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Wednesday, 21 August 2013 01:33
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Exemplifies why it makes no sense to invest in India

If you’re looking at one project which tells investors why it is a bad idea to invest in India, that project is Vedanta’s proposed 6 million tonne aluminium plant in Orissa. All told, the company has invested around R50,000 crore in various projects related to this, including a power plant, but the main source of raw material—bauxite from the Niyamgiri mines in Orissa—is now not available. While the project first had to spend years getting environment ministry clearances, it didn’t help that the environment minister announced his rejection of clearances the day Congress scion Rahul Gandhi reached Niyamgiri to tell the gathered tribals he was their sipahi in Delhi, to save their God.


While the environment ministry finally gave the project a clearance, the Supreme Court verdict placed the bauxite mining in the hands of the gram sabhas—if the gram sabhas voted to say the mining did not affect the God on top of the mountain, Vedanta could go ahead. Since the gram sabhas have voted 12:0 against Vedanta, the matter will be referred to SC. Meanwhile, you would have expected the Orissa government to come up with a Plan B for Vedanta. In any case, the company was not supposed to be mining for bauxite, it had an MoU with the state government’s mining corporation to buy bauxite from it—while a major part of this was to come from Niyamgiri, the supplies would need to come from other sources as well. Not only did the Orissa government not come out with any alternative—relatively easy, given over half of India’s bauxite is in Orissa—the plans being talked of now don’t offer much hope either. A prospecting lease first given out to L&T more than two decades ago is now being served up as an alternative—simply giving this to Vedanta sounds like a neat solution. Except the matter is still tangled in litigation and, once this is sorted out, the matter will go through the tedious process that the Niyamgiri mine has seen. For a state interested in developing its vast mineral resources, you would have thought that, by now, the Orissa Mining Corporation would have had several projects ready with all clearances—potential investors could then either buy from OMC or OMCs pre-cleared mines could be transferred to them. The first thing prospective investors need to do, it appears, is to mine for good luck.


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