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Sterlite Brings Darkness to India's Indigenous Peoples

By Rakesh Kalshian
India Resource Center
June 16, 2004

Lanjigada (Orissa, India) - At first sight, one could be forgiven for mistaking it for some sort of bizarre installation art-form, why would anyone but a crazed artist, think of putting 150 pink-hued concrete boxes in a predominantly adivasi (tribal) area? On closer look, however, as one notices the barbed fencing and the baton-wielding security guard, it begins to resemble a concentration camp. It is a resettlement colony erected for the adivasi families whose homes were bulldozed early this year to make way for Sterlite Industries' alumina refinery project in the Lanjigada block of Orissa's Kalahandi district in eastern India. [Adivasis, meaning first people, refers to Indigenous Peoples of India]

The reason for this pink eyesore lies literally right behind it-the beautiful Niyamgiri hill range beneath whose thickly forested slopes sits the fortune: bauxite. To extract this treasure, Vedanta Resources, a company floated last year to finance Sterlite's ambition to become a global player in the mining business, has raised a whopping one billion pounds on the London Stock Exchange. And for whose sake Anil Agarwal, Sterlite and Vedanta Resources' top dog has no qualms about consigning over 360 families to cultural extinction on his way to being one of the 20 richest people in Britain. Sixty families have already been ousted and 300 more are in danger of losing their lands.

Let's not even talk about what the mining project would do the rich biodiversity of the region. The project involves a bauxite mine over an area of high up on the 4,000 ft high northwest ridge of the Niyamgiri mountain range. The proposed total lease area is 1073.40 hectares (ha), of which 600.961 ha lie in Kalahandi - 85 percent being reserved forest. The remaining 472.44 ha lie in the adjoining Rayagada district.

The Niyamgiris are home to a people who call themselves Jarene, but are popularly known as Dongria Konds. They are one of Orissa's most distinctive and traditional tribes, and live in about 90 villages dotting the various niches of the range. Not only will the project spell doom for these tribes and the ones whose lands fall under the alumina plant area, it would also devastate the local ecology-springs, rivers, and many endangered species.

In their "civilized" avatar, the adivasis, holed up in the pink caricatures of so-called homes, already look like museum exhibits. The colony represents everything that their former universe wasn't-closed, fragmented, soulless, artificial, and ugly. "I miss my old home very much. We have lost our gods, our fields, our trees. But we have to live somehow," says 22-year-old Basanti from Kinari village. Not provided with a kitchen that suits their style, most of the occupants have created temporary cooking space in their traditional style-it symbolizes their current state of limbo.

Incidentally, Agarwal, in contrast, will soon be moving into his 20 million pound house in London.

Forget respect for cultural sensibilities. Currently, these exiles in their own land are worried about their immediate survival. Rations will not last for more than five months, and electricity, which is intermittent, is free for only two months. Compensation money is currently locked in a bank, so people do not have ready access to it. And most bleakly, there is no work for them. Indeed, by dumping them in the colony without work or money, Sterlite has virtually reduced them to helpless zombies. Brusab Naik, 35, reeking of alcohol, is hysterical with rage as he recounts his miseries. He says he will commit suicide if the company does not give him a job.

But in the eyes of the mining company and the state, the poor, backward adivasis couldn't have got a better deal. With the "generous" compensation (Rs 75,000-150,000 per acre depending on the quality of land (approx US $ 1670-3340), so they argue, these "backward" people can now dream of living the fantasies of modern life.

From State Persuasion to State Repression

For the last two years the District Collector, the highest government official at the district level, has been "working" for the company hard-selling the joys of rehabilitation to a skeptical project-affected population-a concrete house, electricity, running water, TV, among other things. No matter that for all these years the state totally ignored its constitutional duties and has not provided even basic amenities. Indeed, the all-too-familiar specious logic of cost-benefit analysis, a clever trick often used by the state and the corporation to justify almost any development project no matter what the social and environmental cost, can be seen at work here.

So much for the state's policy decision which prescribes that "all development projects must be accompanied by a sensitive rehabilitation and employment package!"

When sweet-talk and sophistry didn't work, the company and local administration resorted to false propaganda, coercion and repression. "The police has been routinely harassing those resisting the project," says Bidulata Huika of Rayagada-based NGO Ankuran. Last year in April, a local Dalit leader Lingaraj Azad was arrested for instigating the adivasis against the project. When people rushed to Lanjigada to enquire about his arrest, company goons attacked them with batons and cricket bats. Many sustained serious injuries, which were confirmed later by a fact-finding team of the People's Union for Civil Liberties (PUCL).

In March last year, at a public hearing held by the Orissa Pollution Control Board at the nearby town of Muniguda, over 700 Dongria adivasis gathered to express their disapproval of the project, but, says Bidulata, "company goons and the police didn't allow them to place their objections before the panel. It was a complete farce as only pro-company people were allowed inside the room." However, as the additional divisional magistrate (ADM) came out of the room, he was forced to accept 11 affidavits and hundreds of petitions objecting to the project.

The company's report on the hearing, however, ignores the anti-project petitions, giving the impression that all were in favor of the project. In yet another instance of willful disinformation, the company document reports that the two Gram Sabha (Village Council) meetings of Lanjigada and Batelima called by the Collector on June 26, 2002 approved the project, while the truth, says Debaranjan Sarangi, an activist working in the area, is that people didn't allow the Batelima meeting to take place and the Lanjigada meeting ended without any resolution.

Besides beating the adivasis into submission, the corporate-state nexus has resorted to legal skullduggery to push ahead with the project. For instance, the Sterlite project, which falls in a Schedule V area, runs counter to the spirit of the Supreme Court judgment in Samatha vs State of Andhra Pradesh which not only prohibits sale of land, government or private, in Schedule V areas to non-adivasis but also bars mining leases or prospecting licenses to mining companies. However, the Orissa government performed a legal sleight of hand by deciding not to emulate the Andhra example, as, it argued, the existing laws in the state are adequate to protect the rights and interests of the adivasis! It backed up its decision with the thesis that "transfer of land for development activities, establishment of industries, and operation of mining leases etc in scheduled areas should bring about encouraging socio-economic development of the tribal population."

Second, the law doesn't permit the state to acquire any scheduled land without the prior informed consent of the Gram Sabha. This too has been thrown to the winds with sheer arrogance.

Third, Section 2.3 of the Forest Act categorically states that environment and forest clearance applications should be simultaneously filed. But it is unclear whether the company has sought forest clearance despite the fact that 85 percent of the land falls under reserved forests. The Act further states that "if a project involves forest as well as non-forest land, work should not be started on non-forest land till the approval of the Central Government for release of forest land under the Act has been given." However, the company has not only demolished three villages and relocated them but also begun construction work in the project area. Incidentally, the project's comprehensive EIA (Environmental Impact Assessment) is still pending clearance with the Ministry of Environment and Forests.

The coercion in Lanjiguda has ominous parallels to the modus operandi in neighboring Kashipur district where, on December 16, 2000, police opened fire on peaceful protestors in village Maikanch, killing three people. Outraged villagers vowed to fight the company to death. Little wonder the company has not dared enter the district for the last three years. In fact, Norsk Hydro, one of the original partners in the company, was forced to pull out of the consortium after the incident. Tata, another partner, had already pulled out. So now the consortium is left with only two companies, Aditya Birla's Hindalco and Alcan of Canada, with equity holdings of 55 and 45 percent respectively.

Meanwhile, the state has done its utmost to repress the struggle and its supporters. Following the Maikanch firing, the Orissa government persecuted several state NGOs, notably Agragamee and Ankuran, who were accused of inciting the people against UAIL's project. They were virtually banned for two years and barred from accepting funds from any agency.

Skeletons Rattle in Corporate Cupboard

Sterlite: A Murky Past of Misdeeds

Sterlite's dealings in Lanjiguda should come as no surprise, given the company's history of controversial financial dealings. The Company has also been responsible for unfair labor practices as well as bypassing norms of environmental and worker safety.

Sterlite's first move in the direction of establishing linkages in the field of copper production proved controversial. In the early 1990s, its attempt to locate its copper smelter at Ratnagiri in Maharashtra under technical collaboration with MIM Holdings, Australia, drew sharp protests from the local people, who feared environmental damage. The company was forced to shift the plant along with sulfuric acid and phosphoric acid plants being set up adjacent to it. But the company's copper smelter project in Tuticorin, Tamil Nadu, launched in 1994 was also dogged by controversy. The environmental clearances obtained by Sterlite have for long been a grievance with local residents, particularly the fisherfolk, who complained about noxious gases and effluent released by the plant. In particular, the copper smelter project's Environmental Impact Assessment (EIA) generated much controversy. There were allegations that the EIA was conducted before the company finalized its project, implying that the parameters were changed later. The EIA remained silent on parameters related to unacceptable levels of suspended particulate matter in the effluent, particularly heavy metal such as lead.

The other aspect of Sterlite's conduct in Tuticorin relates to the company's reputation as an employer. The unions claim that most of the workers at the company's smelter in Tuticorin are in the category of contract labor, and have repeatedly complained of lax safety standards at the plant. The company was subjected to intense media scrutiny after an explosion occurred in the plant on August 30, 1997. At least two workers died, and two were maimed, in an industrial accident. The unions, backed by human rights organizations, later claimed that the management ignored complaints from the workers of an impending disaster. In November 1998, the Chennai High Court ordered Sterlite Industries to immediately shut down its copper-smelter plant at Tuticorin. The order was passed after the Nagpur-based National Environmental Engineering Research Institute (Neeri) submitted its report. According to the report, the plant was established within 25 km of an ecologically fragile area "by relaxing green belt requirements without adequate or acceptable justification."

This controversial past, with little attempt to ensure workers' safety or minimize environmental impact, does not augur well for the adivasis of Orissa or their fragile biosphere.

Anil Agarwal, Chairman of Sterlite, whose current worth is estimated to be 800 million pounds, is known to be a notorious businessman, with a history of controversial dealings:
  1. In 1998, the Securities and Exchange Board of India (SEBI) indicted Sterlite, and two other private Indian companies, for insider trading. Sterlite was banned from accessing the market for two years.
  2. In 2000, he was accused of murky dealing regarding a telecom contract with the Department of Telecommunications.
  3. And most infamously, he engineered the controversial "fire-sale of Bharat Aluminium Company (Balco) in the central Indian state of Chattisgarh. The company was grossly undervalued: according to some estimates, several assets of the then state-owned firm were not taken into account during the final valuation, which allowed Sterlite to pay Rs 551 crore ($118.5-million) instead of the estimated Rs 3,000 crore ($ 645 million) that the company was worth.

In an even modestly ethical society, Agarwal would have been barred from doing further business. But he continues to manipulate politicians and capital markets with impunity. Indeed, it is precisely with this disdain for law and scruples that Sterlite has managed to demolish three villages. If he is allowed free rein, he may yet succeed in usurping the land belonging to the 300 families fighting against the project.

It was against this chicanery and highhandedness of the company that in early April this year, over 1000 adivasis under the banner of Niyamgiri Surakshya Samiti (Niyamgiri Protection Council) marched to Lanjigada to register their protest against the project. The pro-Sterlite supporters in the small town had earlier threatened violence if the rally entered the town. Memories of their violent encounter with company goons still fresh, this time the protestors were prepared with batons, axes and other sharp weapons. To prevent any clashes between adivasis and non-adivasis, the local administration had deployed heavy security. Kishan Patnaik, the venerable socialist leader, and Prafulla Samantaray of Lokshakti Abhiyan, addressed the gathering about the unethical and illicit nature of the project. They also exploded the routinely perpetuated myth that development projects like Sterlite's are beneficial for adivasis.

On their way back, some angry protestors set fire to a makeshift camp of the company. By the time police arrived on the scene, the arsonists had fled the scene. The next day, the police instead arrested the last batch of 13 people, mostly activists who had come from different parts of the state to express solidarity with the struggle. They were released on bail only in end of May. Several cases, including one of arson, have been framed against them.

Mad Rush for Orissa's Bauxite

Sterlite is not the only company eyeing the rich bauxite wealth of Orissa, which is estimated to be sixth largest in the world and about 70 percent of India's total bauxite wealth. In fact, it is the newest player in the game. Utkal Alumina International Ltd (UAIL), a consortium of Hindalco of the Aditya Birla group and Alcan of Canada, has been around for the last 12 years but hasn't been able to start operations despite having received the green signal primarily because of fierce local opposition to the project. Larson & Toubro along with Alcoa of US also tried setting up shop here but were forced to pull out in the face of the unrelenting local struggle. It was after Sterlite acquired BALCO that it arrived in this area. It was given a lease for another slice of the bauxite cake in Rayagada district in the Kashipur area but following reports of kickbacks to officials and fierce protests by adivasi groups, the government was forced to cancel its lease.

Sterlite: A Corporation on the Move

Incorporated on 8th Sep 1975 as Rainbow Investments Limited, the name was changed to Sterlite Cables in October 1976. In 1986, the Company was renamed as Sterlite Industries (India) Ltd. The company manufactures polyethylene-insulated, jelly filled telephone cables that cater to the telecom industry, and continuous cast copper rods that cater to both telecom and power sectors. Sterlite also produces optic fiber cables and aluminium alloy sheets and foils. In April 1996, Sterlite Communications, a sister concern which was set up for the manufacture of optical fiber, was merged with Sterlite. The telecommunications business was demerged into a new company - Sterlite Optical Technologies Ltd with the share capital now standing reduced to Rs 27.7 crore (approx $ 6.1 million).

In steady expansion, the company acquired the copper mines of Tasmania and Thalanga copper mines in Australia via acquisition of their holding company Monte Cello Corporation B.V., The Netherlands. The mines are claimed to meet 40 percent of the requirement.

In a move to become a multinational player in non-ferrous mining and metals, in 2002 Sterlite set up a new wholly-owned subsidiary, Sterlite Opportunities and Ventures Ltd, to act as a vehicle for its international acquisitions and mergers. Vedanta Resources is a major company in the UK and India and owns 68.1 percent shares in Sterlite which in turn controls 65 percent of Hindustan Zinc and 51 percent of Bharat Aluminum. Vedanta has an interest in the production of bauxite, copper, gold, lead, silver.

In early June 2004, Sterlite, by now a major international player in metals approached the Government of India seeking to acquire the latter's 49 percent residual stake in aluminium major Balco. The move comes as the Anil Aggarwal-promoted group exercised its call option, three years after it first acquired majority stake in Balco in a controversial deal, which went to the Supreme Court. Sterlite had acquired 51 percent stake in Balco for a mere Rs 551 crore (approx $118.5-million) from the Center in one of the first strategic sales pursued by the previous National Democratic Alliance government. The management of the company has shifted to Sterlite.

Both Hindustan Zinc and Bharat Aluminum added around Rs 2,000 crore (approx $ 442 million) to Sterlite's topline and helped the 'outsider' barge into a sector so far controlled either by the state or the business establishment - the Tatas and the Birlas. Sterlite has picked up two of the three best public sector metal units available and kept them out of reach of competition. Connections with politicians have helped these deals in no small measure. Anil Agarwal, Chariman and MD of Sterlite is known to be close to Laloo Prasad Yadav, Jayalalithaa, Sharad Pawar and some senior leaders of the Bharatiya Janata Party voted out of office in the recent elections. One of the long-term trends underway currently is the shifting of metal markets away from the developed countries to the developing ones, primarily those in Asia. Production patterns are also following consumption trends. Asia already accounts for 40 percent of the world aluminium market, and 45% each of the copper and zinc markets. Sterlite wants a big piece of the action, and while broad trends are apparent to all, Vedanta's founder seems to have made the most concerted play for this market.

It's a telling comment on the collusion of the state with corporate interests that the same tainted company was granted a lease in Lanjigada.

Like Lanjigada, the Kashipur struggle exposes the nefarious nexus between the state and the corporation. To get the project moving pronto, UAIL resorted to the all-too-familiar strategy of deceitful sweet-talk, persuasive sophistry, monetary enticements, divide-and-rule approach, and finally suppression through force. Unfortunately for the company, the people have stuck to their guns despite the odds. The company's fortunes took a nosedive after the Maikanch firing in December 2000 which left three protesters dead and a furious populace vowing to avenge their death.

The state government also constituted a commission headed by Justice P K Mishra to investigate the Maikanch incident. After a year-long investigation, the Commission report found the police guilty of excessive use of force but, inexplicably, refrained from recommending any action against the accused. To rub salt into the wounds of the agitators, the Commission ventured into commenting on the suitability of the project and its environmental impact, and gave it a virtual green signal.

Movement activists feel angry and aggrieved by the Commission's report. They believe it is ridiculous, nay presumptuous, for a judge to make observations on matters in which he has no competence. Says Bhagaban Majhi, 26, one of the leaders of the Kashipur struggle: "He should have confined his judgment to the firing incident. For example, it is nave of him to suggest that bauxite should be consumed domestically when we know that India doesn't need any new bauxite mines to meet its current demand."

Meanwhile, UAIL and Orissa government seem overjoyed with Sterlite's success in demolishing and relocating villages falling in the plant area. In fact, in mid-April, the Economic Times reported the Orissa government as saying that UAIL has started rehabilitation and resettlement work at the Kashipur plant and mining sites. However, this correspondent's visit to Kashipur in early April did not reveal any evidence to corroborate this claim. The report further quotes the official as saying that "the issues have now been resolved amicably," which, is also not accurate. This sort of misinformation campaign reveals the impatience of the investors as they clearly losing money because of the delay.

Curiously, however, a week after the Economic Times report, protesters in Canada called for Alcan to re-assess their involvement in this project which has faced fierce opposition from local people in Orissa for the last 12 years. More importantly, they called for Alcan to release documents to support its claims that the project is environmentally sound, including the official Environmental Impact Assessment (EIA) as well as evidence indicating that affected villages in the area now support the project. Apparently, Alcan's CEO for bauxite and alumina Michael Hanley has committed to providing the requested documents to two of its shareholders, independent journalist Frederic Dubois and activist Abhimanyu Sud, by a specific date. Hanley also stated that Alcan has still not decided whether or not to further develop this long-stalled project.

The campaigns against bauxite mining in Orissa are part of a larger struggle of indigenous people, which form about 22 percent of the total population in the state, against takeover of their lands by the state or corporations in the name of development.

Mining Orissa

Over the last decade, no state has thrown open its natural resources to private investment with such alacrity. In fact, during 1995-96, Orissa received the largest amount of private investments in India, both foreign and domestic, and continues to rank among the top ten. It is not surprising that majority of the new investments are in the mining sector, for Orissa is rich in mineral deposits-90 percent of India's chrome ore and nickel reserves; 70 percent of bauxite; and 24 percent of coal reserves. With such an abundance of natural resources, Orissa is the perfect haven for multinational and domestic corporations to set up steel, aluminium and coal-based power projects.

Besides, the state government is offering handsome subsidies to investors in the form of guarantees, tax concessions and investment subsidy, not to mention acquiring adivasi lands at questionable rates on behalf of the company. Last but not the least, the abundance of cheap labor makes it a haven for investors. In 1998, Alcan's president reportedly claimed the Utkal project promises to be the world's lowest cost alumina plant (In 1999, the price of producing one ton of alumina in India was about USD 90 as compared to the international average of USD 135.)

With economic policies being restructured by international financial institutions, notably the World Bank, the state is laying the red carpet for companies like Sterlite and Alcan while brushing its people's woes under it.

As in other regions of the world, the Bank has been joined by G-7 countries in financing the coal-fired industrialization of Orissa. Known G-7 financiers of Orissa's industrialization include the U.S. government, who loaned $232 million toward the Ib Valley coal-fired power plant; an additional $75 million is forthcoming for further investment in Ib Valley's coal-fired power plants. France provided $607 million toward the construction of an aluminium smelting complex, Nalco; the Kaniha and Ib Valley coal-fired power plants; and the Ananta coal mine. Japan has invested $125 million in coal mining expansion in Orissa. The U.K. has invested $40 million in the upgrading of the Hirakud dam in Orissa, and an additional $75 million toward the privatization of Orissa's power sector.

But has Orissa really gained from WB's structural adjustment program? According to Daphne Wysham of the Washington-based Institute of Policy Studies (IPS) who has studied Orissa's privatization experience, it has caused more harm than good. Namely,
  • Power rates have gone up by 500 percent for the less than 20 percent of households with power;
  • Power rates plummet for industry, many of them foreign-owned TNCs, or industries producing products for export to the North;
  • Poor people, whose only wealth is a small plot of land for crops and a clean environment, are pushed off of their land to make way for mines or industry; their air and water grows steadily more polluted;
  • Rich TNCs are making immense profits and Northern governments are smiling all the way to the Bank-the World Bank, that is-where they reinvest their profits;
  • Global greenhouse gas emissions continue their steady climb to dangerous heights, with 3 percent of manmade global greenhouse gas emissions coming from Orissa alone.

It is abundantly clear therefore that if Orissa continues to woo and pamper mining companies, it would only serve to fatten the already obscene bank accounts of dubious characters like Anil Aggarwal at the expense of economic and cultural pauperization of native population, not to mention the plunder of its bountiful biodiversity.




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