Business, Government and The Global Political Economy

Varun Jain13020241061  Study Group - 10

Dr. Anitha PathakProject ReportGovt. of India v/s

Verdict of the Supreme CourtThe verdict of SC on this case was much awaited as the decision was considered as a litmus test for the implementation of the Forest Act. But to everybody’s disappointment the SC left the power to make the decisions to the local ‘Gram Sabhas’. The Industry is not happy with the decision because it would affect the pace of industrialization. Also, this decision had an important implication on other projects like Posco and Arcelor Mittal in Odisha which though do not have any tribal aspect involved but are facing violent protest against land acquisition from the locals.

Impact on the IndustryThe Supreme Court judgment that aluminium-maker Vedanta cannot resume mining bauxite in the Niyamgiri hills appears to have had a negative impact on the industry at a time when big-ticket projects are facing a tough time in the state.

The most obvious fall out will be for the one million tonnes per annum alumina refinery of Vedanta Aluminium Limited. The unit has been lying closed since December 5 following a raw material shortage. The company, which had been running the refinery with bauxite from Andhra Pradesh, Chhattisgarh, Jharkhand and Gujarat, had to suspend operations after the sources dried up.

Though the state government has asked the group of ministers, headed by finance minister Prasanna Acharya, to explore ways of providing raw material to industries, Vedanta’s case is still stuck even though the company has invested around Rs 45,000 crore in the state. The company is learnt to have submitted 26 applications for the allotment of alternative mines.

Ever since the Union ministry of environment and forests had denied permission for mining bauxite from the Niyamgiri hills in August 2010, Vedanta has been lurching from one trouble to another. The Centre had also nixed its plans to expand the Lanjigarh refinery project.

Seen in this context, the apex court verdict has come as a bit of dampener. Steel and mines minister Rajani Kant Singh admitted that it would have been much better had the Niyamgiri mining issue been cleared in one go.

Two other big-ticket projects — the 12-million tonnes steel plant of South Korean giant Posco in Jagatsinghpur district and Arcelor-Mittal’s same capacity project in Keonjhar — have also been making indifferent progress even though the Niyamgiri kind of tribal angle is not involved in them. Both have been facing land acquisition problems with a popular agitation raging in the respective project areas.

The Posco project has also been rocked by violence, the last incident having taken place in March, in which three persons were killed. Although the state-run Industrial Infrastructure Development Corporation claims to have acquired and transferred 1,703 acres in favour of the South Korean company, the latter is yet to take possession of an inch. The agitation in the area has been so aggressive that Posco was forced to scale down the project reducing its proposed capacity from 12 million to eight million tonnes and land requirement from the original 4,004 acres to 2,700 acres.

There is also the issue of renewal of the company’s memorandum of understanding with the state government. Though the company has agreed to the government’s demand for dropping the iron ore swapping clause, which was part of the original, uncertainty over renewal prevails. Even Posco India CMD Yong Won Yoon is not sure when the revised agreement will be signed.

Delay in land acquisition has also put a spanner in the works of Arcellor-Mittal, who after investing around Rs 150 crore, appear to be losing interest in their project, which has not made any progress in the past six years. The company also seems to be peeved with the state government’s attitude of shifting the blame for everything that has goes wrong.