Vedanta Resources is a large conglomerate, operating in the field of copper, zinc, aluminium, iron ore, oil exploration etc. It’s activities spread across value chain of exploration, asset development,extraction, processing and value addition.
There is no doubt that the management of Vedanta Resources is dynamic, bold and has taken several strategic decisions to boost its business and in the process, has contributed considerably to the industrial and economic growth of several countries including India, South Africa, Australia, Zambia, Liberia and others. It is also a fact that the Vedanta Resources has got into number of controversies, particularly related to environmental issues
Vedanta Resources appears to be in the news in recent time for all wrong reasons.
It is suspected that there are vested interests of politicians, business rivals and motivated elements in the different countries who have been conducting systematic hate campaign against Vedanta Resources. Such forces are obviously, backed by money power. Due to such continuous anti Vedanata Resources campaign,Vedanta Resources is now emerging as suspected company amongst general public all over the world.More is talked about its negatives than against it’s positives. No other multinational company has been subjected to such level of vicious hate campaign.
Whether Vedanta Resources has sinned or sinned against is a question that the general public would never know
However, one is clear that the Vedanta Resources is not able to counter such hate campaign with facts and figures in effective way.For such state of affairs, the group has to search for reasons within itself.
Issue in Sterlite Copper Ltd, India
In India, Sterlite Copper in Tuticorin in Tamil Nadu that belong to Vedanta Resources ,is a classic example. The copper smelter plant in Tuticorin now remain closed in India for several months due to huge mass protest by local residents and others demanding the closure of the unit due to what the protesters think as pollution caused and violation of environmental regulations. The protests resulted in violence and police firing killing 13 people. State government of Tamil Nadu has declared that it would never allow Sterlite Copper to re open again.
While Sterlite Copper approached judiciary and judges have largely ruled in favour of Sterlite Copper for its re opening, issue is still locked in legal battle and it is, as yet, not clear as to what would be the ultimate fate of Sterlite Copper.
While Sterlite Copper says that it has not violated any rules regarding environmental regulations, the environmental authorities and local residents disagree. The campaign by Sterlite Copper about its environmental friendly claims have not convinced most of the local population so far.
Thousands of crore of rupees invested in Sterlite Copper by Vedanta Resources over the last several years, now remains wasted. Due to the closure of Sterlite Copper India has now become net importer of copper, while India was exporting copper when the unit was in operation, it appears that no one is benefited by the closure of Sterlite Copper. Environmental issues if any can always be sorted out and the closure of the unit at great cost could be avoided.
Issue in Zambia
Vedanta Resources is now facing serious issues in its copper plant in Zambia
Recently, Zambian government seized control of KCM, one of Africa’s biggest copper producers owned by Vedanta Resources, saying it had breached environmental and financial regulations.
KCM is Zambia’s largest integrated copper producer with nearly 13,000 workers. It invested USD 500 million in a new copper smelter, which produced 135,000 tonne of refined copper in the first nine months of 2018.
Zambia’s government has accused KCM of lying about expansion plans and paying too little tax.
State-controlled Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) is seeking liquidation of KCM, in which it owns 20.6 per cent. Vedanta owns 80 per cent of the company and has invested over USD 3 billion in KCM in adding processing capacity and extending the mine life since it acquiring the business in 2004.
Vedanta Resources has taken the government of Zambia to international arbitration, following the seizure of its Konkola Copper Mines (KCM), one of Africa’s biggest copper producer, stunning investors.
Vedanta Resources has said that Zambia must withdraw an import duty on copper and give his company due VAT refunds to help restore investor confidence, that was shattered by the African nation’s move to liquidate his copper-mining business.
Issue in alumina mining in India
There have been issues facing alumina plant operated by Vedanta Resources in Odisha in India. There have been allegation of the air and water pollution by Vedanta alumina refinery in Lanjigarh.
Bauxite ore mining in Niyamgiri Hills have been stalled due to anti mining allegation launched by local tribals. Tribal leaders say that “let our blood flow like a river but we won’t allow mining” It appears that mining in Niyamgiri Hills can not operate in the near future.
Issue in iron ore mining in Goa, India
In India, iron ore mining unit operated by Vedanta Resources in Goa have suffered, as Supreme Court has cancelled the iron ore mining permit in Goa.
Unlisted companies also have been forced to close the mining operations in Goa. However, Vedanta Resources is the biggest loser.
Need to improve the image
While a few issues faced by Vedanta Resources due to environmental issues and alleged violation of law have been listed above, it is not all. There are allegations of violation of norms in some other units too.
While there is no doubt that Vedanta Resources have shown extraordinary initiatives and has gone ahead with various projects around the world with determination ,the fact is that its global image has remained distorted.
While viewing the overall performance of such organizations operating internationally and evaluating their performance, it is necessary to take holistic view and see the issues in proper perspectives carefully, without blowing them out.
There could be several hidden and unrevealed reasons, that have caused Vedanta Resources to be vilified, as Vedanta Resources operates in developing and third world countries ,where it is not uncommon to see politicians and vested interests trying to blackmail the industrial units and production centres and demanding bribes.In the absence of receiving gratis demanded, vested interests may campaign and whip up passion amongst the local people to tarnish the image and break morale of the unit. It is also possible that business rivals, particularly competing in the global scene, may indulge in such practices.
Considering the reasonably efficient level of operation in several units belonging to Vedanta Resources including Hindustan Zinc Limited in India, Cairn Energy in India, the overall conditions in the operating units of Vedanta Resources can not be as bad as it is portrayed by the adverse media reports.
In any case, Vedanta Resources has to take some extra measures to safe guard its image as respectable organization and responsible corporate body.
Perhaps, decisions with regard to choice of projects for investment and the location of the projects must be carried out with greater care and duly taking into consideration the ground realities. Vedanta Resources should avoid putting itself in vulnerable scenario, taking calculated risks, where adverse issues may potentially arise.
Vedanta Resources has several lessons to learn across the world.