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INDIA: Indian Activists' Rising Clout

by Jackie RangeWall Street Journal
August 16th, 2007

India's Supreme Court is poised to decide whether a British
company has the right to mine in a sacred tribal forest, a case that
underlines the complexity of undertaking large-scale industrial projects

The case's hearing by the court reflects the growing clout of activist
groups in India and the bigger role the judiciary is taking in enforcing
the country's environmental rules. Experts say legal challenges could
become a greater hurdle for foreign and local investors as India's
environmental lobbyists work together and gather influence.

Vedanta Alumina Ltd., majority-owned by London-listed metals-and-mining
company Vedanta Resources PLC, wants the right to mine bauxite in the
Niyamgiri hills, in the mineral-rich eastern Indian state of Orissa.
Bauxite is refined to produce alumina, which is then smelted to produce
aluminum. Vedanta already operates an alumina refinery it built adjacent
to the area it wants to mine, part of an $800 million project that also
includes a power plant. The company opened the refinery in March, using
bauxite from elsewhere.

The environmental and social activists who brought the dispute to the high
court allege Vedanta didn't disclose that forest land was needed for the
project and therefore didn't get prior clearance from the Ministry of
Environment and Forests -- a violation of Indian law. A spokesman for
Vedanta Resources denies this but declined to comment further on the case
because it is before the court.

The activists also argue the project will do serious harm to the flora and
fauna of the area, which includes rare orchids, elephants, barking deer
and sloth bears. Vedanta declined to comment.

At a hearing in May, Vedanta argued that bringing mining to the area would
create jobs, said a person who attended. The company also promised to
forest other areas in compensation for the trees lost.

The court is scheduled to hear the Vedanta case tomorrow. Its ruling could
stop the mine project, require Vedanta to find another area to mine or
allow the project to proceed, legal observers say.

The legal battle comes against a backdrop of growing social discontent as
India's economic growth of more than 9% leaves many behind. "India's
much-fêted economic miracle is not only bypassing many of the most
vulnerable communities such as dalits [low-caste Hindus], urban poor and
indigenous groups, but is pushing them off their land, out of their homes
and destroying their livelihoods," says Bratindi Jena, of the
international nongovernmental organization ActionAid, which opposes the

As a result, foreign companies flocking here to tap into the booming
economy, as well as India's own fast-growing corporate giants, face
increasing grass-roots resistance: Across the country, conflicts have
erupted over projects ranging from mines to supermarkets.

In May, villagers opposed to South Korean company Posco's construction of
a huge steel complex in Orissa seized three employees, assaulted two and
held them briefly. Canada's Alcan Inc. said in April it would withdraw
from a mining-and-refinery venture that had faced years of protests,
though a spokeswoman denies that is the reason it pulled out. Reliance
Retail Ltd., a subsidiary of India's biggest company, Reliance Industries
Ltd., which is investing more than $5 billion in a national supermarket
chain, has had stores attacked, as small traders fear for their
livelihoods in the face of major retail competition.

Amid such opposition, "investors need to be aware of the potential for
litigators to file public-interest litigation in the courts," says Seema
Desai, a London-based India analyst with consultancy Eurasia Group.
[Mine Project]

Projects have seen opposition from a range of sources, from farmers to
social activists to larger nongovernmental organizations. Ms. Desai
predicts that "over time, some of the protesters or litigators will join
hands in more organized ways, in which case it could become a big hurdle
for investors."

Public-interest litigation, similar to class-action lawsuits in the U.S.,
is filed directly to India's Supreme Court because it is considered to be
in the general public interest.

In court, environmentalists are already getting a sympathetic ear, says
Gurdip Singh, a professor specializing in international and environmental
law at the University of Delhi. Judicial activism has led to India
adopting stringent environmental regulations, he says. The judiciary tends
to see the environment as the property of future generations to be
protected, and it treats the right to a healthy environment as a
fundamental human right, Mr. Singh says.

The Supreme Court is "taking a big interest in things like urban planning,
land issues, environmental issues," says Ms. Desai.

In taking on such cases, the Supreme Court is filling a gap left by the
central government, which has been reluctant to strictly enforce
environmental laws, says Anand Prasad, a New Delhi-based partner with
Indian law firm Trilegal.

The Vedanta case centers on a report produced by an expert panel assembled
by the Ministry of Environment and Forests on the direction of the Supreme
Court. The report said use of forest land in an ecologically sensitive
area like the Niyamgiri hills shouldn't be permitted. It suggested
environmental clearance for the refinery should be revoked until an
alternative mine site has been identified, and said that if the plans had
been properly reviewed at the outset, the project would have likely been

The refinery was completed and began operating after the report was
issued. Vedanta Resources declined to comment on the report.

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