New Delhi: The environment and forests ministry has rejected a fourfold expansion of bauxite mining capacity in Chhattisgarh sought by Bharat Aluminium Co. Ltd, or Balco, severely castigating the firm for what it describes as a “deplorably callous and casual attitude” in addressing concerns the ministry had raised earlier.
Balco, which is 51% owned by Sterlite Industries (India) Ltd and is the third largest aluminium producer in India, says it will reapply. Sterlite Industries is a wholly owned subsidiary of London-based Vedanta Resources Plc.
Anil Agarwal, chairman of Vedanta Resources Plc . Sterlite Industries, which owns 51% of Balco, is the wholly-owned subsidiary of Vedanta
Anil Agarwal, chairman of Vedanta Resources Plc . Sterlite Industries, which owns 51% of Balco, is the wholly-owned subsidiary of Vedanta
The rejection, which took place following a 12 October meeting at the ministry, is only now coming to light.
“We were quite taken aback at the committee’s stern words as well, but our person in the presentation was not able to convince the committee. We shall go back in a month’s time and we are hopeful that we will get clearance,” maintained Pramod Suri, chief executive officer of Balco.
Mining leases in India have to be cleared by the environment ministry on the basis of an environmental impact assessment, or EIA, which studies and determines the environmental and social impact of such a project.
Balco had filed applications to expand its mining capacity in Sarguja, from 0.45 million tonnes per annum, or mtpa, to 0.75 mtpa, and in Kabirdham, from 0.3 mtpa to 1.25 mtpa.
The expert appraisal committee, the internal panel in the ministry that decides on an EIA, in its 12 October report, the minutes of which have been reviewed by Mint, said: “The project proponent (Balco) has been in an unusual hurry in responding to the issues raised by the Expert Appraisal Committee in its meeting dated 18.7.2007 and, in the process, it has shown a deplorably callous and casual attitude in its replies, which are either incomplete or inappropriate and, on few vital issues, the replies have been in the form of assurances to give the details on an uncertain future date.”
Balco, which ceased to be a public sector undertaking in 2001, has expanded its aluminium production capacity from 0.13mt to 0.36mt. Balco has ambitious expansion plans in the pipeline, with a new 0.65mt smelter estimated at $2 billion and a 1,200MW power plant in Chhattisgarh.
Expansion of its mining capacities in Chhattisgarh would significantly boost Balco’s ability to source more quantities of bauxite domestically.
In its rejection of Balco’s Kabirdham proposal, the appraisal committee said: “The status of compliance to the specific conditions to environmental clearance was accorded in 2003 is far from satisfactory.”
See: Excerpts
The committee noted that Balco had not shown any “inclination” to think of a scheme to provide gainful economic activities on a sustained basis for these families that the company knew—well in advance—would have to be shifted when the proposed mining activities commence.
In a telephone conversation with Mint, Balco’s Suri said: “Flora, fauna, tribes or whosoever is there, we shall take care. We are committed to that.”
Suri insisted that the ministry’s rejection of its mining plans will not impact Balco’s ability to get adequate raw materials.
Balco obtains a little less than one-third of the raw material, alumina, from its Lanjigarh refinery in Orissa and the rest, some 0.5mt, are imported by the company.
Though he agreed that there are risks, especially of rising prices, associated with the dependence on imports, Suri says the price of alumina depends on the negotiated long-term contracts.
A senior ministry official, who did not wish to be identified, explained that the ministry approves expansion plans only after it has reviewed a company’s compliance with social and environmental obligations that it had already undertaken.
“In case the company has not been abiding by the previous regulations, expansion proposal should be rejected,” said the senior ministry official, explaining why Balco’s plans were rejected.
“There are key issues surrounding mining approvals, and it’s a significant risk factor, especially because there are only a few aluminium producers in India,” said Naveen Vohra, an analyst with Ernst and Young. He wasn’t talking specifically about the Balco case.
“If you compare India to other countries, such as Australia, on environmental benchmarks, India’s performance is abysmal,” Vohra said. “Ensuring environmental compliance is costly and the process needs to be transparent, which lacks in India and given the increasing importance of the environment, there are bound to be rejections.”
Balco’s Suri put it somewhat differently. “Definitely the way we have to go through the clearances in India is long drawn and tedious,” he complained. “There is no single window clearance. We hope it will improve with liberalization, so that so much time is not wasted. First, we have to get environmental clearances from state and then the Centre, then land acquisition and then rehabilitation. We have one-fifth of the world’s best bauxite reserves but produce only 3% of world’s aluminium.”
Another Vedanta affiliate also ran into unrelated legal and environmental issues in 2007.
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