SLATED TO BE A MAJOR GAME CHANGER, THE NIYAMGIRI MINING PROJECT CONTINUES TO TAKE A TOLL ON TIME, MONEY AND PATIENCE FOR VEDANTA. WHERE DID THEY GO WRONG?
While planning mining activity in India, the actual operational intricacies of the mining hardly seem to be issues at all, compared with the larger issues that are giving so many CEOs sleepless nights. Actually, the ground above has hardly proved as rosy as the ground below. Vedanta’s Orissa mining project is just one of those that seem to have come to the right place but the wrong time.
The periphery of Niyamgiri Hills, where Vedanta set up an alumina refinery and entered into an agreement with the government and the Orissa Mining Corporation (OMC) for bauxite (which the latter would mine from the Niyamgiri Hills), remains a global flashpoint; which we can largely credit to the no holds barred propaganda campaign unleashed by international NGOs against Vedanta, supported by voices within political circles as well. That is ironic, since Vedanta had precisely invested in the Rs.45 billion project to greatly improve its competitive position globally. Was it flawed intent or was it the manner in which Vedanta presented it to the world? Or, as some company officials put it, a larger competitive conspiracy?
Well, the ball started rolling when Sterlite (Vedanta group company) got approval for its refinery in 2004, and hoped to secure bauxite supplies from Orissa Mining Corporation, which was supposed to mine on the Niyamgiri Hills. The case of OMC got stuck in the court due to environmental and community issues, and Sterlite filed an application seeking expediting of the process. That was really when environmental groups and NGOs smelt blood and criticised the move strongly; saying that the two projects should not have been submitted for clearance separately if they were part of one commercial venture. And then began intense scrutiny of the environmental impact and societal impact of the two projects, and all conjectures were built on the premise that there were skeletons in Vedanta’s cupboard. And the faces of protesting Dongria Kondh tribals, who reside in the Niyamgiri Hills were shown across the world as victims of Vedanta’s mining project. Naturally, political implications followed in India, since poverty has that irresistable appeal.
The SC cleared the mining project, understanding that there was no displacement involved and also mandating that the three parties – Sterlite, OMC and Government of Orissa would invest in the Scheduled Area Development of Lanjigarh. Sterlite was supposed to invest 5% of its net profits or Rs.1 billion, whichever is greater, in the SPV, apart from other investments towards wild life management, tribal development and compensatory afforestation. But clearance from the Ministry of Environment & Forests is still pending in this matter.
While planning mining activity in India, the actual operational intricacies of the mining hardly seem to be issues at all, compared with the larger issues that are giving so many CEOs sleepless nights. Actually, the ground above has hardly proved as rosy as the ground below. Vedanta’s Orissa mining project is just one of those that seem to have come to the right place but the wrong time.
The periphery of Niyamgiri Hills, where Vedanta set up an alumina refinery and entered into an agreement with the government and the Orissa Mining Corporation (OMC) for bauxite (which the latter would mine from the Niyamgiri Hills), remains a global flashpoint; which we can largely credit to the no holds barred propaganda campaign unleashed by international NGOs against Vedanta, supported by voices within political circles as well. That is ironic, since Vedanta had precisely invested in the Rs.45 billion project to greatly improve its competitive position globally. Was it flawed intent or was it the manner in which Vedanta presented it to the world? Or, as some company officials put it, a larger competitive conspiracy?
Well, the ball started rolling when Sterlite (Vedanta group company) got approval for its refinery in 2004, and hoped to secure bauxite supplies from Orissa Mining Corporation, which was supposed to mine on the Niyamgiri Hills. The case of OMC got stuck in the court due to environmental and community issues, and Sterlite filed an application seeking expediting of the process. That was really when environmental groups and NGOs smelt blood and criticised the move strongly; saying that the two projects should not have been submitted for clearance separately if they were part of one commercial venture. And then began intense scrutiny of the environmental impact and societal impact of the two projects, and all conjectures were built on the premise that there were skeletons in Vedanta’s cupboard. And the faces of protesting Dongria Kondh tribals, who reside in the Niyamgiri Hills were shown across the world as victims of Vedanta’s mining project. Naturally, political implications followed in India, since poverty has that irresistable appeal.
The SC cleared the mining project, understanding that there was no displacement involved and also mandating that the three parties – Sterlite, OMC and Government of Orissa would invest in the Scheduled Area Development of Lanjigarh. Sterlite was supposed to invest 5% of its net profits or Rs.1 billion, whichever is greater, in the SPV, apart from other investments towards wild life management, tribal development and compensatory afforestation. But clearance from the Ministry of Environment & Forests is still pending in this matter.
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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
