Lessons from the Vedanta catastrophe

The case of Vedanta delisting from the London Stock Exchange heralds a new era of concern for big mining companies

Marquee investors today are wary of companies that are seen to behave irresponsibly towards their environment -- high standards of social governance are treated as importantly as excellence in operations. Following the death of 13 protesters against Vedanta’s copper smelter in Tuticorin, Tamil Nadu, in May 2018, the Labour Party in the United Kingdom asked for Vedanta Resources to be delisted from the London Stock Exchange. Earlier, the Church of England had withdrawn from Vedanta because in its efforts to set up a bauxite mine in Odisha, it had failed to respect the human rights of local people, referring to the protest of Dongria Kondh tribals against the taking away of their hill of worship in Niyamgiri, Odisha.

On the face of it, the Vedanta subsidiary promised world class community engagement, environment management and CSR. The fact is that the proposed copper smelter was located close to human habitation and generated about 400 MT of chemical gases like sulphur dioxide every day – gases that can travel for miles as has been seen in the case of Bhopal’s Union Carbide. Not surprisingly, the people residing in and around wanted a halt to the construction of the new 1200 MT copper smelter and a closure of the existing facility, as they began to suffer various ailments.
 

At the government end, the root of the problem lies in the flawed understanding of what is environment and second, with the manner in which environment clearances are given.

In a narrow interpretation, driven largely because of the preponderance of a forest department outlook in the Indian environment ministry, it is assumed that the environment encompasses only the physical — water, air and land/forests. What is lost sight of are the human beings who are fundamental to any discourse about the environment, and bereft of whom the environment has no social value. It needs to be recalled here that the Environment (Protection) Act, 1986, was conceived after the United Nations Conference on the Human Environment was held at Stockholm in June 1972 in which India participated and pledged to take appropriate steps for the protection and improvement of the human environment.

Unfortunately, the EPA has only a passing mention of the human being. As a result, when a major (and potentially polluting industry) is considered for environmental clearance, no significant social impact study is undertaken, nor is the concurrence of the people who are going to be affected by that project taken. In most cases, the environment clearance is pushed through as an ease of doing business proposal using the imprimatur of the district collector who holds a public hearing in which the protagonist company makes a presentation of their strong CSR credentials. There is little opportunity for the befuddled villagers to comprehend the future implications for them and to put forward their misgivings.
 

What should the government do? It must mandate a social impact study prior to the public hearing and fix the template for it – the likely impact on the health of the people residing in the influence zone of the proposed project keeping in view the nature of the likely effluents and the already existing health sensitivities, the quality of the water available to the residents and the impact of the expected discharges from the project. A study should also be undertaken of the methodology of disposal of waste from existing industry in the area and its impact on the water and air. The government should also insist that all such public hearing take place only after the general consent of all villages.
 

What should a company do to safeguard itself from future disruption? It must define the affected zone as comprising those villagers whose land is being acquired and those who will be under the environmental influence of the project. It should reserve 15-24 per cent initial shareholding for villagers whose land is being acquired and who are in the affected zone and allocate it as social/sweat equity. The company should also announce benchmarks for water, air and soil quality and commit to pay compensation for any breach. This will ensure the company will necessarily put its best foot forward, that villagers will be suitably compensated and that they will become partners in progress. 
 

Companies must reexamine their entire CSR framework. They should recruit village-level representatives to engage with villagers, to help them correct their actions, not to deceive the villagers. 

What is required is a bottom-up approach of social and civic engagement, focusing primarily on the human environment. 

Vedanta Ltd clarifies:

Sterlite Copper’s copper smelter at Tuticorin has followed all environment and safety norms.

It has been close to two months now that the state-of-the art copper smelter at Tuticorin was shut down. The sequence of events leading up to the violence on May 22 was fuelled by incessant barrage of baseless charges and myths that were propagated by a handful “activists” to mislead the industrious and peaceful people of Tuticorin and surrounding areas. While we have been tirelessly working on the ground to bust these myths and address concerns of the common people, it came as a rude shock when a seasoned and experienced bureaucrat like Mr Raghav Chandra writes a piece that is riddled with factual inaccuracies. The problem lies with complete disregard of facts, fictitious arguments, and a clear lack of understanding of the ground situation when pinning down Sterlite Copper and squarely blame it for the troubles in Tuticorin.

Mr Chandra’s article states “the fact is that the proposed copper smelter was located close to human habitation and generated around 400 MT of chemical gases like sulphur dioxide every day – gases that can travel for miles as has been seen in the case of Bhopal’s Union Carbide.”

It is indeed sad and frivolous that a copper smelter, which has been operational for 22 years now with world class equipment and technology is being compared to one of the worst industrial disasters in the world. Contrary to the emission allegation, sulphur dioxide gases generated during copper smelting process at Sterlite Copper are collected and converted into sulphuric acid. In fact, the sulphur dioxide conversion efficiency of the two sulphuric acid plant installed at the smelter is 99.95%, which is one of the best in the world. According to independent assessments, the copper smelter based acid plant emissions contribute less than 1% (approx. 4.2 MT/day) of the total SO2 emissions of approx. 458 MT/day in Tuticorin. In fact, Sterlite’s copper plant ranks among the world’s best smelters with SO2 emission (kg/T of cathode) of 4.6, next only to the top smelter, Aurubis in Germany with SO2 emission (kg/T of cathode) at 4.3.

The major source of SO2 emission are power plants in the region that have an aggregate capacity of 4,000 MW. These plants do not have any mechanism for scrubbing or converting SO2 into a useful product. The coal used in power plants normally consists of 0.5 to 2.5% of sulphur, which produces large amount of sulphur-dioxide when burnt. The government owned power plants emit 50.4% of SO2 in the region while private owned power units account for 48.65% of the total emission of these gases. While the international norm for emissions is 2 Kg of SO2/ MT of acid produced during smelting, the norm fixed for Sterlite is 1 kg of SO2/ MT of acid produced. However, at Tuticorin, we operate at a much lower level than the prescribed limit of 1 Kg of SO2/MT of acid produced.

Mr. Chandra further writes that “not surprisingly, the people residing in and around wanted a halt to the construction of the new 1200 MT copper smelter and a closure of the existing facility, as they began to suffer further ailments.”

The Sterlite Copper smelter has an annual capacity of 400,000 tonne per annum and the expansion would have doubled the capacity to 800,000 tonne. The charge of ailments is again an imaginary one, pulled out of thin air. While the smelter is being accused of spreading cancer in the region, I wish to state facts here to bust another myth that is being conveniently spread in the last few months. According to Tamil Nadu Cancer Registry, more industrialised and less urbanised districts like Tuticorin, Salem, and Vellore are relatively better than more urbanised districts like Chennai, Coimbatore and Erode. As per data on crude incidence rate on cancer, Tuticorin ranks 14 among male and ranks 25 among female out of the 32 districts in Tamil Nadu.

Without checking the large scale development carried by Sterlite Copper over the years in Tuticorin region, the author states that “on the face of it, the Vedanta subsidiary promised world class community engagement, environment management and CSR.” To state the truth, Sterlite Copper has invested more than 500 crore rupees in environmental protection measures, which is among the highest spend by any industry standard and the smelter is currently ranked 7th most energy efficient in the world. On the CSR front, the company runs a wide range of schemes in areas like education, health, child care, women empowerment and agriculture in the region and it has already touched and transformed lives of nearly 2 lakh people in local communities. To list a few, the medical camps by Sterlite Copper run under “Health Care on Wheels” in 35 neighbouring villages provide free primary and secondary health care access and have benefitted 60,000 people so far. At the same time, the water irrigation programme for farmers – considering that Tuticorin lies in rain shadow area – has already reached 50,000 people from the farming community.

Last but not the least, the proposal to delist Vedanta Resources from London is not at all related to the sad events at Tuticorin. The Vedanta Group has been pursuing a strategy of simplification of its corporate structure for several years and the proposed transaction is part of those ongoing efforts. As a result, the management team will have a higher focus on intrinsic operations of the group.

-- Arun Arora, Chief Communications Officer, Vedanta Limited

The author is a civil servant. The views are personal