An article published on November 25, 2005 on www.mineweb.com, an international mining publication focusing on mining finance and corporate news, suggested that Anil Agarwal, the chairman of Vedanta Resources and Toronto-listed junior miner Sterlite Gold, is likely to lose a major goldmine project in Armenia. "Agarwal's conflict with the Armenian government has already hurt the share price of Sterlite, and puts into international play one of the potentially richest of gold deposits in the Caucasus," the article states.
The main reason for the Armenian government's conflict with Agarwal is the concealment of the real reserves of gold by the gold plant. Although on February 2, 2005, the Economic Court ruled to uphold a settlement agreement signed between the Ararat Gold Recovery Company (AGRC) and the Environmental Supervision Department of the Ministry of Ecology, many problems still remain unsolved. We remind you that on June 3, 2004 the Ministry of Ecology's State Environmental Supervision Department published its findings which stated: "In an inspection carried out at the Sotk mine, 865.2 kg of gold, 3.3 tons of silver, 0.86 tons of selenium, and 7.18 tons of tellurium were discovered. An inspection of the Meghradzor goldmine in the Kotayk Marz revealed hidden resources consisting of 143.4 kg of gold, 2.78 tons of silver and 3.38 tons of tellurium." According to the ministry, the concealment of the metals cost the Republic of Armenia 900 million drams (approximately $1,800,000 USD) in lost revenues.
How did it happen that the department, which discovered the concealment of the metals, renounced the results of its investigation during the court proceedings? It is also unclear why the Anti-corruption Department of the Office of the Prosecutor General of Armenia, having the data regarding the concealed resources at its disposal, has not held an inquiry to find out the facts. The settlement agreement gives rise to serious doubts: a group consisting of leading experts could not have made such a blunder.
Born in eastern India, Anil Agarwal started out as a scrap metal merchant in Mumbai, before moving to London 30 years ago. Agarwal's fortunes soared as the small Indian company he set up in 1988 rode the telecom boom, supplying copper cables to telecom companies in India
In his article Vedanta Undermines Indian Communities published on November 15th, 2005 by Corpwatch (www.corpwatch.org) Nityanand Jayaraman writes: " A tribal temple on Shervaroyan Peak in the hills of Yercaud in Southern India recently developed several large cracks. Built several centuries ago, the temple has withstood colonization and independence. But of late, a new mine threatens to destroy this historic site. Vedanta, a fast-growing British company, owns a subsidiary - Madras Aluminium Company Limited (MALCO) - that has been strip mining this and nearby peaks for bauxite, the ore that yields aluminium."
MALCO has built on the banks of the huge reservoir on the Kaveri River in Mettur a smelter and a refinery complex where locally mined bauxite is converted into aluminium. A mountain of toxic red mud - a by-product of aluminum production - is separated from the reservoir by a flimsy embankment.
"MALCO is a small cog in the giant wheel that is Vedanta Resources, a company set up by British billionaire businessman Anil Agarwal. Today, Vedanta is a vertically- integrated behemoth with an impressive international portfolio comprising copper, bauxite (aluminium), zinc, lead and gold. In India, which remains its production base, the company runs a giant copper smelter in the coastal town of Tuticorin in the southern state of Tamil Nadu, and aluminium smelters in the central and east Indian states of Chattisgarh and Orissa.", Nityanand Jayaraman continues.
According to the company's annual report, it plans to start a massive captive mine in the Niyamagiri hills of Orissa, a smelter in nearby Lanjigarh, and a refinery also in Orissa.
Sterlite Industries India Ltd and Vedanta Alumina Ltd are Vedanta's two most significant businesses in India. Vedanta group's Indian subsidiaries include five branches. For more information see: Annual Report 2005. Vedanta Resources plc.
According to Indian activists, the projects threaten densely forested areas that are home to tigers, Indian bison, bears, and elephants. "The affected human population includes impoverished tribal communities, some of whom charge that Vedanta's projects are illegal, and that the state and central governments are colluding with the company to circumvent environmental protections," the journalist reports.
Faced with community opposition, Sterlite has set up a foundation to address local needs.
"We don't do anything extraordinary," S. Chaamundi, country head of the foundation's child welfare program told India's Financial Express. "But the glow in the eyes of the children when they feel that they have someone to bother about them, the shine in the face of the poor parents when they report their child also say 'sorry' and 'thank you,' like the children in the homes they work as housemaids or coolies, make us feel we are doing something worthwhile."
These social welfare programs have done little to blunt a long history of opposition to Vedanta or to counter evidence that it has polluted the environment, poisoned locals, and colluded with officials to bypass environmental protections.
Always when starting a new business, a smelter, a refinery or a mine, Agarwal has faced serious opposition by both the ecologists and the population. There have been numerous protest demonstrations but shortly after, as a rule, he managed to reach an agreement with the government.
"A spate of accidents and gas leaks from the factory spurred the Madras High Court to commission a report on pollution by Sterlite. NEERI - a national environmental engineering laboratory - faulted the company for discharging dangerous levels of pollution into the environment and recommended the company's closure. Barely three months later, the same court reversed itself, cleared Sterlite, and recommended its reopening", Nityanand Jayaraman reports .
By September 2004, when a Monitoring Committee (SCMC) empowered by the Supreme Court visited Sterlite, the plant was churning out four times the allowed levels of pollutants, according to the Vedanta's Annual Report 2004.
The journalist found out that all the new construction in Tuticorin has occured without the environmental clearances legally required by both the central and state governments,
and that other illegal construction at the Orissa site continues. "At the time of the Supreme Court monitoring committee's 2004 visit to Tuticorin, Sterlite had nearly completed construction of a 300,000 ton-per-year copper smelter, a 127,000 ton copper refinery, a power plant, and several other units. None had government approval", he states.
Nityanand Jayaraman also found out that the central government gave post-facto clearance to the already constructed plants - despite the fact that Sterlite had never gotten the pollution board's consent to built them.
He goes on: "Despite his high level connections, Agarwal has fallen afoul of the law in both Britain and in India where he was accused of collaborating with the infamous stock-
market scamster Harshad Mehta. Known as "Big Bull" Mehta was notorious for insider trading and manipulating stock prices." In 1998 while the Bombay Stock Exchange was performing poorly and Mehta was promoting Sterlite stock, the company's shares rose by 41 percent. That same year, the Securities Exchange Board of India (SEBI) "prohibited [Sterlite] from accessing the capital market for a period of two years," for insider trading and other offenses. A subsequent exoneration of Sterlite by the Securities Appellate Tribunal's left many questions unanswered."
"In the UK in 2000, the London Employment Tribunal awarded $1.2 million in damages to an executive whom Agarwal had harassed for refusing to falsify a presentation for a U.S. offering. According to the tribunal, Agarwal threw his digital diary at the executive, and thundered: "You have not seen my negative side, and I will make sure that you do not have a place on this planet." In the March 2004 Billionaires, Michael Freedman reported Agarwal responding that "with 13,000 employees some grievances are inevitable"". (Freedman's article was published on March 14, 2004 on www.forbes.com)
Faced with mandatory disclosures and scrutiny, the company is seeking to delist itself from the Bombay Stock Exchange and transfer its Indian holdings to the UK. "This was the first Indian mining outfit to have a primary listing [in London]," Freedman reported, "and the City needed to be satisfied that the assets Agarwal claimed truly existed and his governance standards measured up. A team of 120 lawyers, bankers and engineers went to India to verify titles and pore over the books."