Church may withdraw investment in Vedanta over ethics row

The Church of England will decide this week whether to maintain its investment in the controversial FTSE 100 listed mining group Vedanta Resources, after coming under pressure to sell its £2.5m stake in the group.

Members of the Church's Ethical Advisory Group will hold their first session since visiting the miner's operations in India last year. Its advice will be passed to the Church's investment managers who will then decide whether or not to withdraw the cash. Vedanta, which yesterday said it would only comment when the Church's final decision was known, is accused of breaching the rights of the indigenous Dongria Kondh tribe in Orissa.

Specifically, the company is accused of failing to consult with the tribe over a proposed bauxite mine in the state, which groups such as Survival International claim will disrupt a site sacred to the group.

The case has attracted the ire of a number of high-profile bodies. The UK's National Contact Point for the OECD Guidelines for Multinational Enterprises, a government body, said last year that Vedanta had "failed to put in place an adequate and timely consultation mechanism fully to engage the Dongria Kondh, an indigenous community who would be directly affected by the environmental and health and safety impact of its plans to construct a bauxite mine in the Niyamgiri Hills, Orissa".

Three years ago the Norwegian state pension fund sold its shares in the company, saying that being an investor would present an "unacceptable risk of contributing to severe environmental damage and serious or systematic violations of human rights".

Stephen Corry, a director of Survival International, which has long campaigned on behalf of the Dongria Kondh, said: "If the Church of England now decide to keep their cash with the company, it will be in the full knowledge that the Dongria Kondh's rights are about to be trampled. The UK government has already told Vedanta that the project is unacceptable, but Vedanta has ignored them – it's painfully clear that words, without action, are meaningless. The Church must take action, and sell its stake in Vedanta Resources."

Vedanta, which is hoping to get approval to start mining the site in March, disputes a number of Survival's claims, specifically those relating to displacing people in the area.

Vedanta is expected to report robust third-quarter results today, helped by strong production and improved commodity markets.

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