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Mining Company Breached Oecd Guidelines

News Release issued by the COI News Distribution Service on 13 October 2009

A UK registered mining company failed to comply with OECD standards for operating overseas when it did not consult an indigenous group on the construction of a bauxite mine in India, a UK Government examination has found.

Vedanta Resources plc is a UK-registered mining company operating directly or through subsidiaries in India, Zambia and Australia. Vedanta’s activities focus on aluminium, copper, zinc, lead and iron mining. The company is listed on the FTSE 100.

The Government’s examination found that Vedanta acted inconsistently with the OECD Guidelines for Multinational Enterprises by failing to put in place an adequate and timely consultation mechanism fully to engage the indigenous group Dongria Kondh about the construction of a bauxite mine in the Niyamgiri Hills, Orissa, India.

Trade, Investment and Small Business Minister, Lord Davies, said: “The Government promotes responsible business practices and adherence to internationally recognised standards.

“Clearly, mining can have an impact on those living nearby so it is essential that UK registered companies maintain an open dialogue with local communities, including indigenous groups, affected by their activities and put adequate means of consultation in place”.

A complaint under the Guidelines against Vedanta was made by Survival International on 19 December 2008, triggering the start of the complaint procedure by the UK National Contact Point (NCP) for the OECD Guidelines.

The UK NCP’s Final Statement on the complaint made two recommendations:

Vedanta should immediately and adequately engage with the Dongria Kondh, on the construction of the bauxite mine. Vedanta should include a human and indigenous rights impact assessment in its project management process, paying particular attention to the creation of an adequate consultation process, prior to the finalisation and execution of a project, with indigenous groups potentially affected by the company’s activities.

Notes to Editors

1. The UK National Contact Point’s Final Statement on the case is published at www.bis.gov.uk/nationalcontactpoint.

2. The OECD Guidelines for Multinational Enterprises set out standards that adhering states expect business to apply, wherever they are trading and operating overseas. The Guidelines cover a broad range of issues in business ethics including industrial relations, the environment, corruption and human rights.

3. The UK National Contact Point (UK NCP), part of the Department for Business, Innovation and Skills, initially aims to bring parties together to mediate a solution to complaints brought against UK registered multinationals or foreign multinationals operating in the UK. It is only if mediation fails that the UK NCP fully examines the allegations contained in the complaint. If it considers that a company has not met the requirements of the Guidelines, the UK NCP will issue a statement detailing this decision and making recommendations on how the firm can come into line with the Guidelines in the future.

4. On 19 December 2008, Survival International raised a number of concerns to the UK NCP in relation to the planned construction of an open pit bauxite mine by Vedanta and its subsidiaries in the Niyamgiri Hills situated in the State of Orissa (India). In particular, Survival International alleged that Vedanta had failed to consult with an indigenous group affected by its operations, the Dongria Kondh, who live within 4 to 5 km from the mine but revere as sacred the area on which the mine is being built, and depend for their livelihood on the area affected by the mine’s operations.

5. Survival International also claimed that Vedanta, by allegedly failing to consult the Dongria Kondh, has breached India’s international commitments under the UN International Covenant on Civil and Political Rights, the UN Convention on the Elimination of All Forms of Racial Discrimination, the Convention on Biological Diversity, and the UN Declaration on the Rights of Indigenous People.

6. The OECD Guidelines are not legally enforceable on businesses, but all OECD members are committed to raising awareness of the Guidelines and implementing the Guidelines’ complaint procedur

Department for Business, Innovation & Skills

The Department for Business, Innovation and Skills (BIS) is building a dynamic and competitive UK economy by: creating the conditions for business success; promoting innovation, enterprise and science; and giving everyone the skills and opportunities to succeed. To achieve this it will foster world-class universities and promote an open global economy. BIS - Investing in our future.

Contacts:

BIS Press Office
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Ben Lloyd
Phone: 020 7215 5974
Ben.Lloyd@bis.gsi.gov.uk