Indian villagers pay a high price as commodity boom comes to rural Orissa

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The Independent Online

Villagers in the impoverished Indian state of Orissa, moved from their land to make way for a bauxite refinery, have been thrown a lifeline by India's Supreme Court, encouraging the country's environment movement.

The Lanjigarh refinery, controlled by one of Britain's richest men, the billionaire businessman Anil Agarwal, has swallowed more than 100 acres. An investigation by monitors for the Supreme Court found that villagers have been moved to a site on the fringe of a forest reserve, some of them against their will. They have no land to grow food or to graze their animals.

When Mr Agarwal, one of Britain's richest men, stood in a London conference room this week and told his shareholders of the fantastic bonanza their company, Vedanta, had earned in the past year, he did not allude to the controversy hanging over the Lanjigarh refinery. He also omitted the high social and ecological cost that could be paid for his company's success by some of the poorest people in India.

In Vedanta's new annual report, Mr Agarwal, 53, who began his career as a scrap metal dealer in Bombay, also harped on his firm's commitment to the well-being of the Earth. "Sustainable development," he writes in the report, "is at the very heart of our business strategy. We... recognise the potential impact upon the environment."

But he did not explain that, while the Lanjigarh refinery is close to a rich source of high quality bauxite, on the peaks of the nearby Nyamgiri Hills, his firm's designs on these pristine peaks have aroused a storm of protest.

Mining in the hills is "on hold", as Vedanta explained to The Independent, and the Indian government has yet to permit it. But the company denies that it has ridden roughshod over villagers' rights to the detriment of the environment.

Anil Agarwal's story began 30 years ago in Bombay, where he set up in business collecting scrap aluminium and copper and reselling it to firms manufacturing wire and cable. He has been moving steadily up the metals industry chain ever since.

Mr Agarwal first came to the attention of the British media in 2000, when he threw his digital diary at a senior employee who had had the temerity to cross him, barking: "You have not seen my negative side. I will make sure you do not have a place on this planet." A London employment tribunal awarded the employee the record sum of £805,000 in damages.

But as the years passed, Mr Agarwal has grown bolder, not more circumspect. When a monitoring committee of India's Supreme Court visited a Vedanta-owned copper-smelting plant at Tuticorin in Tamil Nadu, southern India, in 2004, to inspect an expansion of the plant for which Vedanta claims it had full permission, it found a huge copper smelter, a copper refinery and several other units were close to completion, yet none had the government's approval.

An expert committee reporting to the Supreme Court said: "The company has expanded the plant without consent ... and without environmental clearance ...The quantities of hazardous wastes generated [by the expanded plant] would naturally be far in excess of those for which authorisation have been granted."

There are fears that the course of events could be similar at the Lanjigarh site in Orissa. In 2003, construction of an alumina refinery began on the site, to process bauxite ore mined at the peaks of the nearby Nyamgiri Hills. The hills are a protected forest area with a level of bio-diversity rare in South Asia, home to endangered wild animals including tigers and elephants.

But as well as providing habitat, the hills are a precious resource for the local people. The layer of bauxite on the summit acts as an aquifer, soaking up the heavy monsoon downpours and releasing them slowly throughout the year, feeding dozens of steams which provide pure water to the local villages.

Dr Sreedhar Ramamurty, a geologist formerly with India's Department of Atomic Energy, said: "My greatest concern is for the water sources, because the bauxite is a storehouse for water, like a great, thick layer of sponge."

Indian environmentalists claim that 660 hectares of prime forest land will have been destroyed, more than 90 per cent of the total reserve, and up to 100 forest streams could run dry.

In December 2004, two monitors were sent from the Supreme Court in Delhi to investigate. Their report found that while the Ministry of Environment and Forests had given clearance for the refinery, it had given no such clearance for mining in the hills.

The inhabitants of two tribal villages in the path of the refinery had been induced to move, and put in a relocation camp on the edge of the forest. The company said: "There has been no forcible eviction and no single complaint has ever been filed suggesting any kind of forcible eviction from the settlement. All the people at Lanjigarh who have been displaced have been offered full rehabilitation, and compensation for purchased land has been paid out at twice the government rate."

But Supreme Court monitors reported that some of those moved had complained. Some brought their grievances to the company's AGM this week. Vedanta told The Independent: "The new accommodation is close to plenty of grazing land where those who have animals are able to graze them."

But the monitors from the Supreme Court who visited the rehabilitation colony said they were "stunned to see that the colony is in close vicinity to reserved forests of the Nyamgiri Hills. No land has been given to villagers for growing crops."

Vedanta this week denied anything untoward at Lanjigarh. Vedanta "has no suspect designs" on the Niyamgiri hills, the company said, which "have been allotted to the Orissa Mining Corporation with which Vedanta has a joint venture". But Vedanta admitted work was "currently on hold" awaiting permits from the Indian government. The company said it has "neither alienated tribal land nor caused any damage to forests". Yet the court monitors reported: "Thousands of mature trees have been felled by the company in Nyamgiri forests, and it has already started digging the bauxite ore in the garb of test-mining". Vedanta denied it had started mining.

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