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Tom Albanese, CEO

Vedanta Resources plc


16 Berkeley Stree
London W1J8DZ
UK

Your ref. Our ref. Date


HJE- 15/53 Oslo, 27 May 2016

Concerning the Council on Ethics' reassessment of Vedanta Resources

Dear Mr Albanese,

We make reference to previous communication with your company including Vedanta's


letters to the Council dated 11 February 2015 and 11 February 2016.

The Council has carefully reviewed the information Vedanta has provided. The Council has
considered your views regarding our 2007 recommendation, but has also looked into
developments at Vedanta's subsidiaries from 2007 until the present. The Council has assessed
Sterlite Copper, Bharat Aluminium Company, Lanjigarh Alumina and Konkola Copper
Mines.

Following its assessment, the Council has decided not to recommend the re-inclusion of
Vedanta in the Government Pension Fund Globals investment universe. In the Councils
view there continues to be an unacceptable risk that your company will cause or contribute to
severe environmental damage and serious or systematic human rights violations.

Please find attached the Councils assessment.

Yours sincerely

Johan H. Andresen
Chair of the Council on Ethics

CC: Radhika Arora, Investor Relations and Rahul Matta, Sustainable Development and
Communications

Enclosures: The Council on Ethics' assessment of Vedanta Resources plc., 27 May 2016
COUNCIL ON ETHICS
P.O. BOX 8008 DEP
N-0030 OSLO
NORWAY
ETIKKRDET
WWW.ETIKKRADET.NO
The Council on Ethics assessment of Vedanta Resources plc.
27 May 2016
Vedanta Resources plc (Vedanta) and its listed subsidiaries Sterlite Industries Ltd (Sterlite)
and Madras Aluminium Company Ltd (Malco) were excluded from the Norwegian
Government Pension Fund Global in 2007, following a recommendation from the Council on
Ethics. The Council examined four of Vedantas subsidiaries in India: Sterlite Industries,
Madras Aluminium Company, Bharat Aluminium Company and Vedanta Alumina, and found
that the companies were responsible for or contributed to severe environmental damage or
systematic human rights violations.

Since 2007, Vedanta has restructured. Sterlite Industries, Sesa Goa, Vedanta Aluminium
(VAL) and Malco (which was delisted in 2009) were merged into a new company, Sesa
Sterlite Ltd. In 2013, the Council recommended the exclusion of Sesa Sterlite, as the merger
did not change the companies operations, and the recommendation of 2007 continued to
apply. Sesa Sterlite has now been renamed Vedanta Ltd.

In this reassessment of Vedanta, the Council has focused on four of Vedantas subsidiaries -
Sterlite Copper, Bharat Aluminium Company, Lanjigarh Alumina, all operating in India, and
Konkola Copper Mines, which is located in Zambia. The review is based on information that
Vedanta has made available to the Council, as well as the Council's own research. The
Council has based its assessment on developments from 2007 until the present.

Sterlite Copper -Tuticorin


In its recommendation of 2007, the Council focused on Vedanta's approach to production
expansions, the disposal of hazardous waste, the contamination of ground water, green belt
issues, repeated breaches of government regulations and requirements, as well as the likely
environmental and health impacts on people living in the area.

Vedanta has provided extensive information on the operations at Tuticorin, regarding both
investments in pollution abatement and waste disposal, and claims to have obtained all valid
consents, clearances & approvals from statutory bodies [ ] since inception and till date and is
operating under consented capacities.1 In this regard, the Council notes that in 2010 the
Madras High Court ordered the closure of Sterlite Copper on environmental grounds,
including excessive pollution, poor waste disposal, inadequate green belt development and
violations of the Pollution Control Board's directives under the Consent to Operate. The
Supreme Court stayed the decision, but ordered a third-party inspection of pollution at the
plant and an assessment of whether operations were in compliance with environmental
requirements.

Following this investigation, the Supreme Court directed the Tamil Nadu Pollution Control
Board (TNPCB) in 2011 to impose mitigation measures on Sterlite Copper. As stated in your
letter, the TNPCB issued 30 directives (improvement measures) to Sterlite Copper and

1
Letter from Vedanta to the Council, 11 February 2015
prescribed a timeline for their implementation. Vedanta has informed the Council that Sterlite
Copper is now in compliance with all the directives.

Nevertheless, the Council notes that the Supreme Court's final decision in 2013 not to close
the operation was accompanied by a significant penalty imposed on Sterlite Copper for
extensive environmental degradation between 1997 and 2012, and for not being in compliance
with government requirements. The judges stated:

Considering the magnitude, capacity and prosperity of the appellant company, we are
of the view that it should be held liable for a compensation of Rs 100 crore for having
polluted the environment in the vicinity of its plant and for having operated the plant
without a renewal of the consents by the Tamil Nadu Pollution Control Board for a
fairly long period and according to us, any less amount, would not have the desired
deterrent effect on the company.2

Your statement that all consents have been in place from the start-up of operations conflicts
with the court's judgement.

The Council notes that Vedanta has taken steps to improve the environmental performance of
Sterlite Copper by investing in a number of pollution abatement and waste disposal facilities,
particularly following the Supreme Court's ruling in 2011. The Council finds that the
company's investments are likely to have reduced some of the pollution from the operations.
However, there are still issues of concern, outlined as follows:
- In 2008, Sterlite Copper commissioned an epidemiological study covering all villages
within a 5 km radius of the plant. In your letter to the Council, you state that: The
study has not found any ill effects due to operations of the plant. However, the report
also describes more incidences of respiratory disorders and skin ailments in the
population living around the factory site compared with a similar population living
further away. This seems not to have been investigated further, which may undermine
the credibility of the report.

- In the latest inspection report, carried out by National Environmental Engineering


Research Institute (NEERI) in 2011, it is stated that: The total land under possession
of M/s SIIL [Sterlite Copper] from SIPCOT as per the industry management is 102.5 ha
as against 172.17 ha.3 In the excerpts of the report that you have provided to the
Council, this page is missing. The environmental clearance for the expansion of
production capacity at Sterlite Copper appears to have been based on a plant area of
172.17 ha. Considering that only 60 percent of this area is available, it is not clear to the
Council whether there has actually been sufficient room to implement the required
pollution control measures.

- The Council notes that in the same NEERI report it is pointed out that at some locations
the green belt is fragmented, that the single-line plantations stretching for a total of 2.5
km were not considered to constitute a green belt, and that the green belt only covered
12.1 per cent of the area, compared with the required 25 per cent. Also these pages of

2
http://supremecourtofindia.nic.in/scr/2013/2013_v6_piii.pdf
3
NEERI 2011: Inspection of M/s Sterlite (India) Ltd., Thoothukudi Assessment of Environmental Pollution
Status. Hon'ble Supreme Court of India, p.106. (Hereafter referred to as NEERI 2011).
the report are missing in the information you have provided. Although Vedanta states
that it has now complied with the requirement, it is not clear to the Council whether
there is sufficient room for plantation development, considering that there is
significantly less land available at the site.

- A claim against Sterlite has been filed in the Madras High Court, alleging that Sterlite
Copper has been dumping slag in low-lying areas and water bodies on local peoples
land. This practice seems to be ongoing.

- Google Earth Images from 2016 show that large volumes of gypsum are stored in the
gypsum pond, contrary to Vedantas claims that the pond is empty. Local sources
contacted by the Council have confirmed that disposal facilities are full.

Bharat Aluminium Company (Balco)


The Council based its assessment of the Balcos Bodai Daldali bauxite mining operations on
the forced relocation of tribal people in Kawardha between 2005 and 2007, and the inadequate
or lack of compensation offered to those affected by the mining operation.

Resettlement and compensation


Vedanta disagrees with the Council's assessment with regard to the number of families and
individuals affected, the amount of compensation paid and the fact that the relocation was
forced. Vedanta states that Balcos land compensation rate was Rs 1 lakh per acre ( USD
1,650 per acre) while the existing market rate was Rs 30,000 Rs 50,000 per acre (USD 490
830 per acre). Vedanta also writes that it practises voluntary shifting of displaced family at
place of their choice, therefore the resettlement villages have been made at place of their
choice only, and accordingly the house land and agricultural land of villagers have been taken
in possession by Balco only with consent of the displaced family.

In the Councils view, this does not seem to be the full picture. After a visit to the mine in
2009, the Expert Appraisal Committee (EAC) of Indias Ministry of Environment and Forests
(MoEF) confirmed that Vedanta/Balco was obliged to ensure proper relocation and
resettlement of 261 affected families in four villages at Bodai-Daldali. The EAC stated that by
April 2009 only 72 families had been moved to four relocation sites; 189 families had yet to
be resettled, and the rehabilitation of the 261 families had still to be completed. In the EACs
view, progress in the resettlement of the families to be displaced was far from satisfactory.
Many families did not have verifiable land titles, as a consequence of which Vedanta/Balco
refused to compensate them for their loss. The EAC commented that it was sheer
coincidence that the issue has become relevant and known to the EAC while considering the
proposal for expansion.4 The Council is aware that in April 2010 the EAC permitted the
expansion for a period of five years. There is no information as to why the EAC exempted the
huge expansion project from any public hearing.5

4
In early 2007, Vedanta/Balco applied to the Indian Ministry of Environment and Forests (MoEF) for
permission to expand its Bodai-Daldali operations no less than five-fold.
http://www.minesandcommunities.org/article.php?a=9363
5

http://www.indiaenvironmentportal.org.in/files/html/Environment_Clearance/5240Bharat%20Aluminium%20
Company%20Ltd.html
According to Vedantas GRI Disclosure Document FY 2014-15, none of the companys active
mines are operating in or adjacent to indigenous peoples territory. However, to the Councils
knowledge, the Baigha is one of India's notified Scheduled Tribes and has the right under
Indian law to give Free, Prior and Informed Consent (FPIC) to a project as large as the Bodai
Daldali mine.6 The lack of public hearing means that the Baigha as a community may not
have been given an opportunity to express its concerns about the project prior to a period of a
huge expansion, which seems to be in conflict with Vedantas own policies on consultation
and community development.

The chimney collapse at Korba


The chimney collapse at Balco's Korba site in Chhattisgarh on 24 September 2009 has been
widely reported. The chimney was under construction and had reached a height of 240 metres
when it collapsed on top of more than 100 workers, who had sought shelter from a
thunderstorm. The judicial Commission of Inquiry into the causes of the disaster stated in its
report of 2012: Compliance with all the statutory requirements for the construction of the
chimney was the responsibility of BALCO and the responsibility of determining the safety
measures was also that of BALCO, because BALCO was the owner of the Project. 7

Vedanta has previously communicated to the Council that the Chimney collapse was found to
be a meteorological phenomenon not related to design flaw of chimney design.8 This is not
consistent with the Commissions findings. Vedanta has also informed the Council that it
obtained an injunction from the Chhattisgarh High Court prohibiting the publication of the
Commissions report, on the grounds that Balco had not been afforded a sufficient right of
reply to its allegations.

In the Councils view, it is peculiar that what appears to be the only action Vedanta has taken
in response to the accident is to hinder the publication of the inquiry report. To the Councils
knowledge, Vedanta has not addressed the reports findings. The Council has not seen any
information showing that the company has reviewed its health and safety procedures to
prevent future accidents.

Vedanta has provided the Council with information relating exclusively to positive
developments. It is striking that in the 2010 audit of Vedanta's operations and policies,
conducted by the British consultancy Scott Wilson (later URS), there is only a brief mention
of the collapse, where at least 40 workers died. The URS review of Vedanta's Sustainability
Policies and Practices for the Lanjigarh Refinery of 17 November 2010 recorded that, in
2009, the company had received an award from the British Safety Council (BSC).9 The
Council finds it pertinent to add that in August 2010, the BSC withdrew two awards
previously made to Vedanta, due to the substantial number of fatalities and casualties at Korba
the previous year.10

6
http://www.tribal.nic.in/Content/list%20of%20Scheduled%20Tribes%20in%20India.aspx
7
The Bakshi Judicial Inquiry Report Into The Korba Chimney Disaster Of 23 September 2009,
http://www.minesandcommunities.org/files/2014/Bakshi%20Report%20on%20Korba%20disaster.pdf
8
Telephone call with representatives from Vedanta 14 October 2014.
9
Scott Wilson 2010: Vedanta Resources PLC and Lanjigarh Refinery. Independent Review of Sustainability
Policies and Practices, Summary report, 17 November 2010, p. 18,
http://vedantaresourcesplc.com/uploads/vedantasummaryreport0812.pdf
10
http://www.theguardian.com/business/2010/aug/29/vedanta-safety-awards-stripped
http://www.ft.com/cms/s/0/191acf56-b39e-11df-81aa-00144feabdc0.html#axzz3v3Xv8fm8
Poor working conditions at Balco's mines
The Council is aware that the extraction of bauxite ore at Balcos Bodai Daldali mine is to a
large degree carried out manually by contract workers engaged for one day at a time.
Reportedly, these workers splinter rocks with sledgehammers, gather the pieces bare-handed
in kitchen bowls, which they carry on their heads to waiting lorries. No protective gear seems
to be provided.11 The working conditions at the mine have recently been documented in video
footage and articles by journalists who visited the mine in February 2016. These labour
practices hardly correspond to Vedantas own human rights policy, which states that the
company will strive to ensure the health, safety and well-being of all workers, and
minimise risks associated with occupational hazards and prevent injury and ill health to
contractor employees working on Vedanta sites.

In addition, other requirements imposed by the government on the company such as dust
control, the provision of safe drinking water, medical care facilities for workers and the
reclamation and replanting of mined-out areas seem not to be complied with.12

Lanjigarh Aluminium
The recommendation addressed the environmental impacts associated with the planned
mining operations in the Niyamgiri Hills and the refinery at Lanjigarh, as well as violation of
the human rights of tribal people in the area.

Niyamgiri Hills
In January 2014, the Indian government denied permission for Vedanta to prospect and mine
the Nyamgiri Hills on the grounds that, inter alia, the Dongria and Kutia Khond communities
had unanimously voted against it at their gram sabhas (village meetings).13 In the Councils
2007 recommendation, the impact that the mining operations would have on the tribal
communities was considered a serious human rights violation.

In its letter to the Council, Vedanta states that it has entered into a MoU with the Government
of Odisha, which assures supply of 150 mill tonnes of bauxite for our processing facility, we
are working with the State Government and pursuing alternate options for our long term
bauxite security. In February 2016, it was reported that the Government of Odisha had
petitioned the Supreme Court for holding a fresh Gram Sabha in the Niyamgiri area, an
earlier attempt to get the nod of the village body was unsuccessful. Odishas steel and mines
minister said: We have urged the Apex Court to allow the State-owned Odisha Mining
Corporation to undertake mining at Niyamgiri hills.14 The Council considers that should it
source bauxite from the Niyamgiri Hills, Vedanta could still be complicit in human rights
violations perpetrated by its business partner.

11
http://www.minesandcommunities.org/article.php?a=13331
12
http://www.minesandcommunities.org/article.php?a=13331 and Balco report on compliance submitted to the
Ministry of Environment and Forests in November 2012.
13
http://articles.economictimes.indiatimes.com/2014-01-11/news/46067729_1_mining-proposal-niyamgiri-hills-
source-bauxite
14
http://www.thehindu.com/business/Industry/tribals-oppose-fresh-bid-for-bauxite-mining-in-niyamgiri-
hills/article8331931.ece
Media reports state that the Orissa state government has now directed its mining corporation,
OMC, to start mining bauxite at Karlapat, which is also in the Kalahandi district, reportedly to
provide bauxite to Vedantas refinery.15 The Council notes that tribal organisations have
strongly opposed the Karlaplat project because it would be detrimental to the environment and
tribal livelihoods, and as such appears to be similar to Niyamgiri. To the Councils
knowledge, Vedanta seems so far not to have engaged with local communities in this case.

The Lanjigarh refinery expansion


In 2007, Vedanta submitted an application to the Ministry of Environment and Forests
(MoEF) for the expansion of the Lanjigarh refinery from 1 to 5 million tonnes per annum of
Alumina, and for an increase in power generation from 75 to 300 MW.16 The Council notes
that accusations of illegal activity, violations of environmental regulations and human rights
abuses are still being voiced against the company.

Vedanta has provided a timeline of major events concerning the setting up the Alumina
refinery at Lanjigahr. In this, Vedanta makes reference to the committee that was set up in
2009 to review the mining plan, but not to the conclusions of its report, one of which is cited
below:17

The Vedanta Company has consistently violated the Forest Conservation Act, the
Forest Rights Act, the Environment Protection Act and the Orissa Forest Act in
active collusion with the State officials. Perhaps the most blatant example of it is
their act of illegally enclosing and occupying at least 26.123 ha of Village Forest
Lands within its refinery depriving tribal, dalits and other rural poor of their rights. In
view of the above this Committee is of the firm view that allowing mining in the
proposed mining lease area by depriving two Primitive Tribal Groups of their rights
over the proposed mining site in order to benefit a private company would shake the
faith of tribal people in the laws of the land which may have serious consequences
for the security and well being of the entire country.18

Likewise, in the timeline provided, there is no mention that the MoEF decided not to permit
mining in 2011. Vedanta challenged this decision in court, but the Orissa High Court backed
the MoEF's ruling against the refinery and required Vedanta to start a new the process for
environmental clearance. The court recorded that: By the companys admission it was
evident that nearly half the work on the refinery had been completed even before it got the
requisite clearance, which is in violation of the law.19

In July 2014, Vedanta again applied for environmental clearance for the expansion of the
refinery. The expansion will require an increase in the supply of bauxite from 3 to 15 million

15
http://www.thehindu.com/news/national/other-states/tribals-oppose-bauxite-mining/article7649731.ece
16
Vedantas Annual report of 2015 states 4 Mt.,
http://www.vedantaresources.com/media/177388/22883_vedanta_ar2015_final.pdf
17
Saxena, et.al.: Report of the four-member committee for investigation into the proposal submitted by the
Orissa mining company for bauxite mining in Niyamgiri. 16 August 2010, p. 9,
http://envfor.nic.in/sites/default/files/Saxena_Vedanta-1.pdf
18
See footnote 17
19
TerraGreen, 30 January 2012, cited in the EIRIS 2012 Update Two years on: Review of progress by
Vedanta Resources on EIRIS ESG recommendations commissioned by Aviva Investors, p. 6,
http://www.eiris.org/publications/
tonnes per year. Vedanta misrepresents the outcome of a mandatory public hearing on the
expansion of the refinery which took place on 30 July 2014. Vedanta claims that the majority
of the people have supported the expansion project in the interest of local area as well as
community. To the Councils knowledge, the meeting was disrupted by Dongariya Kondh
villagers who questioned the purpose of holding the meeting in the absence of locals, and
there was a strong opposition to the refinery expansion voiced by Kondh people at the
hearing, which had to be abandoned midway through.20

The Council is aware that Amnesty International has published three reports on Vedantas
operations at Lanjigahr, in 2010, 2011 and 2012, alleging that Vedanta is responsible for
numerous violations of environmental laws and regulations, as well as human rights abuses
against indigenous inhabitants.21 Amnesty carried out four field visits from 2010-2012 to
gather information on Vedanta's environmental and human rights practices. Vedanta
responded in 2011 by issuing the report: The Lanjigarh development story: Vedantas
perspective, but seems not to have replied publicly to Amnesty's 2012 report.

In Vedanta's account, there is no mention of the investigation carried out by Indias National
Human Rights Commission (NHRC) into human rights violations associated with Vedanta's
operations in Lanjigahr. The NHRC report was issued in 2010 and shows that the NHRC was
concerned about the forced displacement of families and lack of proper compensation. In all,
276 families have lost 100 per cent of their farmland to the company, but only 9 have been
treated as displaced families (and thus entitled to rehabilitation under Vedanta's scheme). The
remaining families have been given a cash grant but no alternative means of livelihood. The
commission recommended that the government monitor the rehabilitation of the families
affected by the project. Contrary to what Vedanta claims, the NHRC states that people
affected by the project have been protesting against the acquisition of their land at village
meetings (gram sabhas). The company has chosen to suppress dissent through inducement of
local police. Protestors have been booked in false cases including dacoities. The police have
forced them to sign agreements with the company, undertaking to vacate their land and houses
at the companys terms, under duress.
Excessive pollution from the refinery is also reported. The report recommends a number of
actions to the government, including an expert group to monitor the impact of pollution on the
health of local communities.22 To the Council's knowledge, the government has not responded
to the report. In its meeting on 18 February 2016, the Commission directed the Chief
Secretary of the government of Orissa to look into the allegations made in the complaints
and to send a report within four weeks including status of the rehabilitation and resettlement
of the victims/displaced persons at the plant.23
In the Council's view, it appears that the situation at the refinery with regard to human rights

20
Caravan Magazine, 10 August 2014, reprinted at: http://www.minesandcommunities.org/article.php?a=12739
This video can be viewed at: https://www.youtube.com/watch?v=MsSGBnNmM-U
21
Amnesty International, 2010: Don't mine us out of existence,
https://www.amnesty.nl/sites/default/files/public/rap_india_dont_mine_us_out_of_existence.pdf
Amnesty International, 2011: Generalisations, omissions, assumptions: the failings of Vedantas Environmental
Impact Assessments for its bauxite mine and alumina refinery in Indias state of Orissa,
https://www.amnesty.nl/sites/default/files/public/asa200362011en.pdf
Amnesty International, 2012: Briefing: Vedantas perspective uncovered. Policies cannot mask practices in
Orissa, https://www.amnesty.org.uk/sites/default/files/vedanta2.pdf
22
Letter from NHRC Eastern Region's Special Rapporteur to NHRC, 14 May 2011 pp 35-40.
23
NHRC Case Details of File Number: 601/18/6/2010. Status 2/18/2016.
violations and environmental hazards does not seem to have improved significantly since
2007. In light of the proposed expansion of the refinery, which will require Vedanta to acquire
additional areas for red mud disposal, ash disposal, green belt and buildings, there is a serious
risk that these violations will continue.

Konkola Copper Mines (KCM)


The Council did not assess KCM in 2007, but finds it pertinent to include KCM now.

Since 2006, a number of serious discharges have been identified at the Nchanga mining
complex. They are alleged to be ongoing, occur frequently and result in contaminated water
with very low pH levels and quantities of toxic substances (including Cu, Fe, Co, Mn and
sulphates). These spills are alleged to be caused by systematic failings in equipment,
maintenance, monitoring and operations at the Nchanga copper mine.

In 2011, the High Court upheld a claim brought by 2000 residents from Chingola against
KCM for polluting the towns piped water supply. Pointing to a number of serious failures in
KCMs operations, the court found KCM guilty of water pollution. The court further declared
that KCM had shown gross recklessness and that KCM must bear moral, criminal and civil
liability in respect of the pollution it had caused.24 The verdict was upheld in the Supreme
Court in 2015, although compensation to villagers was reduced. The Council is aware that the
law firm Leigh Day has taken legal action on behalf of 1,826 Zambian villagers against UK-
based Vedanta Resources plc and KCM. The claimants are seeking compensation for the loss
of and damage to their land and for health problems resulting from the pollution. They are
also seeking remediation of the land and the provision of clean water.25 The Council notes
that Vedanta has challenged the villagers right to pursue their claims in Britain, saying that
the case against them should be heard in Zambia.26

In 2014, the Auditor General of Zambia investigated the management of environmental


degradation caused by mining activities in Zambia, including the Nchanga and Nkana
operations at KCMs Konkola mine. The report is based on the KCMs own monitoring
reports from 2009-2011, which show levels of Cu, Fe and TSS consistently in excess of
requirements throughout the year for some of the monitoring points. For some substances, e.g.
copper, levels were 100-200 times higher than the limits set by the authorities. The highest
discharges were from the pollution control dam, which appeared to be overflowing. All the
discharges monitored flowed into local streams. The auditor also found that silt from a
number of overburden dumps at the Nchanga mine had the potential to pollute local streams
and ultimately the Kafue River. The Council has requested updated monitoring reports from
Vedanta, but these have not been provided.

Vedanta states that it has implemented a number of mitigation measures. Most of these,
however, seem either to have been installed before 2011 or they are not adequate to reduce
pollution levels.

24
In the High Court of Justice Queen's Bench Division Technology and Construction Court Between: Dominic
Liswaniso Lungowe & others (Claimants) and (1) Vedanta Resources PLC (2) Konkola Copper Mines PLC
(Defendants). Particulars of Claim. Claim No. HT 2015 0000292. Dated 14.08.2015.
25
See footnote 24.
26
http://www.theguardian.com/global-development/2016/apr/12/mining-giant-vedanta-resources-uk-court-
zambia-villagers-case-alleging-pollution
The Council's assessment
Vedanta has provided the Council with information on its sustainability policies, its reporting
practices and the external reviews of its policies and practices carried out by third parties. It
has also submitted comments to the Councils recommendation of 2007. In addition, the
Council has requested further information from Vedanta, including on the mining operations
at KCM.

The Council notes that controversies surrounding the companys operations do not seem to
have diminished since 2007. Allegations of human rights violations and environmental
damage continue to be voiced by local communities affected by its operations. The results of
investigations that various authorities have conducted to clarify these issues, give cause for
concern.

Human rights violations associated with relocation of local communities appear to be ongoing
at Lanjigarh, as the NHRC, among others, has observed. It is disturbing that local police
forces still appear to be acting in the companys interest in silencing protests. Harassment and
intimidation of local communities by police forces acting on behalf of Vedanta was
investigated by the Central Empowered Committee in 2005, and included in the Councils
2007 recommendation. It seems that Vedanta has done little to prevent such human rights
violations.

Likewise, forced displacement and inadequate compensation still appears to be an issue at


Lanjigarh and possibly also at Balcos operations. One cause of the conflict seems to be
related to Vedantas practice of distinguishing between families with and without land titles.
Affected families without land titles appear to receive less compensation, although they may
be equally affected by the companys operations. Although this may not be unlawful, it causes
serious harm to vulnerable groups who have no alternative sources of income, and is not
consistent with Vedantas assurance that it makes every effort to minimise and mitigate the
impact of unavoidable resettlement.

Breaches of workers entitlement to safe working conditions appear to be ongoing at Balcos


mine. Apart from the serious safety shortcomings which the commission of inquiry found
after the fatal collapse of a chimney that was under construction, there still seems to be
significant potential for the company to improve working conditions at its operation.

Certain pollution aspects at Sterlite have probably improved as a result of specific government
directives. Nevertheless, a number of issues are yet to be resolved. Furthermore, the Council
finds it substantiated that the pollution at KCM is ongoing, with long-term impacts that are
detrimental to local peoples health and livelihoods. The Council has not researched
environmental impacts associated with other subsidiaries, but notes that the NHRC
recommended an investigation of the pollution from the refinery at Lanjigarh.

The violations of laws and procedures by Vedantas subsidiaries were important elements in
the Councils 2007 recommendation. In preparing this assessment, the Council has also found
numerous reports of Vedantas failure to comply with government requirements. This applies
to all four subsidiaries investigated.

In recent years, Vedanta has developed a sustainability framework which covers all aspects
of sustainability Occupational Health and Safety, New Projects, Human Rights, Land
Resettlement, Energy & Carbon, Training & Leadership Development, Community
Engagement, etc. Vedanta has upgraded management systems to implement the framework,
policies and reporting procedures, and has initiated third-party reviews (External
Sustainability Assurance) of its policies and their implementation at its subsidiaries. To a
large extent, the audits find that the subsidiaries have implemented Vedantas framework and
policies in a satisfactory way.

This conclusion does not correspond to the Councils findings and assessment. The Council
finds that the company is selective when informing about its activities. It is difficult to
understand that neither the pollution at the Konkola Mines, the social conflicts and NHCRs
investigation into human rights violations and the opposition to the expansion of the refinery
at Lanjigarh, nor the chimney collapse are mentioned in the audits. This weakens the
credibility of the audits and the sustainability framework. In the Councils view there is a
significant gap between Vedantas policies and its actions on the ground.

The Council concludes that the basis for excluding Vedanta from investment by the
Norwegian Government Pension Fund Global is still present, as there continues to be an
unacceptable risk of the company causing or contributing to severe environmental damage
and serious or systematic human rights violations.