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Vedanta Resources

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Vedanta Resources plc
Company typePublic limited company
LSE: VED
IndustryMetals and Mining
FoundedMumbai, Maharashtra, India (1976)
FounderAnil Agarwal
HeadquartersLondon, United Kingdom
Area served
Worldwide
Key people
Anil Agarwal
(Executive Chairman)
Navin Agarwal
(Deputy Executive Chairman)
Tom Albanese
(Chief Executive)
ProductsCopper, aluminum, zinc, lead, gold, iron ore, pig iron, metallurgical coke and oil and gas exploration
RevenueDecrease US$12.87 billion (2015)[1]
Decrease US$−5.009 billion (2015)[1]
Decrease US$−1.799 billion (2015)[1]
Total assetsDecrease US$36.98 billion (2015)[1]
Total equityDecrease US$1.603 billion (2015)[1]
Number of employees
27,717 (2015)[1]
SubsidiariesSterlite Industries
Hindustan Zinc Limited
Sesa Goa
Bharat Aluminium Company
MALCO
Vedanta Aluminium
Sterlite Energy
Australian Copper Mines
Konkola Copper Mines
Websitewww.vedantaresources.com

Vedanta Resources plc is a global diversified metals and mining company headquartered in London, United Kingdom. It is the largest mining and non-ferrous metals company in India and has mining operations in Australia and Zambia[2] and oil and gas operations in three countries. Its main products are copper, zinc, aluminium, lead, iron ore and petroleum.[2][3] It is also developing commercial power stations in India in Odisha (2,400 MW) and Punjab (1,980 MW).[4] The company is principally owned by Indian billionaire Anil Agarwal through Volcan Investments, a holding vehicle with a 61.7% stake in the business.[5] According to the New York Times, Vedanta Resources is "known in some parts of the world for having left financial and environmental problems in their wake."[6]

Vedanta is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

History

The company was founded in Bombay (now Mumbai) in 1976 by Anil Agarwal, who is also its Executive Chairman.[7] Agarwal founded Sterlite Industries, a business operating in the industrial sector in 1976[8] and then in 1986 established Vedanta Resources bringing together a variety of businesses owned by the Agarwal family.[9] It was first listed on the London Stock Exchange in 2003 when it raised $876 million through an Initial Public Offering.[10] Meanwhile, in 2006 it acquired Sterlite Gold, a gold mining business.[11] It raised an additional $2bn through an ADR issue in 2007.[12] In 2008 it bought certain of the assets of Asarco, a copper mining business, out of Chapter 11 for $2.6bn.[13] In December 2011 it announced the US$8.67 billion acquisition of Cairn India, a subsidiary of Cairn Energy, heralding its foray in the oil sector.[14]

Operations

Copper

Sterlite Industries (India) Ltd: Sterlite is registered office headquartered in Tuticorin, Tamil Nadu, India. Sterlite has been a public listed company in India since 1988, and its equity shares are listed and traded on the NSE and the BSE, and are also listed and traded on the NYSE in the form of ADSs. Vedanta owns 53.9% of Sterlite and has management control of the company.

Konkola Copper Mines: Vedanta owns 79.4% of KCM’s share capital and have management control of the company. KCM’s other shareholder is ZCCM Investment Holdings plc. The government of Zambia has a controlling stake in ZCCM Investment Holdings plc.

Copper Mines of Tasmania Pty Ltd: CMT is headquartered in Queenstown, Tasmania. Sterlite owns 100.0% of CMT and has management control of the company.

Zinc

Hindustan Zinc Ltd: HZL is headquartered in Udaipur in the state of Rajasthan. HZL’s equity shares are listed and traded on the NSE and BSE. Sterlite owns 64.9% of the share capital in HZL and has management control. Sterlite has a call option to acquire the government of India’s remaining ownership interest.

Aluminium

Bharat Aluminium Company Ltd: BALCO is headquartered at Korba in the state of Chhattisgarh. Sterlite owns 51.0% of the share capital of BALCO and has management control of the company. The government of India owns the remaining 49.0%. Sterlite exercised an option to acquire the government of India’s remaining ownership interest in BALCO in March 2004.

Vedanta Aluminium Ltd: Vedanta Aluminium is headquartered in Jharsuguda, Orissa. Vedanta owns 70.5% of the share capital of Vedanta Aluminium and Sterlite owns the remaining 29.5% share capital of Vedanta Aluminium. Vedanta Aluminium produces ingots, billets & wire rods that are sold in the markets around the world. Vedanta Aluminium Limited (VAL) has acquired 24.5% stake in L & T subsidiary Raykal Aluminium. Based on achieving certain milestones, VAL will fully acquire Raykal Aluminium in phases.[15]

Madras Aluminium Company Ltd: MALCO is headquartered in Mettur, India. MALCO’s equity shares are listed and traded on the NSE and BSE. It owns 93.9% of MALCO’s share capital and has management control of the company .

Iron ore

Sesa Goa Limited: Sesa Goa is headquartered in Panaji, India, and its equity shares are listed and traded on the NSE and BSE. Vedanta owns 57.1% of Sesa and has management control of the company.

Commercial power generation business

Sterlite Energy Limited: Sterlite Energy is headquartered in Mumbai. Sterlite owns 100.0% of Sterlite Energy and has management control of the company.

Oil and gas

Vedanta has oil and gas properties in India, Sri Lanka and South Africa. In India, it is a major producer of crude oil in the state of Rajasthan through its subsidiary Cairn India.

Criticism

Environmental damage

Vedanta has been criticised by human rights and activist groups, including Survival International, Amnesty International and Niyamgiri Surakshya Samiti because of the company's operations in Niyamgiri Hills in Orissa, India that are said to threaten the lives of the Dongria Kondh people who populate this region.[16] The Niyamgiri hills are also claimed to be an important wildlife habitat in Eastern Ghats of India as per a report by the Wildlife Institute of India[17] as well as independent reports/studies carried out by civil society groups.[18] In January 2009, thousands of locals formed a human chain around the hill in protest at the plans to start bauxite mining in the area.[19] The Union Environment Ministry in August 2010 rejected earlier clearances granted to a joint venture led by the Vedanta Group company Sterlite Industries for mining bauxite from Niyamgiri hills.[20]

Vedanta's Alumina Refinery in Lanjigarh was criticised by the Orissa State Pollution Control Board (the statutory environmental regulation body) for air pollution and water pollution in the area. According to Amnesty International, local people reported dust from the plant settling on clothes, crops and food. Vedanta officials claimed there was no dust pollution from the plant at all.[21] An environmental inspection of the plant reported water pollution by the plant including increasing the pH value of the river Vamshadhara below the refinery and a high level of SPM in the stack emissions.[22]

In October 2009 it was reported that the British government has criticised Vedanta for its treatment of the Dongria Kondh tribe in Orissa, India.[23] The company refused to co-operate with the British government and with an OECD investigation. It has rejected charges of environmental damage, saying it may be related to the increased use of fertiliser by farmers.[21]

It was reported in August 2015 that villagers in Chingola, Zambia can smell and taste toxic pollution/leaks from the largest copper mine in Africa owned by KCM.[24]

Safety concerns

2007 Mining Deaths

Unsafe mining operations led to 18 deaths and 1,256 injuries involving own employees and contractors in 2007.[25]

Balco, Korba, Chhattisgarh

A chimney under construction by Gannon Dunkerley & Company at the Balco smelter in Korba, Chhattisgarh collapsed on 23 September 2009, killing at least 40 workers.[26] Balco and GDCL management have been accused of negligence in the incident.[27]

Litigation

Armenia

In early 2008, the Armenian government began an investigation of AGRC, a subsidiary of Vedanta Resources, concerning compliance with licensing and tax regulations following independent media claims that AGRC submitted incorrect data in production reports relating to royalty payments and was in violation of licensing laws. AGRC was also served a preliminary notice of penalties and fines to the tune of about $50 million (or 80% of its net assets).

India

In respect of bauxite mines at Lanjigarh, Orissa, public interest litigations were filed in 2004 by Indian non-government organisations led by the People's Union for Civil Liberties to the supreme court sub-committee regarding the potential environmental impact of the mines. The Ministry of Environment and Forests received reports from expert organisations and has submitted its recommendations to the supreme court.

The sub-committee has found "blatant violations" of environmental regulations and grave concerns about the impact of the Niyamgiri mine on both the environment and the local tribal population. The committee recommended to the court that mining in such an ecologically sensitive area should not be permitted.[28]

Human rights

In February 2010, the Church of England decided to disinvest from the company on ethical grounds.[29] According to the indigenous rights organisation Survival International, the church’s decision is extremely unusual, as it almost always prefers a policy of 'constructive engagement’ to disinvesting.[30] The church said "we are not satisfied that Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect" and that "[it] would be inconsistent with the Church investing bodies’ joint ethical investment policy".

The Director of Survival International, Stephen Corry, said, "The Church’s unprecedented and very welcome decision sends a strong signal to companies that trample on tribal peoples’ rights: we will not bankroll your abuses. Anybody that has shares in Vedanta should sell them today if they care about human rights."[30]

Vedanta responded by expressing disappointment at the church's actions, and that it is "fully committed to pursuing its investments in a responsible manner, respecting the environment and human rights".[21]

The NGO Amnesty International has also criticised the company's record on human rights.[21][31] It has said, "[I]t is clear that Vedanta Resources and its subsidiaries [...] have failed to respect the human rights of the people of Lanjigarh and the Niyamgiri Hills" adding, "The proposed bauxite mine [...] threatens the survival of a protected Indigenous community [...] However, these risks have been largely ignored and consultation with and disclosure of information to affected communities have been almost non-existent."[32]

Following this controversy, several shareholders have joined in selling their shares because of human rights concerns. This includes the Joseph Rowntree Charitable Trust, the Marlborough Ethical Fund, Millfield House Foundation and PGGM. The British and Norwegian governments have both condemned the project, and Martin Currie Investments has also disinvested following pressure from Survival. The BP Pension Fund has reduced its shareholding over similar concerns.[33] The Economic Times criticised the project in an editorial, stating that if the mine goes ahead it will "impoverish a defenceless populace, perhaps to extinction."[34] On July 2010, the Chief Secretary of the Indian state of Orissa ordered a new investigation into the rights of the Dongria Kondh tribe affected by Vedanta Resources' bauxite mine, in what Survival International characterised as the "...third major blow to Vedanta in a month". The announcement came two weeks after the Indian Minister of Environment and Forests ordered an investigation on the same topic. A government investigation published in March concluded that Vedanta’s mine ‘may lead to the destruction of the Dongria Kondh’.[35]

A four-member panel set up by government of India in the Ministry of Environment and Forests investigated the bauxite mining proposal over Niyamgiri near Lanjigarh in the districts of Kalahandi and Rayagada in Orissa. The area has been traditional habitat of two particularly vulnerable tribal groups, the Dongria Kondh and the Kutia Kondh. The committee submitted its report on 16 August 2010, saying "The Vedanta Company has consistently violated the Forest Conservation Act [FCA], the Forest Rights Act [FRA], the Environment Protection Act [EPA] and the Orissa Forest Act in active collusion with the State officials. ..Allowing mining ... by depriving two primitive tribal groups of their rights over the proposed mining site to benefit a private company would shake the faith of the tribal people in the laws of the land ".[36] Based on a panel report, the government of India has served a show cause notice on the company on why its Stage I environment clearance should not be cancelled.[37]

In July 2010, Sterlite Industries, a subsidiary of Vedanta Group, was slapped a tax notice of about ₹3.24 billion (US$39 million), and charged with violating several rules by the excise department in India.[38] Excise officialed charged Sterlite Industries with misdeclaration because the company tried to ship out copper waste for separating gold and silver when the waste also contained other precious metals like platinum and palladium.[39]

References

  1. ^ a b c d e f "Vedanta Resources PLC 2015 Annual Report Form (10-K)". EDGAR. United States Securities and Exchange Commission. 27 February 2016. Retrieved 21 December 2015.
  2. ^ a b "About Us". Vedanta Resources plc. Retrieved 1 September 2010.
  3. ^ "What We Do". Vedanta Resources plc. Retrieved 1 September 2010.
  4. ^ "Commercial Power Generation Business". Vedanta Resources plc. Retrieved 1 September 2010.
  5. ^ Elena Moya. "Vedanta investors look into human rights issues in India". the Guardian. Retrieved 3 April 2015.
  6. ^ http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html
  7. ^ Who is Anil Agarwal? Daily Telegraph, 16 August 2010
  8. ^ Vedanta Resources Senior Mananagement
  9. ^ BALCO was the first Public Sector Company that was dis-invested in India and Anil Agarwal took the majority shares, turning around the fortunes of this ailing public sector aluminium company. The other major Indian companies are Hindustan Zinc, Sesa Goa, Vedanta Aluminium, Sesa Sterlite, Sterlite Energy etc. Vedanta Resources History
  10. ^ Indian mining Vedanta IPO to raise at least $876 mln Market Watch, 5 December 2003
  11. ^ Vedanta to buy stake in Sterlite Gold for Rs 285 cr Business Times, 14 June 2006
  12. ^ Sterlite raises $2 billion via ADR Bloomberg, 30 June 2007
  13. ^ Vedanta unit buys Asarco out of Chapter 11 at $2.6B Market Warch, 1 June 2008
  14. ^ Vedanta completes Cairn India deal Times of India, 8 December 2011
  15. ^ "Vedanta Aluminium acquires 24.5% stake in L&T subsidiary". 11 June 2012.
  16. ^ "British mining company threatens sacred mountain". Survival-international.org. Retrieved 1 August 2010.
  17. ^ "Studies on impact of proposed Lanjigarh Bauxite Mining on biodiversity including wildlife and its habitat" (PDF). Freewebs.com. Retrieved 1 August 2010.
  18. ^ "A brief report on Ecological and Biodiversity importance of Niyamgiri Hill and implications of Bauxite Mining" (PDF). Freewebs.com. Retrieved 1 August 2010.
  19. ^ Sahu, Sandeep (27 January 2009). "Indians protest over mining plans". BBC News. Retrieved 30 September 2009.
  20. ^ "Vednata would invest $2 billion less in India". business.rediff.com. Retrieved 25 October 2010.
  21. ^ a b c d "India refinery 'threatens health of local community'". BBC News. 9 February 2010. Retrieved 9 February 2010.
  22. ^ Nayak, C.R., Inspection Report on M/S. Vedanta Alumnimum Limited, Lanjigarh, Dist: Kalahandi
  23. ^ "UK Government blasts Vedanta for mistreatment of Oriya tribals". Thaindian.com. 12 October 2009. Retrieved 1 August 2010.
  24. ^ Vidal, John. "'I drank the water and ate the fish. We all did. The acid has damaged me permanently'". the Guardian. Retrieved 2 August 2015.
  25. ^ "Vedanta Annual Report 2007" (PDF). p. 38. Retrieved 1 August 2010.
  26. ^ "Balco chimney crash deaths climb to 26, dozens still trapped". Thaindian.com. 24 September 2009. Retrieved 1 August 2010.
  27. ^ "India chimney collapse kills 22". BBC News. 23 September 2009. Retrieved 1 August 2010.
  28. ^ Indian Supreme Court's Central Empowered Committee (2005) Report in IA No. 1324 regarding the alumina refinery plant being set up by M/S Vedanta Alumina Limited at Lanjigarh in Kalahandi District, Orissa
  29. ^ "Church of England sells Vedanta shares over Orissa human rights". News.in.msn.com. Retrieved 1 August 2010.
  30. ^ a b "Church takes 'unprecedented' step to sell stake in Vedanta". Survivalinternational.org. Retrieved 1 August 2010.
  31. ^ "Don't Mine Us out of Existence – Amnesty International". Amnesty.org. 9 February 2010. Retrieved 1 August 2010.
  32. ^ "Amnesty slams Vedanta Resources". Survivalinternational.org. Retrieved 1 August 2010.
  33. ^ "Survival applauds Rowntree decision to sell Vedanta shares over ethical concerns". Survivalinternational.org. Retrieved 1 August 2010.
  34. ^ Stop the Vedanta Project in Orissa The Economic Times 17 Mar 2010
  35. ^ "Third blow for Vedanta in a month as mine faces new probe". Survivalinternational.org. Retrieved 1 August 2010.
  36. ^ "Don't clear Vedanta's Mining Project: Panel". The Hindu newspaper. Retrieved 17 August 2010.
  37. ^ Panel report
  38. ^ PTI (26 July 2010). "Business / Companies : Sterlite Industries facing tax demand of Rs. 324 cr". The Hindu. Retrieved 1 August 2010.
  39. ^ "Sterlite Industries charged for evading duty". Sify. Retrieved 3 April 2015.
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