Tuesday, June 22, 2010

Why should I not go to Kalahandi, asks Vedanta chief Anil Aggarwal

NDTV, June 22, 2010
The proposed bauxite mine in Orissa's Niyamgiri Hills by Vedanta, the 10 billion dollar mining giant has sparked protests in India and abroad. The environmental ministry, reacting to reports that the mining will impact the livelihood and traditions of the tribals who live in the vicinity of the mine has withheld a final clearance to the mine. Earlier this year, reacting to the controversy, the Church of England sold its shares in Vedanta, a FTSE listed company. But in a rare interview to NDTV, the CEO of Vedanta, Anil Aggarwal says he is going ahead with the project despite mounting unrest. Mr Agarwal, who is based in London, says that the Church sent a representative to the site which found no violations. He called their decision to sell their shares nothing but hype.


NDTV: The mining industry has always been a paradox. On the one hand it is worth billions of dollars, it is one of the fastest growing sectors of the economy and yet it always comes into some amount of questioning when it comes to its societal or environmental norms. Is it a question of perception or is it a question of reality... that is a question a company like Vedanta and its Head, Anil Aggarwal has tackled for several years. And it's real pleasure to talk to you because you normally don't live in India, you are in London a lot of the time and so it is quite rare to get an interview with you.


Mr Aggarwal, this is also an opportunity to clarify so many of the questions which you doubtless face every day as the head of Vedanta, particularly with your mining operations. Does it concern you when you read headlines about the various charges made against many of your mining activities like in Orissa, for e.g., which has become like the biggest flash point for environmental activists, how do you react to those headlines?

Aggarwal: This is absolutely not true and there is no basis for it. You know we are a growing economy, we have just opened our doors, and we have huge resources. We are a poor country moving towards progress and we are therefore finding these challenges. We are a democratic country and because of that we have not even touched the mine. Where is the question of mining activities till we get permission? We are waiting for permission from the government to start the mining.

NDTV: Environmental Ministry has conducted a survey and they said that there seemed to be some kind of violation of the forest act which is why you have not got the go ahead as yet.

Aggarwal: No! No! One, the mine belongs to OMC - Orissa Mining Corporation, and then, somebody filed a PIL. The Supreme Court, in last 2 years, has put all the respective people in place to conduct an enquiry and they have given a clear cut verdict. The Supreme Court of India said that this is absolutely permissible and we should go ahead with the mining. It also said that the local people are very important, and that 5% of the profit should be spent on development of the area. Even if you look at other mining activities, everyone is saying the same thing. You should follow the Sterlite example.

NDTV: But you say that you have taken the people with you, the particular team that studied the Niyamgiri project had an environmentalist and also sociologists. Now a part of the report says that the tribals were not taken into consultation when you were planning the project. Would you agree with that charge?

Aggarwal: See, if you go there, you will see that we have built this company... this plant in the last 6 years, and 5000-6000 people have worked day and night to complete that project. Kalahandi is the most backward area of our country and is that why I should not go? Why should I not go? I mean, the whole world is there.

NDTV: That's where all the bauxute is.

Aggarwal: Putting 10,000 crores of money, I have gone there because there was a bauxite. In the last 25 years we have had the largest bauxite mines in India and in the last 25 years no bauxite mining has been done except by Nalco. You mean we should remain poor forever? Aluminium is a natural material to be produced in India.

NDTV: I think the question is not whether you should mine or not but how does it affect the local communities who as you say come from the poorest quarters of the country, but you didn't answer the question... were the tribals of the Niyamgiri hills taken into consultation about the project or about the fact they will be displaced?

Aggarwal: Unless a public hearing is conducted and people are in favour, no project can start. So there was public hearing. We have more respect for the locals than anybody else as we have been working with them. Nobody lives there, not a single family in the area where our mining project is. They live quite far... maybe 5, 10, 2 kms... those kind of distances. And they are our people and we have provided them with employment, we are giving them education, help in agriculture...whatever is necessary. The main thrust is towards developing the area.

NDTV: This is again I suppose a question of trying to fight the perception. Then why is Arundati Roy saying that if Vedanta is allowed to go ahead with its plans for mining, it would lead to the devastation of not just the Dongriakol tribal community, but eventually all those whose livelihood depends on the eco system.

Aggarwal: As far as we are concerned, that mine is not even in our name. The mine belongs to the government and we have only one condition, just one agreement with them and that is that when they get all clearances from the government and the mining is done, we will pay them. See, I'm giving you all the facts on the place.

NDTV: Yes. Once the mining starts, then the bauxite from that mine will supply to your refinery which is right there at the foot hills of the mine. So you can't exactly say it is not your mine or not your responsibility.

Aggarwal: At the moment it is not my mine. They have to give clearance... OMC owns the mine and OMC has an arrangement with Vedanta. If they get the clearance, then we will begin mining. At this moment there is no shortage of bauxite in India and the most abundant material available is bauxite.

NDTV: Ok, but are you saying that you are committed to ensure that the tribals of that region will not be displaced, will have access to forest and that their lives will not be disrupted?

Aggarwal: Government has such clear cut rules and regulations and the Supreme Court is involved, so how can we go wrong in the Orissa. It is impossible to say anything till all the clearances come. We can only talk about fundamentals. 25 years ago, we used to have Mica in Bihar and people said that if the Mica goes what will happen... will people find the alternative; it is the same thing here.

NDTV: Here the question is that there is a hill called the Niyamgiri hill that the tribals say they worship. So it also has a certain cultural and traditional significance for them in their day to day lives, and the mines will somehow destroy that.

Aggarwal: No no...We have full respect for their sentiments. Whatever it is has to be, has to be sustainable norms, and we have to follow that.

NDTV: Mr Aggarwal, are you concerned that the protests at Niyamgiri have now acquired an international resonance because after all you are an FTSE listed company. But that these protests in way have got internationalised... is that a matter of concern to you, for example, some of your shareholders like the Church of England have pulled out or sold their shares in Vedanta.

Aggarwal: See, they themselves have visited me. Why do you think they did that?

They have come and I have a report that says they didn't find anything wrong. Each of the investors is quoting this and specifically the Church of England representatives, who came here say they didn't find anything wrong,

NDTV: Then why did they pull the shares out?

Aggarwal: No... They must be owning 10 shares or 2000 shares... selling this does not us shake up...it is a hype but it is such a small thing as far I'm concerned. I'm looking at the fundamental...I am the Chairman of the company, I can't violate anything nor am I going to push things. I can do only what is right. I am looking to put India on the fastrack. For us, for 25 years no mining has taken place and it is the best thing to do for our growth to manufacture or to produce aluminium.

NDTV: Mr.Aggarwal, why has this become such a big issue in India? While you are right to say India does need to grow, the question is what kind of growth? Now, as you see a rise of Naxal violence, particularly in those areas where mining is increasing... that link is being made that this very stark difference between the millions of dollars being earned by mining and the extreme poverty of people who live there is pushing people to take up arms. It is pushing people into Naxal violence. Is that argument something you accept?

Aggarwal: I have no idea. I only know wherever we work we have tremendous peace, people prosper, people are with us, we pay high taxes, we look after people and they are very happy.

NDTV: l quote what the Home Minister says... if Naxalites are prepared to submit or give up arms, then we are happy to cancel all the bauxite mining contracts if it actually brings peace. Do you agree with that?

Aggarwal: You are pulling me in a different direction. I am not the right person; I don't know what you are talking about. I only understand that wherever we work, wherever any of our organisations are, we abide by the law. I really want India to be on the fast track and this year we should have a 5 billion dollar profit and we believe we are spending 5000 crores on development, education and child development.

NDTV: Tell me a little about that amount because I think there is some sort of gap between at least the perceptions of profits earned from mining and how much of that is going back. Recently you took out some big full page ads to talk about what you are doing, your websites mention sustainable developmental work, what are the activities that Vedanta is doing to plough the profits back in to the communities?

Aggarwal: We have to.... most of the wealth is going back to society. Yesterday I heard one of your news channels saying that 100 people had died in air accident, international papers and everybody was talking about it. In India, every minute 2000 children die of water borne diseases. Why not talk about that?

NDTV: So specifically what are you doing to address these issues, particularly in areas where you are conducting mining activities?

Aggarwal: In these areas, to eliminate poverty, every child having the right to a square meal, school education, right to health care services, medical treatment, and to fundamental English, we have started and are running almost 4000 anganwadis and we are very passionate about it.

NDTV: You are running 4000 anaganwadis all over the country?

Aggarwal; All over the country and probably 60-70 thousand children are involved. I am trying to see how we can eliminate poverty completely from Bihar, Orissa, Rajasthan, whatever we can do...provide mid-day meals. We are giving 3 lakh mid- day meals to school going children.

NDTV: Are these specifically in your areas... where you have mining activities or this is every where?

Aggarwal: We are in 7 states and in all the states whatever we can do something for the people ...our entire team is very passionate about it.

NDTV: Ok the government is actually proposing a new mining bill which I'm sure you are aware of... where they want to go one step beyond some of the things you are talking about to ensure that mining is more socially responsible, for example, one of the things they have proposed and the law minister was telling us recently about on NDTV is that mining companies that are listed should share 26% of the equity from the promoters' quota with those that are displaced or affected by mining. If you are not listed, you share 26% profit, is that an acceptable amount for you or is that an acceptable proposal....26%... that's a lot of money.

Aggarwal: If they open up and say these are the mines and please bid, there can be 10%, there can be 30%, I have no idea. People would say, whatever the profit is revenue, that is the right prospective government should go ahead with...instead of saying the tax.

NDTV: Open up which mines? Are you talking of the government controlled mines? Open up Coal mines. Allow private players to enter coal mining, which is at the moment is off limits to private investment.

Aggarwal: Whether it is coal or anything else, what you are talking about is opening the resource sector and putting the tax. Tax is an alarming word, but if you say this is an asset and we had to auction in the proper manner, I think people will voluntarily come and give lots of money.

NDTV: Let's assume they don't do that but they say whatever existing mining activity you are doing or any new mining activity you do, you have to pay this % to the government for local area development. Does that figure seem too high for you? Do you think that is a realistic figure?

Aggarwal: I have never seen something like this happening before. I have seen that the Supreme Court was very concerned about the mining and the Supreme Court decision in Imphal that they have taken in sterlite case to 5% profit to be given for development of local community; I think it was high, but still acceptable.

NDTV: You think 26% is high or what the Supreme Court has said in the case of Manipur?

Aggarwal: Manipur, also in the case of Orissa where 5% profit to be deployed for the local development.

NDTV: That seems a little high for you even if it comes from the Supreme Court but is high for you as an industrialist. Ok so 26% then would be a...it is a proposal...

But specifically looking at Goa, your experience in Goa, where you bought Sesa Goa which is the iron ore mining company, there are some issues with environmental clearance. I think one of your clearance have been suspended again. Do you believe that this is the peril of an industry like mining, or again you believe this is a battle of perception you are now fighting that wherever Vedanta goes, there is whole question of are you following the legal rule or are you not? Looking at Goa for example.

Aggarwal: Sesa Goa is a 50 year or 40 year old company and no change in its management has taken place. We are active investors and we have deployed the funds. The company is running with the same people and it is not a new thing. It is not like Vedanta has come and has done something. Vedanta has only provided resources for them to do what they are planning to do.

NDTV: But you own Sesa Goa now?

Aggarwal: Of course, but the management is same. It is not like I have gone there and started something new. That company has been there for a long time and is a pride of India and Goa. It is a great company, and its done work and whatever they do; they do it with great pride. We provide them enough resources so that whatever they plan, they can execute.

NDTV: What are your expansion plans in India...at the moment you have mines in Orissa, you have mines in Chhattisgarh as well in Goa, Rajasthan...what is the road ahead for you?

Aggarwal: We are making aluminium and we have a plan to producer 3million tonnes of aluminium. For copper we are the largest investors in Tamil Nadu, produce copper. We have also in Zambia, Austraila zincand we are very proud of that, In Chhattisgarh we produce aluminium, iron ore in Goa. These are all our individual companies and we have invested 20 billion dollar into this company and I am very very proud the way we have built these plants. If you say what India is, this will be one name...VEDANTA!!!

NDTV: Well Mr.Aggarwal, that is true. I mean it is quite a remarkable expansion of the company from where it started off but of course as you were saying there is this huge untapped potential in India as far as mining is concerned, huge bauxite deposits, coal deposits waiting to be extracted but at the same time I think there is a very strong case about the social cost of mining and the environmental cost of mining. As long as the balance is maintained that's the most important thing... to maintain that balance.

Aggarwal: If you look at how long you want us to be powerless, how long without water, look at the best countries - if they can build on richness, India has better richness than them. How long do you want to wait? I'm looking at India to be on the fast track where we can compete with the world.

NDTV: That's right, but just as I said, as long as one maintains the balance between growth and social responsibility... that's the most important balance.

Aggarwal: No this is a very important thing you have said. There is no question... in terms of America, in terms of our emission levels not even 6 %. How will we compare them to us though we are a modern industry because we are setting up all our plants in modern days? Those industries were setup 30-40 years back.

NDTV: So you are saying that balance is very important and we will hold you to that Mr.Aggarwal.

Aggarwal: No question no question; none of the Indian companies will do that. Thank you

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