India: Metal versus mettle

This week the Dongria Kondh tribe, from the Indian forests of Orissa, learn if they face eviction from their sylvan surroundings to make way for an opencast bauxite mine run by London-listed -- but Indian-founded, managed and controlled -- metals and mining giant Vedanta Resources. 

Vedanta -- whose name means 'transcendence' in Sanskrit -- wants to dig into the Niyamgiri hills to feed an alumina refinery it has already built in the area as part of an 800 million dollar project. The Dongria claim the mine is an act of deicide that will desecrate their sacred hills, force them from their homes and upset their forest-dependent livelihoods. The Dongria are animists; they attribute their gods and goddesses to various natural phenomena, objects, trees, animals, and the Niyamgiri mountain is a temple to Niyam Raja, their supreme god.

The David and Goliath battle will be settled a thousand miles away in New Delhi by solemn moustaches in subfusc cloaks. India's Supreme Court will decide whether Sterlite Industries, Vedanta's Indian subsidiary, can proceed with the project. If this were a Bollywood film, the villagers would destroy their rapacious corporate oppressors in a game of cricket; yet in real life, big business usually triumphs:

• The state and central government want steel consumption to grow by close to 10% in the next five years, and both back the mining plan, as part of efforts to industrialise and exploit the mineral resources of underdeveloped eastern India.
• The country has substantial reserves of ores and minerals, ranking among the top three in the world for deposits of coal, iron ore, chromite and bauxite, and among the top five for zinc, copper and manganese. These are so far under-exploited, due to government policies which previously favoured a 'closed' economy.

Vedanta -- which is controlled by the London-based billionaire Anil Agarwal, India's 6th richest man -- claims that drought-prone and poverty-stricken Orissa has about 60-70% of the reserves of major natural resources producer Australia. The bauxite in Orissa is also of extremely high quality, which makes it cheap to turn into aluminium. Vedanta promises to bring development and jobs along with the diggers, and invest in healthcare and education. It wants to expand the site fivefold and make it the largest of its kind in the world.

In recent years, India's tribal groups have benefited from increasing legal and political rights. As a result, government attempts to clear land using compulsory purchase orders and forced re-settlement schemes have met with resistance. Tribal groups have not been tempted by the argument that they will gain from increased employment, since labour has been imported from other states in the past. Moreover, India's influential environmental lobby has reinforced the resistance of indigenous groups to the metals and mining industries.

Even if this case may be different -- nearly 2,000 people are employed in the refinery, many from the local community -- the tribe is fighting and has gained international support. Survival International, an organisation supporting tribal peoples and their human rights, has urged Vedanta's UK shareholders -- including Coutts Bank, Standard Life, Abbey, and HSBC -- to pull their investments unless Vedanta abandons its plans. Norway has already excluded the company from its national pension fund investments, citing complicity in environmental damage and human rights abuses.

The case is a further demonstration of the challenges facing the Indian metals industry. It has major assets with which to expand its global presence, but political problems pose a greater challenge to the projected expansion of the sector than economic obstacles.