria Kondh, on the construction of the bauxite mine" and that it should include a human and indigenous rights impact assessment in its project management process.

The OECD Guidelines are not legally enforceable on businesses, but OECD members are committed to raising awareness of the Guidelines and implementing the Guidelines' complaint procedure, the agency said.

Vedanta is a FTSE 100 company registered in the U.K. Its subsidiary Sterlite Industries (India) Ltd. has won Indian court approval to proceed with the project.

The company is awaiting a permit from the Indian government before commencing mining operations in Orissa. Last week it said it expected final approval by March and to begin operations soon after.

The bauxite from the mine will feed the company's new alumina refinery at Lanjigarh.

Survival International, an international organization that support tribal groups, filed a complaint under the guidelines in December, 2008, triggering the start of the complaint procedure by the U.K. National Contact Point.

Vedanta's proposed mine site is sacred to the Kondh people, hundreds of whom have been engaged in months of protests and blockades against the mine, Survival said.