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Vedanta rejection at Niyamgiri won't be the last; jinx of bauxite mining may continue -Meera Mohanty
-The Economic Times


When the voting stops on August 19, the scorecard, which is currently 9-0, may well read 12-0. An emphatic and embarrassing rejection of state and corporate plans to mine bauxite atop the Niyam Dongar hilltop in the Kalahandi district of Odisha.

Mining1

Twelve tribal villages that call this mountain range home have, in all likelihood, secured their religious rights over the hill and its natural resources, including 72 million tonnes of bauxite that the $15 billion mining giant Vedanta Resources has been trying to get its hands on to convert to alumina at its neighbouring refinery.

India's highest court had ordered this referendum in April, after noting that project considerations had not taken into account whether scheduled tribes and other traditional forest dwellers had any rights of worship over the Niyamgiri hills.

Mining2

There may never have been as much at stake, or such media scrutiny, or judicial intervention, but the unanimous message coming from the gram sabhas being held since July 18 is not new: Odisha's troubled bauxite journey must reassess its challenges. And it could start by revisiting its history.

This is not the first time a plan to mine bauxite in eastern India-home to about 70% of the country's reserves of the mineral used to make aluminium-has collided with a conflation of interests, and stalled or crumbled. Chances are it won't be the last, and will continue to ring-fence the industry's expansion.

"It is a matter of great irony that Odisha has some of the best minerals of all kinds, particularly the finest bauxite, but there's not a single new mine in the last 30 years," says SK Roongta, managing director of Vedanta Aluminium.

In the period that Roongta refers to, six major bauxite projects have found themselves tangled in conflict. These six, which are the gateway to about 30% of India's bauxite reserves of 3.5 billion tonnes, all lie in the eastern belt of Odisha and Andhra Pradesh, passing through some of the poorest parts of the country.

The story of each reveals the details and nuances of the jinx that bauxite mining has come to be. It's not just a Vedanta that is opposed; every aluminium company wanting to secure raw material, be it from the private sector (Hindalco, JSW, etc) or the public sector (Nalco), has felt the backlash. The actors on the other side vary: locals, a Norwegian NGO, a minister, the state itself. The reasons have differed: from religious significance to rehabilitation, from perceived intrusion to policy revision.

And all this goes back to the beginning of the short history of this mineral in India.

Shorter History

Unlike iron ore or coal, which date back to pre-independence days, the rush for bauxite is recent, dating back to the 1970s. So, in iron ore, for instance, the clout of miners, and their relationship with the state, is set. Also, pure mining of bauxite has not been encouraged by the government; it is most compelling to mine when it is linked to an aluminium refinery, especially in the vicinity.

Massive bauxite reserves were discovered scattered along the mountain reaches of the Eastern Ghats in the 1970s. This area that straddles southern Odisha and northern Andhra is referred to as the 'east coast bauxite belt'. According to data from the ministry of mines, Odisha holds 52% of India's bauxite reserves, followed by Andhra Pradesh with 18%.

In Odisha, most of the reserves reside in what used to be the undivided districts of Koraput, Bolangir and Kalahandi, known for their extreme poverty and hunger. This is where Niyamgiri also is. In Andhra, the reserves are in Vishakapatnam and East Godavari, both heavily Naxal-affected. Beginning from the eighties, aluminium producers rushed in. But mining here was never going to be easy.

Companies found the bauxite here rich and easy to convert. Also, Odisha's rich coal reserves helped to generate power to feed the aluminium operation. Thus, two major costs -raw materials and power-could be taken care of. "A tonne of aluminium produced here with captive resources is 30% cheaper than anywhere else," says Dr Mukesh Kumar, chief operating officer at Vedanta's aluminium refinery in Lanjigarh, adjoining Niyamgiri.

Vedanta set up Lanjigarh with precisely such economics in mind. Its agreement with Odisha promised it a supply of 150 million tonnes of bauxite, and the mine identified by the state to meet half of that supply was Niyamgiri.

In 2007, the Supreme Court, hearing a petition against Vedanta, suggested that it may be "less risky" to have the state's mining arm, Odisha Mining Corporation (OMC), do the mining under a joint venture with Vedanta than allow a company whose credibility it wasn't completely satisfied with.

However, Saswat Mishra, chairman and MD of OMC, is not enthused about mining bauxite.

"We stand to make much more from pursuing our interest in iron ore and chrome (bauxite)," he says. "But if the government directs us to do something as per our memorandum of understanding, we are obliged to obey."

Now, though, it seems OMC won't be able to mine Niyamgiri and the state will have to make good the remaining 75 million tonnes from elsewhere. Even before that, in December 2012, Vedanta shut Lanjigarh, saying that it is unviable without a raw material source in the vicinity. As per industry calculations, Niyamgiri bauxite would have cost Vedanta Rs 700-750 a tonne. If it sources it from Gujarat, it will cost the company Rs 2,500-2,600 a tonne.

Odisha is considering its options. Some options, seen through the matrix of the factors that influence Odisha mining, are complex. Like Karlapat, a bauxite mine that overlaps a wildlife sanctuary and is also a source of livelihoods for tribals. "We will not give Karlapat. Don't our brothers live there?" says Lada Shikhakha, tribal chieftain of the Dongria Kondh and who was a key leader in the Niyamgiri protests against Vedanta.

Organised Movements

Shikhakha's willingness to go beyond the territory of his people is not just a stated interest. More and more, it is also manifesting itself and enabling resistance movements against bauxite mining to organise themselves better-in terms of number of people, strategic choices, funding and legal interventions.

On January 9, many of them gathered atop Maliparbat-in Odisha, where work to mine another small deposit had begun-in what is turning out to be an annual "protest mela" consisting of singing, dancing, feasting and sloganeering, this time against Hindalco, which has right to the deposit. "The whole struggle was to cover other bauxite to Sijimali, Kuntimali, Saasbahu Mali and Niyamgiri (all deposits in Odisha). We were active in mobilising Lanjigarh people," says poet and activist Saroj Mohanty, of his 10-year long association with the Kashipur movement a decade ago, for which he even served time in jail.

Leaders like Mohanty say they are motivated by the imbalance in the power equations between the coprorates and tribals. "You ask tribals to hand over their resources, to become landless labourers for development," says Mohanty. Adds Kumuti Majhi, the leader of another tribe in the Niyamgiri Suraksha Samiti: "Today, even the Dongria votes. But has the government done anything for them? It has not even made pattas of their land. It isn't educating them, has built no hospital."

Companies say they are investing in the region, but there's a governance deficit on the part of the state, which turns into a reputational deficit for miners. According to Angshuman Das, chairman and managing director, Nalco, the PSU contributes 1% of its annual profits to a body that comprises officials from the state, district and the company, but that money has not been spent. "In the end, we were forced to start another parallel foundation," says Das.

According to Kumar of Vedanta, the company has spent Rs 170 crore in corporate social responsibility (CSR) work in Lanjigarh since 2004. This includes the Rs 10 crore a year the Supreme Court asked it to contribute towards a Lanjigarh Development Authority.

This authority has a corpus of Rs 27 crore. Of this, Kumar says, Rs 12 crore has been spent in Kalahandi, but only Rs 6 crore in Rayagada, where the Dongria Kondhs live and which is a place of unrest. "Nobody is there to take up the works," says Kumar. "And yet, locals blame the company for missing street lamps." Das feels the government should either introduce the new mining bill, which requires miners to distribute an amount equal to the royalty to affected locals, or let companies manage their own CSR.

Big Projects Mired in Conflict

In Odisha and Andhra Pradesh, which hold 70% of India's bauxite reserves, six major mining projects are stuck, underlining the impasse in the sector.

Niyamgiri

District: Kalahandi-Rayagada, Odisha

Company: Orissa Mining Corporation (for Vedanta)

Reserves: 88 million tonnes Allotment year: 2004 (MoU signed)

Conflict: The mountain Vedanta wants to mine has religious signifi cance for tribals

Status: In the ongoing referendum, 9 of the 12 villages so far have voted against the mining project


Gandhamardan

District: Bolangir-Bargah, Odisha

Company: Balco

Reserves: 216 million tonnes Allotment year: 1980s

Conflict: In the 1980s, protests erupted after Balco, while exploring the area, allegedly damaged an ancient temple

Status: Balco has surrendered the mine, but others have applied- including Continental Resources

 

Maliparbat

District: Koraput, Odisha

Company: Hindalco

Reserves: 9.8 million tonnes

Allotment year: 2007 (final nod from state)

Conflict: Villagers say small mine won't sustain jobs

Status: Local protests stalled work and a Naxal threat worsened the impasse

 

Pottangi

District: Koraput, Odisha

Company: Nalco

Reserves: 75 million tonnes

Allotment year: 2007 (reserved by Centre)

Conflict: Odisha has been placing conditions

Status: Nalco awaiting fi nal nod from Odisha


Araku, Chintapalli

District: Visakhapatnam, Andhra Pradesh

Companies: State mining corporation (for Jindal South West, Ras Al Khimah)

Reserves: 564 million tonnes Allotment year: 2005-08 (MoUs signed)

Conflict: Centre-state friction. Tribal affairs minister KC Deo opposed to mining in tribal areas

Status: Deo has Sparring between minister and state continues


Baphilimali

District: Rayagada, Odisha

Company: Utkal Alumina

Reserves: 195 million tonnes

Allotment year: 1998 (nod from state)

Conflict: Its original investors left after two decades of resistance from villagers

Status: New owner Aditya Birla Group, finally, started mining two months ago