Ruchira Singh,
Vedanta Aluminium Ltd has been asked by the government to seek public consent afresh in Kalahandi district of Orissa as a precursor to getting environmental clearance for expanding its alumina refinery and power plant, a move the company wants to avoid as it seeks to get a plan that’s been stalled for two years moving again.
The company needs to comply with 70 points, including the public hearing on the expansion plan, shows a copy of the terms of reference (ToR) issued by the ministry of environment and forests (MoEF) that Mint is in possession of.
Company officials are in talks with MoEF and the state pollution control board, seeking a waiver on public hearings on grounds that they were conducted twice before—in 2003 and 2009, said a Vedanta official who didn’t want to be named.
“The company has every document to show they are complying with all the points in the ToR (except for one),” the official said. “...they (Vedanta Aluminium) are telling them that the public hearing has already taken place, so another one is not needed. Besides, it will take a long time to convene another public hearing.”
The person said Vedanta is in dialogue with MoEF and the state pollution control board and may hear from them on the request soon.
Vedanta Aluminium, a subsidiary of the newly announced Sesa Sterlite, was asked to stop expanding its refinery in Lanjigarh from 1 million tonnes (mt) to 6 mt in October 2010 because of environmental concerns. The following year, the Orissa high court quashed an appeal filed by the company and upheld MoEF’s decision.
Vedanta appealed to MoEF last month, asking it to reconsider giving it approval in the light of clearances given to Jindal Power Ltd and Lavasa Corp. Ltd, a unit of Hindustan Construction Co. Ltd, both of which had been stalled over environmental objections.
As a part of the appeal in January, MoEF issued the new ToR on 2 February.
MoEF scientist P.L. Ahujarai, who signed the ToR, did not answer his phone and there was no response to an email asking whether Vedanta’s bid for a waiver will be considered.
“The company has received a ToR relating to technical and environmental details, and we are moving ahead with it,” said S.K. Roongta, managing director at Vedanta Aluminium. “The company is working on it.”
Roongta did not give further details.
The ToR states that 5% of costs must be earmarked for social work that the public will allocate as per its wishes.
“Five per cent of the total cost of the project should be earmarked for Enterprise Social Commitment based on public hearing. Item-wise details along with a time-bound action plan should be included,” according to the ToR.
It also calls on the company to file “issues raised at the public hearing with replies”, to the ministry.
“Probably the company is afraid they might not be lucky with a public hearing as there are powerful NGOs (non-governmental organizations) in eastern India who can sway opinions,” said an analyst in Mumbai, who didn’t want to be named in line with company policy.
Growth is critical for Vedanta Aluminium, burdened with a $4 billion (Rs.19,640 crore) debt, as Sesa Sterlite tries to build itself into a resources giant.
Apart from environmental clearance, Vedanta Aluminium also needs to win a Supreme Court case that will allow it to mine bauxite in the Niyamgiri Hills in Orissa, said an analyst.
“Clearance from the environment ministry is definitely important, but more important is securing the bauxite mines,” said Sanjay Jain, senior vice-president (research) at Motilal Oswal Securities Ltd. “The environment clearance will have little relevance for their earnings as their cost of making alumina is very high as they have to bring bauxite from Balco (Bharat Aluminium Co. Ltd) and Gujarat. So, expanding alumina production while not having bauxite mines will have little utility.”
According to Jain, Vedanta’s cost of production for alumina is about $323 a tonne—nearly equal to the market price—and its already low margins will risk being further crimped at that price. That shows the urgency of getting the bauxite mines for captive use.
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