By Joseph Kirschke, News Editor-Mining 

By any measure, 2013 has been a dismal year for Vedanta Resources plc, the $11.4-billion U.K.-based mining, oil and gas conglomerate with two-thirds of its operations in India.

On August 13, its woes culminated in a referendum by Dongria Kondh tribal villagers blocking efforts to extract bauxite from their sacred Niyamgiri hills, which stretch 92 miles through eastern Orissa.

After a decade of protests and worldwide condemnation, the verdict in the court of public opinion was swift. “Two days before India celebrated its 67th Independence Day, a tiny village deep inside the forests of Orissa tasted the fruits of freedom,” trumpeted Mumbai’s Business Today echoing the media, populist, nongovernmental organization (NGO) and international activist voices dogging the proposed refinery by the company’s subsidiary, Vedanta Aluminum Ltd. 

But Vedanta Resources, 65% owned by Indian business mogul and onetime scrap metal dealer Anil Agarwal, is no stranger to controversy: industrial accidents, environmental mishaps and human rights abuses have stained its reputation across the subcontinent—and the world beyond. But as Vedanta continues lobbying for its Orissa interest—while actively recruiting public relations consultants in international publications like The Economist—it maintains a very  Corporate Social Responsibility (CSR)-oriented agenda.

And it also makes Vedanta unique in the mining sustainability realm: Moreover, many Western firms have either learned hard lessons from past irresponsible mining or are implementing CSR to avert future ones—with social activists condemning them as covering for past abuses. Vedanta, on the other hand, is accused of firing tit-for-tat—implementing CSR in the face of constant violations and negative publicity alike.

India is unique unto itself, too, of course. The world’s second-most populous nation of 1.2 billion is also home to a feisty but deeply flawed democracy where poor governance, rampant corruption and explosive poverty collide head-on—with challenges to any extractive industry accentuated by a powerful, combustive NGO culture.    

Amid a flailing economy, Vedanta’s bind is illustrative, according to sector advocates like RK Sharma. “India has an unsustainable density of NGOs—and the movement is instigated by them,” said Sharma, secretary general of the Federation of Indian Mineral Industries, which has recorded 64,565 applications bottlenecked by state governments.

Officials at Vedanta and its state-owned, joint venture partner, Odisha Mining Corp. Ltd., have strong motivation to develop the Niyamgiri Hills: Estimates by the Geological Survey of India indicate the area contains 70% of national bauxite deposits—or 2,525 billion tons—allowing for some of the most profitable global aluminum industry operations. 

But NGO activism stoking awareness by international celebrities and investors, coupled with state bureaucracy, “are stalling the country’s development,” added Sharma.

To its credit, meanwhile, Vedanta has implemented vast CSR programs across the country and overseas. “Corporate social responsibility, is close to my heart,” Agarwal said in a statement.

Vedanta’s website echoes the sentiment with an impressive litany of accomplishments within the past decade. These include literacy and computer usage initiatives for more than 140,000 children and adults in 300 schools; 28 company-run schools and post-graduate colleges for 16,000 female students; health services for 5.7 million; 18 company hospitals and clinics, as well as lunches for 250,000 children in 2,952 schools. 

There’s more, including a 350-bed Vedanta Cancer Hospital and Research Center and a Vedanta Hindustan Zinc Heart Hospital in Rajasthan; 13,840 acres of land under cultivation and watershed for 17,425 farmers; veterinary services for 456,581 cattle; 27,100 women in 2,050 self-help groups; and an exclusive Orissa CSR Advisory Board. 

In five years, moreover, Vedanta CSR investment supported teams of 77 full-time development personnel, 342 local community coordinators and 111 NGO and government partners; CSR officials also use a “Community Matrix” for self-assessment. 

Other Vedanta critics, however, argue New Delhi’s newest CSR legislation, passed on August 8, allows for gaps between good programs and poor corporate citizenship.  Mark Hodge, director of the Global Business Initiative on Human Rights, for instance, noted that the government forced Vedanta to discontinue its promotional “Creating Happiness” campaign over environmental issues.  

The so-called “Companies Bill, seems to convey the inexcusable message that companies can somehow offset negative impacts in one area of their work with corporate philanthropy in another,” Hodge added. The legislation mandates companies with revenues exceeding $900,000 spend 2% on social welfare programs.

In Orissa, India’s Supreme Court initially petitioned authorities to survey villagers impacted by Vedanta and consulted 12 tribes for protection of cultural and religious rights. But officials in Orissa, home to 40 million people, must now consult all 100 indigenous groups totaling 8,000 inhabitants. Tensions also run high with a heavy police presence in an area menaced by paramilitaries battling a Maoist insurgency.

Parts of the Niyamgiri, however, have already been accessed by Odisha Mining, with regional officials pining to supply Vedanta from the site; Orissa’s ruling party has voiced intentions to spur the development. The delay has forced Vedanta to transport bauxite from other mines, leading to a loss of $90 per ton of alumina produced by its Orissa refinery.

The battle has cost Vedanta dearly on a number of fronts. In August, Aviva Investors, a top London Stock Exchange financier, decried its “lack of focus” on social issues, threatening to hold back shares, citing a “significant” underperformance related to human rights and the environment since 2010. 

“In particular, we are disappointed to find another director appointed without a credible track record in mining or sustainability issues,” Reuters quoted Aviva Corporate Responsibility Head Stephanie Maier, referring to non-executive appointments, including Deepak Parekh, chairman of Indian mortgage lender HDFC.

And although “we are pleased to note that progress continues to be made within Vedanta,” Maier added, “this has been slower than expected.”    

Other troubles have haunted Vedanta during its push for corporate sustainability. Three years ago, for example, the Church of England also announced plans to sell off company shares and, in 2009, the U.K. condemned Vedanta for human rights violations against the tribes; the Norwegian state pension fund divested its shares altogether.

Equally damning, Vedanta was stripped of several international safety awards for neglecting to report a Q4 2012 chimney collapse at one of its projects—one of the worst industrial accidents in recent Indian history—that killed 40 workers. In 2011 and 2012, regulators banned iron ore mining in two states, including at a Vedanta unit, while, in Q2, authorities closed a copper smelter owned by another subsidiary after a noxious leak sickened nearby Tamil Nadu residents.

Literally, Vedanta also represents an Indian orthodox philosophy wherein “service is the highest spiritual discipline,” according to the late Sri Sathya Sai Baba. “It extinguishes ego and gives bliss.”

In the minds of many, by all accounts, when it comes to Vedanta Resources, the words “discipline” and “bliss” are relative.

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