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Latest news on Utkal Alumina: CARE withdraws, Hydro sells?

CARE (UK) and Business Partners for Development (BPD) have withdrawn from their previous cooperation with the controversial mining consortium Utkal Alumina. The reason is the high level of conflict in the area, relating to the proposed mining project. Local NGOs and the Norwegian Church Aid are happy with the decision. Meanwhile, Norsk Hydro is negotiating with the Indian industrial conglomerate Aditya Birla on selling a part of its 45% share in Utkal Alumina.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
CARE (UK) and Business Partners for Development (BPD) have withdrawn from their previous cooperation with the controversial mining consortium Utkal Alumina. The reason is the high level of conflict in the area, relating to the proposed mining project. Local NGOs and the Norwegian Church Aid are happy with the decision. Meanwhile, Norsk Hydro is negotiating with the Indian industrial conglomerate Aditya Birla on selling a part of its 45% share in Utkal Alumina.


By Tarjei Leer-Salvesen
Norwatch
 
NorWatch has had access to an internal report that Business Partners for Development (see NorWatch 11/2000) sent Norsk Hydro in connection to the Utkal Alumina mining project. BPD writes that they are withdrawing from the area in question. The reason is the violence and the generally high scale of the conflict regarding the proposed project. There is little reason to believe that the project-affected people and local NGOs will enter a constructive and peaceful dialogue with the company and local authorities in the near future.

- We are satisfied with the withdrawal of BPD and CARE (UK). They did not consult the project-affected people before starting their work with Utkal Alumina. They were there with a mandate from Norsk Hydro instead of a mandate from the poor. This is a wrong approach for high quality development projects, says Fredrik Gjernes of the Norwegian Church Aid, an organisation that has several partners on their own in the region.

Gjernes says that BPD was right in trying to facilitate and improve a dialogue between the company and local protestors against the same. But they failed because they started in the wrong end, he adds.

- Does Norsk Hydro have any comment to the fact that BPD has withdrawn and cancelled their future plans for working with Utkal Alumina?

- Business Partners for Development, which is an independent organisation, wanted to bring all parties together in a dialogue. BPD has developed a model with which they have positive experience, from India as well as other places around the globe. For BPDs model to work, people must at least be willing to speak with each other. BPD found the situation in this case so tense that this was unrealistic for the time being. This is a conclusion quite online with what Utkal Alumina itself said in February, when the company decided to scale down project activities, awaiting that a majority of people in the local communities supports the project and the establishment of a dialogue with all organisations represented in the area.  At the same time of announcing a scale-down of project activities, it was also announced an increased effort from Utkal to sustain and strengthen dialogue with all relevant groups in the area. It was further stated that Utkal would continue its support to the Utkal Rural Development Society, atrust established in 1998 to stimulate a long-term sustainable development in the Kashipur block of Orissa, Information Director Thomas Knuzten wrote in a comment to NorWatch.

He points out that the low level of activities in Kashipur reflects the decision of the Board.

Hydro sells out?
Dagens Næringsliv (a Norwegian Business Daily) wrote on the 18th of July that Norsk Hydro and Alcan are negotiating with the Indian industrial conglomerate Aditya Birla. The Birlas want to increase their stake in Utkal Alumina. Already they own Indal, and are thereby a 20% minority partner in Utkal. But Birla is hungry for control over the company.

Aditya Birla is a company feared by the people of Orissa. NorWatch spoke with several tribal leaders during our last visit to the area in April, and some of the indirectly blame this Indian company for the massacre on the 16th of December last year. Aditya Birla has a track record in violence from other and similar cases.

Utkal's CEO, Mr Ola Lie, replied quite undiplomatically when he was asked to comment on the internal atmosphere after the Aditya Birla takeover of Indal from previous owner Alcan. These are the words he used:

- You could say it like this; we had to go a few extra rounds in discussing the practical implementation of our ethical guidelines.

Dagens Næringsliv brought an interview last year with the boss of Aditya Birla's subsidiary Hindalco, Mr. Agarwala, who in clear text said he is willing to put hard pressure on Norsk Hydro to make them sell parts of their shares.

In the Norwegian Church Aid, the news of a possible part-sale from Norsk Hydro is met with mixed emotions. On the one side, joy over the fact that Norsk Hydro is feeling a pressure, but on the other side, worries that a sale could be a far too quick way out for the company which are responsible for the problems that has been generated in Kashipur over the past years.

- We have said all this time, that Norsk Hydro has a responsibility for ensuring the human rights of the project-affected people. They cannot run away from such a responsibility by selling a few shares, says Fredrik Gjernes in a comment to NorWatch.

- Norsk Hydro was one of the companies responsible for taking the land from the people. They still control Utkal Alumina together with Alcan, and the Board has the power to give the land back to the people if they wish to do so, says Gjernes.

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"We have said all this time, that Norsk Hydro has a responsibility for ensuring the human rights of the project affected people. They cannot run away from such a responsibility by selling a few shares."
Fredrik Gjernes, the Norwegian Church Aid

" We are satisfied with the withdrawal of BPD and CARE (UK). They did not consult the project-affected people before starting their work with Utkal Alumina. They were there with a mandate from Norsk Hydro instead of a mandate from the poor. This is a wrong approach for high quality development projects."
Fredrik Gjernes, the Norwegian Church Aid
                                      
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Utkal Alumina
Norsk Hydro, who also has appointed the CEO, owns Utkal Alumina International Ltd 45%. Other partners are Canadian Alcan (35% share) and Indian Indal (20% share). Indal is owned by Aditya Birla, a company that is now struggling for a controlling position in the joint venture through buying shares from Alcan and Hydro. Utkal Alumina has proposed to build a bauxite mine and an alumina refinery in Kashipur, Orissa, India. The project will cost approximately USD 1,8 billion if both project phases are constructed. The project-affected villagers have strongly opposed the project since the plans were known. They will loose valuable agricultural land and fear for the water resources, as a consequence of the mining and the factory. The proposed mine will be located at the Baphli Mali plateau, a hill that is sacred to the adivasi tribes in the area.

Norwatch Newsletter 7/01