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47059086.STG3-draft

Vedanta Resources plc and Lanjigarh Alumina Refinery

IESC Monitoring

Review Report

Review of Progress on

Recommendations

Report

November 2012

UNITED KINGDOM & IRELAND

Prepared for: Standard Chartered Bank as Agent to the Lenders

Vedanta Resources plc

REVIEW OF PROGRESS ON RECOMMENDATIONS

IESC MONITORING REVIEW REPORT

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URS Infrastructure and Environment UK Ltd

6-8 Greencoat Place

London

SW1P 1PL

United Kingdom

Tel +44 (0) 20 7798 5000

Fax +44 (0) 20 7798 5001

www.urs.com




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Limitations

The conclusions and recommendations contained in this Report are based upon information provided by others and upon the assumption that all relevant information has been provided by those parties from whom it has been requested and that such information is accurate. Information obtained by URS Infrastructure & Environment UK Limited (“URS”) has not been independently verified by URS

1, unless otherwise stated in the Report.

The methodology adopted and the sources of information used by URS in providing its services are outlined in this Report. The work described in this Report was undertaken before, during and after the site visits in Namibia and Zambia during October 2012 and is based on the information available during the said period of time. The scope of this Report and the services are accordingly factually limited by these circumstances.

Where assessments of works or costs identified in this Report are made, such assessments are based upon the information available at the time and where appropriate are subject to further investigations or information which may become available.

URS disclaim any undertaking or obligation to advise any person of any change in any matter affecting the Report, which may come or be brought to URS’s attention after the date of the Report.

Certain statements made in the Report that are not historical facts may constitute estimates, projections or other forward-looking statements and even though they are based on reasonable assumptions as of the date of the Report, such forward-looking statements by their nature involve risks and uncertainties that could cause actual results to differ materially from the results predicted. URS specifically does not guarantee or warrant any estimate or projections contained in this Report.

1. Note that following its acquisition by URS and consequent integration into the main Group, the ‘Scott Wilson / URS Scott Wilson’ brands have now been discontinued and the company that undertook the original Sustainability Review is now named URS Infrastructure and Environment UK Ltd.

Copyright

© This Report is the copyright of URS Infrastructure & Environment UK Limited. Any unauthorised reproduction or usage by any person other than the addressee is strictly prohibited.




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TABLE OF CONTENTS 1 EXECUTIVE SUMMARY ................................................... 1

2 INTRODUCTION AND BACKGROUND ........................... 4

2.1 Vedanta Resources.......................................................... 4

2.2 Terms of Reference ......................................................... 4

2.2.1 Review of Vedanta’s Implementation Progress Report 3 .. 4

2.2.2 Site Visits ........................................................................... 4

2.2.3 Monitoring Review Report ................................................. 5

2.3 Approach .......................................................................... 5

2.4 This Monitoring Review Report ...................................... 5

3 CORPORATE RECOMMENDATIONS ............................. 7

3.1 Recommendation 2.5.7 Sustainability Committee ....... 7

3.2 Recommendation 2.5.8 Sustainability Officer .............. 7

3.3 Recommendation 2.5.4 Value Statement....................... 8

3.4 Recommendation 2.5.2 Code of Business Ethics ........ 8

3.5 Recommendation 2.5.6 Policies ..................................... 8

3.6 Recommendation 2.5.3 Stakeholder engagement ...... 10

3.7 Recommendation 2.5.13 Reporting .............................. 10

3.8 Recommendation 2.5.8bis Sustainability oversight ... 11

3.9 Recommendation 2.5.9 Professional competencies .. 12

3.10 Recommendation 2.5.16 Human rights policy ............ 13

3.11 Recommendation 2.5.24 External audit ....................... 13

4 COMPANY LEVEL RECOMMENDATIONS ................... 14

4.1 Recommendation 2.5.15 International best practice .. 14

4.2 Recommendation 2.5.11 Land management ............... 16

4.3 Recommendation 2.5.23 Incident register................... 18

4.4 Recommendation 2.5.12 Environmental communications ............................................................ 19

4.5 Recommendation 2.5.17 Consultation for new sites . 19

4.6 Recommendation 2.5.20 Vulnerable social groups .... 20

4.7 Recommendation 2.5.22 Cultural heritage .................. 21

5 LANJIGARH RECOMMENDATIONS ............................. 22

5.1 Recommendation 3.3.20 Environmental management22

5.2 Recommendation 4.5.8 Grievance mechanism .......... 22

5.3 Recommendation 3.3.3 Housekeeping ........................ 23

5.4 Recommendation 3.4.3 Proposed expansion ............. 23

5.5 3.3.79 Disaster management plan ................................ 23




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Table of Tables Table 6.1 CORPORATE LEVEL ........................................................................................ 28

Table 6.2 COMPANY LEVEL ............................................................................................. 29

Table 6.3 LANJIGARH ....................................................................................................... 30

Table 7-1: Summary of Incidents Apr-Jun 2012 ................................................................. 31

5.6 Recommendation 3.3.32 Retrenchment plans ............ 24

5.7 Recommendation 3.3.48 Contractor accommodation 24

5.8 Recommendation 4.5.5 Dust emissions ...................... 24

5.9 Recommendation 4.6.8 Livelihood support ................ 24

5.10 Recommendation 4.6.12 Integrated development ...... 25

5.11 Recommendation 3.3.63 Health and safety management ......................................................................................... 25

6 OVERVIEW OF PROGRESS AND REMEDIAL ACTIONS ......................................................................................... 26

6.1 Group Level Recommendations ................................... 26

6.2 Company Level Recommendations ............................. 26

6.3 Lanjigarh Refinery Recommendations ........................ 27

7 SOCIAL, ENVIRONMENTAL AND H&S INCIDENCES . 31

APPENDIX 1: COMMENTARY ON “THE LANJIGARH DEVELOPMENT STORY: VEDANTA’S PERSPECTIVE” AND AMNESTY INTERNATIONAL’S RESPONSE, “VEDANTA’S PERSPECTIVE UNCOVERED” .............. 35




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1 EXECUTIVE SUMMARY

This Monitoring Review Report was commissioned as the third 6-monthly update on Vedanta’s progress in implementing the Recommendations from the original independent strategic sustainability review that Scott Wilson (now URS) undertook in September 2010.

The first review of progress was undertaken in July 2011 and involved visits to the Vedanta Aluminium Limited (VAL) alumina refinery at Lanjigarh, the Sustainable Development department at its former location at Udaipur, and the Hindustan Zinc Limited (HZL) plant at Chanderiya. The second review in February 2012 included visits to the VAL Lanjigarh, Bharat Aluminium Co. Ltd (BALCO) and Sesa Goa operations and the Sustainable Development office now located in Delhi.

As per previous reviews, Vedanta submitted their Third Progress Report, which was used as a basis for discussion during our site visits to the Skorpion Zinc Mine (SZ) in Namibia and Konkola Copper Mines (KCM) in Zambia. (The site visits were originally scheduled for August 2012 but unfortunately had to be delayed due to conflicting diary commitments amongst the URS team).

Arrangements for governance and centralised day-to-day management of sustainability issues remain in place and are functioning well. The range of policies, management and technical standards that form the new Sustainability Framework is substantially complete, although documentation including the Guidance Notes are still outstanding. An extensive training programme is being rolled out across most of the Group to support the implementation of the Sustainability Framework, which is now subject to a combination of self assessment and an internal audit and assurance programme.

However, the fact that the Sustainability Framework documentation dealing with Indigenous Peoples is still to be formally released (it was originally due in 2011 and is currently pending approval) is cause for some concern as it represents a significant omission from the core Sustainability Framework documentation. A draft was reviewed and some feedback provided, but its approval and issue requires speedy resolution as there are potential implications for Environmental and Social Impact Assessments currently in progress, and the outcome of the final audit (e.g. if insufficient evidence of implementation is available at that time).

We are pleased to confirm that otherwise that Vedanta continues to make generally satisfactory progress - see section 6 of this report for an overview – and is able to demonstrate solid progress at both Group and Subsidiary Company levels. In particular, a considerable amount of focused effort has been put into improving safety performance across all operating units throughout the Group. Information on progress in relation to Lanjigarh was limited and there was no visit to the plant this time so we are restricted in what we are able to conclude as to advances made there since our last visit.

As before, some other elements are still to be fully completed and/or require minor adjustments, but the Company anticipates that all the necessary actions within its control for the completion of the Sustainability Framework and the remaining outstanding Recommendations will be completed by December 2012 and therefore capable of undergoing full and final assessment in June 2013.

No new material issues were identified during the site visits to both the Skorpion Zinc mine and refinery in Namibia and the Konkola Copper Mine complex based around Chingola in Zambia. However, these visits facilitated a good understanding of the rate of implementation progress across the wider Group and suggest some minor refinements to the Sustainability Framework, such as the need to address the potential influx / immigration impacts from new projects.




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The current situation in regard to the Recommendations is briefly summarised as follows:

Corporate level:

• Nine Recommendations were either previously closed out or have been closed during this review.

• One (the Sustainability Framework Policies and Standards) is considered to be broadly ‘on track’ – albeit with the abovementioned reservations in regard to the delayed Sustainability Framework documentation in regard to Indigenous Peoples determination and issue management - to achieve closure by the end of the 2012. Some other amendments or refinements are / may be required in regard to other Standards due to the revised or clarified requirements articulated in the Guidance Notes to the International Finance Corporation (IFC) 2012 Performance Standards and the majority of Vedanta’s proposed Guidance Notes are outstanding.

• The remaining example, External Audits, is not due until June 2013 but we are satisfied that if the remaining documents are finalised by the end of 2012, the Sustainability Framework will have had sufficient time for bedding-in to ensure that the proposed final audit will have full value and that suitable conclusions can be reached.

Company level:

• Three Recommendations were previously closed. The SZ Gergarub and KCM Chililabombwe satellite mining projects were examined to determine the current level of implementation of the Sustainability Framework and no significant problems were identified.

• The remaining Recommendations are believed to be broadly ‘on track’ to achieve closure by the end of the year as per the following:

• 2.5.15 International Best Practice: We wish to see some significant improvement in the self assessment/assurance process results to justify this as fully suitable for closure (see detailed comments on Corporate Recommendation 2.5.8 Sustainability oversight in Section 3 below);

• 2.5.11 Land management: A number of refinements are needed, such as a more robust approach for critical habitat assessment in relation to new projects in order to ensure that there will be no degradation of such habitat or net reduction in critically endangered or endangered species as a result of new project activities;

• 2.5.12 Environmental communications: Stakeholder Engagement Plans are being developed to communicate environmental monitoring regimes at plants to stakeholders;

• 2.5.22 Vulnerable social groups: We are currently unable to close out this Recommendation until we can review the final approved version of the remaining Sustainability Framework documentation on this topic - these are in the process of being finalised.

Lanjigarh:

• Seven Recommendations were previously closed out and we are now able to close 3.3.32 Retrenchment plans.

• Two remain broadly ‘on track’ to achieve closure: work continues on the documentation needed for both 3.3.20 Environmental Management and 3.3.63 Health and safety management.

• One, the Expansion Project, is still ‘pending’ (i.e. it is dependent upon an eventual Court

decision) and the plant is committed to developing an integrated Environmental and Social Action Plan which will include new Stakeholder Engagement, Biodiversity and Tribal Development Plans in line with corporate requirements.




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Given the anticipated level of progress for year end, we believe that only a check of documentation and a return visit to Lanjigarh will be required at the next six-monthly waypoint. This will allow Vedanta every opportunity to maximise implementation of its Sustainability Framework across the Group in preparation for the final audit in June next year.

We are pleased to acknowledge the full cooperation of all managers and staff involved and their helpful and comprehensive responses to requests for information.




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2 INTRODUCTION AND BACKGROUND

2.1 Vedanta Resources

Vedanta Resources (Vedanta) is listed on the London Stock Exchange and is a FTSE 100 metals and mining company. It is involved in mining and processing copper, zinc, aluminium and iron ore, in power generation and in oil.

The Group is characterised by a spread of operations and plants, rapid growth and a complex ownership structure. It has experienced significant growth in recent years through various expansion projects of its core copper, iron, zinc and aluminium businesses in India, Australia and Zambia and its 2011 acquisitions of Bellary Steel & Alloys Ltd in India, Lisheen Mine in Ireland, the Skorpion mine in Namibia and the Black Mountain Mines in South Africa. In 2011, Sesa Goa acquired Bellary Steel & Alloys Ltd and, following the granting of official approval, the Group acquired a significant stake in Cairn India Limited, which includes India's biggest onshore oilfield in Rajasthan and 9 other properties in India, plus one in Sri Lanka.

2.2 Terms of Reference

Scott Wilson Ltd was originally appointed as the Lenders’ Independent Environmental and Social Consultant (IESC) by Standard Chartered in September 2010 to review Vedanta’s strategic approach to sustainable development and to assess the social and environmental issues in relation to Vedanta Aluminium Limited’s (VAL) Lanjigarh (India) alumina refinery and its proposed expansion.

Following that strategic sustainability review, the Lenders require Vedanta to provide them with Implementation Progress Reports every 6 months until the IESC determines that “the implementation of all the recommendations in the Independent Review Report is materially complete and all the issues highlighted in the Independent Review Report have been suitably and substantially mitigated” (the “E&S Consultant Opinion”).

URS Scott Wilson Ltd (Scott Wilson was acquired by URS in September 2010) was re-appointed as the Lenders’ Independent Environmental and Social Consultant to undertake the 6-monthly review of Vedanta’s progress.

The scope of work had three major components and a series of sub-components as follows:

2.2.1 Review of Vedanta’s Implementation Progress Report 3

• Review the preliminary Implementation Progress Report 3 and supporting documentation and provide a list of queries and/or requests for additional information prior to the Site Visit.

• Provide commentary on two recent reports, “The Lanjigarh Development Story: Vedanta’s Perspective” and Amnesty International’s response, “Vedanta’s Perspective Uncovered”, which is in Appendix 1.

2.2.2 Site Visits

• Conduct short site visits at two of Vedanta’s other operations – Skorpion Zinc in Namibia and the Konkola Copper Mines (KCM) in Zambia - with the aim of reviewing how Corporate and Company recommendations are being implemented at an operational level; and

• Meet Vedanta’s management in charge of addressing the recommendations of the 2010 Independent Review and discuss both progress to date and the future actions needed for a successful final audit in June 2013.




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2.2.3 Monitoring Review Report

• Provide a summary of Vedanta’s progress and commitment to implementing the recommendations of the 2010 Independent Review Report, identifying those which have not been materially completed or satisfactorily addressed and why progress is not in line with expectations.

• Comment on the adequacy and timescale of any remedial actions proposed by Vedanta, particularly in regard to material failings, and recommend appropriate remedial action plans and timelines accordingly.

• In regard to Recommendation 2.5.23, review the register of social, environmental and H&S incidences and report on Vedanta’s approach and response to any material incident(s) and report on whether any changes to Vedanta’s processes or procedures were recommended and / or implemented as a result of any investigations into significant incidents. Compare the incident register to media coverage of Vedanta and any allegations made against Vedanta and investigate any discrepancies.

• For all other recommendations, comment on the progress made to-date, investigate any off-schedule situations and comment upon the adequacy and timescale of any remedial actions proposed by Vedanta, including its capacity to achieve any recommendation within the agreed timeline.

2.3 Approach

The URS team that undertook this 6-monthly review of progress study comprised of two consultants, both of whom were involved in the original review in 2010 and one who has participated in each 6-monlthly review to date.

The team members undertook site visits in Namibia, visiting the Skorpion Zinc (SZ) mine near Rosh Pinah, and the Konkola Copper Mines (KCM) based at Chingola in the Zambian Copper Belt.

A summary of our findings were presented to and discussed with the Chief Sustainability Officer (CSO) and senior management / staff of SZ and KCM during the visit; a telepresence meeting with the Group’s Chief Executive Officer (CEO) is being organised to discuss this report following our return to the UK.

2.4 This Monitoring Review Report

This Monitoring Review Report is presented in several sections.

• Part 3 relates to our findings on the progress Vedanta has made in addressing the recommendations regarding its strategic approach to sustainable development at the corporate level;

• Part 4 considers Vedanta’s progress on the recommendations which are applicable to the Group’s subsidiary companies including the SZ and KCM operations which were visited;

• Part 5 deals with URS’s review of the recommendations for the Lanjigarh alumina refinery. Please note that as Lanjigarh was not physically visited in this progress review, commentary is restricted to any documentation provided to the team;

• Part 6 is a tabular representation of progress against recommendations for Group, Company and Lanjigarh levels. The tables included in part 6 present an overview of our assessment of Vedanta’s current progress in implementing our recommendations, together with brief details of any outstanding issues due to be checked in the final audit and our appraisal of the outlook for successful close-out; and




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• Part 7 deals with the specific Lenders’ concerns in regard to incident reporting and investigation across the group.

Each recommendation is considered in turn and comprises our original recommendation and its timescale, commentary on what progress or otherwise has been made thus far, our judgement on what has been achieved, and our recommendations or suggestions for any further actions and/or revised timings.

We discussed the degree of progress against each recommendation with Vedanta’s CSO and, where appropriate, indicated what corrections and refinements we believe may be needed to achieve full closure. Implementation of the various actions was confirmed as being substantially on schedule and, providing the outstanding Sustainability Framework documentation is completed and the other information we requested is available for review at the end of December 2012 at the latest, we expect that all of the remaining actions can be completed by the final progress review in June 2013.

There is however one outstanding recommendation which remains dependent upon external actions; if resolved by June 2013, this will be subject to further consideration at the final audit review to the extent possible:

• 3.4.3 Proposed expansion: Closure is at least partially dependent upon external action,

namely the Court decision regarding the Lanjigarh refinery expansion project.

Appendix 1 contains our commentary on “The Lanjigarh Development Story: Vedanta’s

Perspective” and Amnesty International’s response, “Vedanta’s Perspective Uncovered”




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3 CORPORATE RECOMMENDATIONS

This section comprises the Recommendations proposed for the establishment of an over-arching corporate level sustainability function, including development of a governance structure and management systems, with the aim of improving coordination across the Group in regard to new projects and their associated environmental and social impacts.

Our commentary is summarised in section 6.1 below which comprises a table showing overall progress in addressing the Corporate Recommendations.

3.1 Recommendation 2.5.7 Sustainability Committee

• The title of the HSE Committee should be changed to the Sustainable Development Committee and its terms of reference expanded to reflect the breadth of its role covering all aspects of the environmental and social sustainability of the Group (Original target = May 2011).

This item was considered ‘closed’ in our second progress review report.

However, further to restructuring of the Company at Group level earlier this year, we confirmed that the Committee’s original Mandate remains valid and that there have been no changes in the designated participants of the Sustainability Committee.

Since the last progress review, further Sustainability Committee meetings were convened as planned on May 10

th and August 18

th 2012. Agendas, presentation materials and meeting

minutes were provided for review and it was confirmed that they demonstrate a consistent, on-going approach to the management of environmental and social sustainability for the Group and that improving safety performance is a key priority.

As the Committee’s composition and remit to direct implementation of the Sustainability Framework across all Group companies remains fully in place and is consistent with the original objective of this recommendation, this Recommendation is confirmed as being closed out.

3.2 Recommendation 2.5.8 Sustainability Officer

• Appoint an appropriately qualified Chief Sustainability Officer (CSO) with international experience to direct and coordinate the HSE, CSR and related functions. The CSO will act through single points of contact in each subsidiary company (Original target = November 2011).


It was confirmed that there have been no changes to either the departmental structure or its responsibilities. The team is now at full complement and comprises the CSO and Heads of: Safety and Crisis Preparation; Environment and Conservation; Corporate Responsibility and Human Rights (currently vacant); Sustainability Data, Reporting and Analysis; Sustainability Assurance; a Sustainability Manager and administrative support.

We also note that some subsidiary businesses, notably KCM, are adopting a similar model and appointing their own Sustainability Officers/Vice Presidents to drive the local agenda and coordinate implementation. We welcome this development which fulfils our recommendation for single points of contact within the subsidiary companies.




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We are satisfied that the Sustainability team remains in place and that it plays a fully active role across the range of issues covered by our original report. Accordingly, we can confirm that this Recommendation remains closed.

3.3 Recommendation 2.5.4 Value Statement

• Revise the wording of the Value statement on Sustainability to state: “We aim to contribute to the social and economic welfare of the communities where we work and to protect and conserve the environment” (Original target = February 2011).


We confirmed that the revised Value Statement remains publicly available on the corporate web site, at:

http://www.vedantaresources.com/sustainability/our_policies.html

http://www.vedantaresources.com/mission-values.aspx

We confirm that this Recommendation remains closed.

3.4 Recommendation 2.5.2 Code of Business Ethics

• The preamble to the Code, “How We Do Business”, should include reference to local communities as a key element affecting Vedanta’s reputation along with customers, shareholders, competitors and suppliers (Original target = February 2011).


The revised Code remains published on the corporate web site at:

http://www.vedantaresources.com/sustainability/our_policies.html

http://www.vedantaresources.com/corporate%20governance.aspx


3.5 Recommendation 2.5.6 Policies

• Develop a series of policies to realise the aims stated for each of the four sustainability areas (environmental stewardship, nurturing people, health and safety, and empowering communities). The policy statements should be succinct, should reflect best international practice and reflect a commitment to continuous improvement. Annual targets for progress and reporting should be considered wherever possible. Noise should be included as a policy issue (original target = 2011 Annual Report and Sustainability Report).

Vedanta has now largely completed the process of developing its Sustainability Framework, which consists of Group level Policies, supported by a suite of Management and Technical Standards (see page 10 of Vedanta’s Third Progress Report). The policy statements are published on the corporate web site




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(http://www.vedantaresources.com/sustainability/our_policies.html) and have been adopted at each of the subsidiary companies. We also note that a Group policy on Product Stewardship has been drafted and is currently awaiting approval.

The Technical Standards dealing with Site Closure and HIV/AIDS, and three amended documents (Management Standard on Acquisitions, Divestment and Joint Venture Due Diligence and Technical Standards on Conducting Environmental and Social Impact Assessments (ESIA) to International Standards and Supplier and Contractor Management that were revised in light of our previous comments) were provided for review and are generally deemed to be fit-for-purpose.

However, the Sustainability Framework documentation dealing with Indigenous People issues is still pending approval. A draft was reviewed and some feedback was provided to help clarify the determination process in light of the potential conflicts between the IFC requirements and Indian Laws that have delayed this key document. Timely approval and issue is considered to be essential; this needs to be resolved before the end of 2012 if not before.

Work also continues on the series of Guidance Notes in tandem with additional training materials to support implementation of the Sustainability Framework so it is possible that some of the ‘missing’ content will be included in those documents. A late draft copy of Guidance Note GN03: Land Acquisition and Resettlement Management was provided for review. It provides both additional information to that included in the Standards and contains example formats for the required documentation. It appears to be suitable model for the remainder of the Guidance Notes.

Overall, the vast majority of the Sustainability Framework’s content is deemed to be of a very good standard, but we have identified some specific areas where improvements or adjustments are either recommended or required in order to address the full range of potential issues that may arise in future ESIAs and sustainability management.

For instance – and notwithstanding the possibility that these topics may be addressed in further amendments and/or Guidance Notes that have yet to be reviewed - the following topics, which are generally regarded as potential Lender ‘red flag’ issues, may require further attention to address potential Lender concerns and ensure appropriate objective evidence of their consideration can be provided upon reasonable request:

• Examples of individual Subsidiary Company policies – such as the KCM policy statement on Security – could be considered for wider adoption;

• There is a need to specify a Labour Assessment for new ESIAs in countries where Vedanta does not already operate in order to ensure compliance with host country legislation, International Labour Organisation (ILO) core conventions, and parity of conditions between migrant and non-migrant workers undertaking similar work. This could be undertaken in tandem with any human rights due diligence being undertaken for new projects;

• ESIAs (or any supplemental reports for Lenders) should include a detailed assessment of the potential for any child labour, forced labour or trafficking issues that might be associated with a project, including any specific mitigation and compliance monitoring actions;

• There is also a potential need to ensure good management of any immigration (influx) to a project area. Potential impacts associated with influx include: spontaneous developments; local price inflation; competition for natural resources (water food, fuels); pressure on local infrastructure and Government services (education, health, etc.); health exposure / social risks (crime, drugs, sexually transmitted diseases, social conflict); and disarticulation / loss of traditional values; and

• A more robust process for the determination of ‘critical habitat’ and justification of decisions / mitigation rationale in the event that a project cannot avoid a critical habitat (this may be




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included in a supplemental report for Lenders rather than in the ESIA). Also, as precautionary measures, there should be some consideration of biodiversity offset strategies (as mentioned in the Black Mountain Mine Biodiversity Action Plan) and a more rigorous approach is recommended for monitoring implementation of Biodiversity Management Plans (i.e. to ensure ‘no net reduction’ in any affected critically endangered / endangered species throughout the project life cycle and closely monitor any such risks throughout the life of the project).

Vedanta anticipates that all the Guidance Notes will be completed ahead of the final audit in June 2013. We would however still like to review the remaining documentation prior to the final audit and suggest that Vedanta target the end of December 2012 for this so that we can confidently close out this recommendation.

As noted elsewhere, the implementation programme is now at an advanced stage with training being complemented by the gap analysis self-assessment process and the internal audit / assurance programme.

We can confirm that Vedanta has continued to make progress since our previous visit although it needs to finalise the outstanding Sustainability Framework documentation as soon as possible. Further consideration should be given to the aforementioned refinements to the documentation and more of the detailed Guidance Notes should be provided for review by December 2012 in order to be considered on fully track for the final audit in June 2013.

3.6 Recommendation 2.5.3 Stakeholder engagement

• Adopt internal procedures to ensure that all requests for information from stakeholders (including investors, NGOs, international organisations and the press) are dealt with in a timely manner. We see this as an important part of a wider programme to inform and communicate with all stakeholders. To assist with transparency Vedanta should maintain a register of enquiries and responses and provide a summary in their Annual Sustainability Report/website (Original target = May 2011).

This item was considered ‘closed’ in the second progress review report and we note the inclusion of an analysis of received emails in the published 2011-2012 Sustainability Report.

We were provided with an updated register of enquiries and the replies to each of the information requests and so can confirm that the enquiries were in relation to possible collaborations in CSR programmes, sustainability surveys, specific data and personal information requests.


3.7 Recommendation 2.5.13 Reporting

• Report, where possible, on Group environmental and social performance as a whole, seek to benchmark performance against industry best practice, and seek assurance from appropriate bodies with industry and sustainability expertise (Original target = April 2012).

We note that the latest Sustainable Development reporting was subject to independent assurance (by Det Norske Veritas) and that it broadly met the Global Reporting Initiative (GRI) G3.1 level A+ (including mandatory use of the Mining and Metal Sector Supplement’s (MMSS) criteria) albeit with partial reporting on 13 of the indicators.




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It was confirmed that arrangements are in place to ensure that suitable data are collected and analysed to facilitate full reporting in due course. Current intentions are that it will report on particulate emissions, training data per employee category, proportion of local hiring and spending on local suppliers by 2013. More time is however needed to collate the data from expanding Group operations, but it is intended that full reporting should be achieved on the remaining indicators, including those on biodiversity and human rights reviews of operations and supply chains.

Vedanta has also undertaken a study of its stakeholder engagement objectives and reporting methodology against those of 4 multi-national corporations. Those corporations were selected due to the fact that they operate in the same sector, have comparable sustainability issues and similarly report publicly on their performance in line with the GRI G3.1 criteria.

In order to develop the Group’s reporting and meet the requirement for benchmarking performance against industry best practice, Vedanta undertook a gap analysis study against the GRI G3 and the MMSS requirements and a comparison against a sample of 4 global mining and metal companies’ sustainability reports by an independent service provider.

We can confirm that satisfactory completion of the benchmarking exercise facilitates the close-out of this Recommendation at this time.

3.8 Recommendation 2.5.8bis Sustainability oversight

• The corporate Sustainability Development Committee should continue to ensure that subsidiary companies take a consistent approach to promoting sustainable development in accord with international best practice by monitoring performance, lesson learning and dissemination of best practice (Original target = November 2011).


As per 2.5.7 above, further to restructuring of the Company at Group level earlier this year, we confirmed that the original Mandate remained valid and that there have been no changes in the designated participants of the EXCO Committee.

Since the last progress review, further Committee meetings were convened as planned on April 3rd and June 5th 2012. Agendas and meeting minutes were provided for review and it was confirmed that they demonstrate a consistent, on-going approach to the management of environmental and social sustainability for the Group.

The number of reported fatal accidents in this period is again disappointing, but the spike in numbers is largely due to the single June incident at Hindustan Zinc Limited (HZL) (reviewed in both the EXCO and Sustainability Committee meetings). We will continue to review the Group’s safety performance and major incidents through appraisal of Company-level Recommendation 2.5.23 Incident register. See also Section 7 below with regard to further comments on incidents and fatalities recorded during the review period.

We consider the internal assurance process to be the key tool by which the EXCO Committee can monitor performance across all the subsidiary companies. Although early conclusions might be skewed by the nature of exercise (e.g. through over-optimistic or over-cautious responses to the set questions), the tabulated results of the self-assessment questionnaire highlight potential weaknesses in the assurance topics that are being targeted for improvement, once confirmed by the internal audit programme. All 14 subsidiary companies’ sites have now responded to the self assessment questionnaire, the results have been tabulated and follow-up validation audits by the corporate Sustainability team have commenced as per programme.




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All responses are graded on a numerical scale as good (>90), satisfactory (70-90), unsatisfactory (40-70) or unacceptable (<40), with each Company’s score being determined by the lowest mark amongst its individual sites’ scores. As might be expected, there is a wide range of results across the different constituent parts of the Group and the individual sites within the companies, as well as for the 16 subjects. Typically, there are also some marked variances in topic scores between the self assessment results and the internal audit findings as witnessed by the recent HZL Chanderiya audit.

Nevertheless, although it is too early in the assurance to reach definitive conclusions about progress to date, the exercise identifies relative strengths and weaknesses within the implementation programme and specifically which companies / sites have to improve their performance. Overall, Vedanta currently identifies a number of areas where current performance is graded as unsatisfactory or unacceptable, although in the majority of cases scores are not too far below the ‘satisfactory’ threshold. We would like to see urgent attention given to all ‘unsatisfactory’ and the lower ‘unacceptable’ scores but particularly those relating to key issues, i.e.: New Projects; Management of Change; Supplier and Contractor Management; Human Rights, Social and Security; and Stakeholder Engagement.

By its own judgement, Vedanta currently estimates the mean overall performance as 65 = unsatisfactory and improvement is needed throughout the organisation. The Group and its individual components obviously need to improve these scores and achieve at least ‘satisfactory’ gradings on all 16 points by the time of the final close-out audit next June. To this end, we would like to see the EXCO Committee take an active role in driving the internal assurance process and seeking across the board improvements in the assurance evaluations and especially in regard to the subjects that are linked to new and on-going ESIAs (see also 2.5.15 International best practice – below).

We confirm that this Recommendation remains closed, but we shall be looking for significant improvements to the self assessment results for next June’s final audit.

3.9 Recommendation 2.5.9 Professional competencies

• Keep under review the full range of HSE and CSR competencies it requires across its business and consider the need for additional training, as appropriate, in relation to the IFC Performance Standards and Guidelines, human rights, vulnerable groups and the GRI Mining and Metals Sector Supplement (Original target = November 2011).

Since our last visit, Vedanta has continued to roll out its extensive sustainability training and awareness programme.

To date, over 3000 people across the group companies have received training in the Sustainability Framework; at the time of writing, all Group companies had received some training (NB when Vedanta produced its progress report, Black Mountain Mine had yet to undergo the programme but the programme has now commenced there). Further specific training has been provided to the mergers and acquisitions department and all security staff have been instructed on human rights and appropriate responses relevant to their role.

In addition, Vedanta employees and contractor staff underwent a total of 683,452 hours training on environmental, occupational health and/or safety topics (e.g. fire prevention, safety management, working at heights, occupational health surveillance, fleet management, road safety, permit to work) during the 2011/2012 fiscal period.

We reviewed further training course materials, which we found to be satisfactory in relation to each of the modules’ topics, and questioned participants to check their understanding of the Sustainability Framework’s requirements and the IFC Performance Standards and the relevant




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Environmental, Health and Safety (EHS) Guidelines. The CSO held a short awareness session during our visits to Skorpion and KCM.

As noted above, the Guidance Notes have still to be issued so there may be further scope for additional training provision to develop awareness, skills and competency in other areas of potential weakness in the Sustainability Framework as noted in 2.5.6 Policies above.

Vedanta anticipates that the initial training roll-out will be completed by the end of 2012.

Subject to the on-going process of identifying and addressing evolving training needs on sustainability topics, we consider that sufficient progress has been made and that this Recommendation is suitable for close-out at this time.

3.10 Recommendation 2.5.16 Human rights policy

• Adopt a specific human rights policy demonstrating its commitment to the UN Declaration of Human Rights and procedures to ensure its implementation. This should be communicated to all stakeholders via its web site (Original target = November 2011).


We note that the Group’s Human Rights Policy Statement remains on the corporate web site: http://www.vedantaresources.com/sustainability/our_policies.html

We confirm that this Recommendation remains closed out, subject to satisfactory review of the Guidance Notes once available.

3.11 Recommendation 2.5.24 External audit

• Undertake an independent audit of Group and Company environmental and social performance against international standards (IFC, ICMM and OECD) after 12 months of implementing the recommendations in the Scott Wilson report (i.e. June 2012). Recommendations which are not implemented will be included in a Remedial Action Plan and their compliance reviewed every 6 months (Original target = as specified within preceding text).

Despite the delay to the outstanding Sustainability Framework documentation and the material omission of eco-system services, Vedanta has confirmed that its Sustainability Framework will be substantially completed by the end of 2012 and that implementation roll-out will be at a suitable state of maturity to facilitate the proposed final assurance audit in June 2013.

Vedanta has commissioned URS to undertake that exercise.

Provided the outstanding documentation and any significant amendments are available for our review by the end of December 2012, we shall consider that the Company will be on track to demonstrate sufficient implementation of its Sustainability Framework and thus meet the agreed deadline of June 2013.

However, it should be noted that any substantial delay to completing the Sustainability Framework beyond the December 2012 deadline will have a detrimental impact on our confidence that the Group will be ready to undergo the final audit next June.




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4 COMPANY LEVEL RECOMMENDATIONS

This section comprises the Recommendations needed to ensure that the Group’s sustainability policies and procedures are implemented across the organisation’s structure, both in India and overseas, with particular regard to new projects, their environmental and social impact and appropriate mitigation.

In addition to Lanjigarh, we have previously been to plants and mines operated by HZL (Chanderiya zinc refinery), BALCO (Korba aluminium complex) and Sesa Goa (the Amona pig iron and coke plant, and the Sanquelim mine) in India. This review was our first opportunity to look at Vedanta’s overseas businesses.

Skorpion Zinc (SZ) is located in southwest Namibia and comprises a mine and refinery producing Special High Grade zinc for export. The mine is approaching its end of life hence the current focus on establishing the feasibility of mining the nearby Gergarub deposit which would extend the life of the refinery although it would require substantial process modifications. The site’s management systems have achieved ISO 9001, ISO 14001 and OHSAS 18001 certification and ISO 17025 laboratory accreditation. It has been fatality-free since 2000.

Konkola Copper Mines in the Zambian Copperbelt comprises the Konkola copper mine and satellite mining project, the Nchanga (at Chingola) copper mines and ore concentrator, the Nampundwe pyrites mine, plus the Nchanga and Nkana (in Kitwe) smelters and the Nkana refinery. Mining has undertaken here for more than 70 years so that in addition to some disused mines there is progressive construction of new plant introducing modern technologies alongside the demolition of older facilities. KCM’s management systems have been developed in accordance with OHSAS 18001, ISO 14001 and ISO 9001; certificates have already been obtained for some key business units. There have been some recent workplace fatalities – see Section 7 below – and management is fully committed to improving its safety performance.

We have gained a wider insight into the relative maturity of sustainability management across the Group in India and now in some of Vedanta’s overseas subsidiaries. Our commentary from this review is summarised in section 6.2 below which includes a table showing overall progress in addressing the Recommendations for the Group’s subsidiary companies.

4.1 Recommendation 2.5.15 International best practice

• Produce and test EIAs and EMPs against the IFC Performance Standards and ICMM best practice and define clear links between the EIAs, EMPs and Environmental Management Systems. Specifically EIAs should be expanded in relation to biodiversity and habitat identification, the identification of cultural heritage (scheduled and non-scheduled sites) and social and human rights impacts. Vedanta should commission independent reviews of one or more major EIAs each year in order to ensure compliance with IFC Standards (Original target = to be implemented for all new projects and major extensions requiring EIA).

The ESIA Status sheet identifies the projects that are currently undergoing or will be subject to an impact assessment process, their current status and their associated risks, impacts and opportunities. The updated list includes those previously notified (i.e. the HZL Zawar and Kayar underground mines, the ongoing BALCO Taraimar coal block project and the Sesa Goa Western Cluster Project in Liberia) and adds the Black Mountain Gamsberg zinc mine in northern Bushmanland in South Africa and Skorpion Zinc’s Gergarub mine in Namibia. The list did not originally however include the KCM Satellite Mining Project in Chililabombwe although details were supplied in the form of the draft ESIA terms of reference and other documentation; an updated list was provided during the audit. In the course of the site visit, it




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was also stated that an ESIA for the reopening of the Mimbula pit was in process; an initial Public Consultative Meeting was held in Chingola in December 2011.

Following our last review, Vedanta initiated a new initial screening process for new projects and mergers / acquisitions, and has amended the relevant documentation (see 2.5.6 Policies above). Discussions at Scorpion Zinc suggest that the Screening Checklist was a useful exercise in ensuring the identification and full consideration of all relevant issues.

The Gamsberg project - which was not visited or subject to detailed review - comprises new mining activities and the development of related infrastructure including power lines, upgraded water pipe, transport options and accommodation. It has just completed the public comment period in regard Background Information Document and the Draft Scoping report and baseline studies are currently underway. Although there is significant potential for socioeconomic benefits, the Gamsberg area is considered to be “unique in terms of its rare habitats and species composition, comprising 34 known Red Data Book species and constituting the single most important site for conservation in the region” (2001 United Nations Environment Programme (UNEP) paper on “The Integration of Biodiversity into National Environmental Assessment Procedures, National Case Studies -South Africa”) and will therefore be closely followed by biodiversity-themed NGOS. Mining projects have been proposed several times before but without being progressed further so that ‘stakeholder fatigue’ is mentioned as a risk.

The SZ Gergarub project involves the development of the mines, a concentrator and related infrastructure, power line and water pipe, transport options and accommodation complex. Currently operating under the Exploration licence, the project is still at the legal and permitting stage - the scope for ESIA and Baseline assessments has been done, a shortlist of consultants and service providers has been identified and contract award for the next stage is anticipated in the 4

th quarter of 2012. The Gergarub area is outside but close to the

Sperrgebiet National Park, which is considered to be an “arid biodiversity hot spot”, and is prominently sited either side of a major highway. It is therefore expected to be under close scrutiny from government and other interested parties. The screening checklist for Gergarub confirms that, in addition to being a global hotspot, the site is “part of the Bushmanland Inselberg system and a Succulent Karoo Ecosystem priority area”. However although some high priority mammal species are in the general area, none have been recorded in close proximity to the site since the mine was developed.

SZ also has a biodiversity action plan (BAP) which covers conservation of important plant species, a nursery, on-going site rehabilitation of exploration areas and trial rehabilitation areas (to establish which plant species will re-colonise which types of degraded environment). The BAP is being implemented to a very good standard and the original baseline studies and the BAP will be updated and extended to cover the proposed Gergarub project area.

The KCM Satellite Mining Project will comprise both underground and open pit mining and associated infrastructure, which will be determined during the parallel Feasibility Study. The area is characterised by regenerating scrubland and forest with prominent anthills and an old tailings deposit which will be removed and reworked. The site is bordered on two sides by watercourses, namely the Kafue River, a major watercourse within Zambia, and a tributary stream (Carcosa). There appear to be no permanent residents on site although there is some seasonal use of the area for cropping. Discussions on site revealed an awareness of the sensitivity of the environmental and social issues.

It is also planned to reopen the Mimbula Open Pit within the KCM complex. This pit was previously worked but had been abandoned and had become flooded. Dewatering and associated drilling have revealed the potential for new extraction both wider and deeper than the existing pit. The site is relatively remote from settlements and within the existing operational area. An ESIA is to be prepared although we did not see the Terms of Reference.




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It was noted that both the Terms of Reference and the procurement specification for the SZ Gergarub project had not been fully updated to reflect the requirements of the Sustainability Framework, although the KCM satellite mining Terms of Reference did mention the IFC standards albeit rather later in the document that we would wish. From the viewpoint of the lenders, adherence to international best practice as exemplified by the IFC Performance Standards is critical. Accordingly, all documentation needs to be updated prior to issue in order to reflect the applicable IFC Performance Standards (i.e. PS 1, 2, 3, 4, 6 and 8) and the mandated General and Mining EHS Guidelines at the earliest possible stage in the process.

As a consequence of this, it is also strongly recommended that subsidiary companies fully incorporate ‘Project studies and ESIAs’ into their management systems (e.g. either amending the relevant management standards or producing a separate document dealing specifically with the Pre-Feasibility Study / Feasibility Study / ESIA process).

Both Scorpion Zinc and KCM are seeking to expand their operations rapidly to meet demand and expand output. It is crucial that environmental and social considerations are pursued in parallel with the feasibility studies rather than after feasibility studies have been completed. This will ensure that alternatives are considered and that potential impacts are identified at the earliest opportunity and that this design process is adequately documented. We were pleased to see that Scorpion Zinc had sought to appoint ESIA consultants during the feasibility study, to consider alternatives, and to input to the design process.

In regard to the core requirement for independent reviews of EIAs, the Chhattisgarh Coal Block was examined last year (2011) but other projects’ ESIAs are not currently sufficiently developed to be subject to this type of review. If practicable, another review will be undertaken prior to the next visit or the final audit next year.

In addition, we recommend that in any cases where the final ESIA report adequately complies with host country requirements but does not explicitly cover all the potential issues stipulated in the Sustainability Framework and/or the applicable international standards, a supplemental report should be prepared and be made available to the Lenders upon reasonable request. This supplemental report should include as a minimum a clear assessment of those issues likely to represent potential ‘red flags’ to the financiers (i.e. child / forced labour, human rights, ‘indigenous peoples’, involuntary resettlement, critical habitat assessment and ‘no net reduction’ of any critically endangered or endangered species).

Although further progress has been made since our last review, we would like to see significant improvement in the self assessment/assurance process results in regard to the key subjects of New Projects, Human Rights, Social and Security, and Stakeholder Engagement (as discussed in 2.5.8 Sustainability oversight above) before we can consider this Recommendation to be fully suitable for closure. We believe that these changes can be made quickly and estimate that this Recommendation will therefore be suitable for closure at our next review.

4.2 Recommendation 2.5.11 Land management

• Develop a policy and implementation practices to more proactively manage land in their ownership in order to maximise environmental gains and to promote biodiversity. This would include the development of environmental management plans for all non-operational land and the carrying out of habitat surveys for all new sites prior to development (Original target = in time for the 2011 Annual report and Sustainability Report, i.e. now June 2012).

Vedanta has undertaken a preliminary Group-wide biodiversity review using the I-BAT mapping tool to identify which operations are operating within close proximity to either a




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protected International Union for Conservation of Nature (IUCN) red list area or a key biodiversity hot spot. This process has in turn informed a risk assessment that will set priorities for the development of Biodiversity Action Plans.

A total of 47 sites were identified as a result of this review and they were classified as follows:

• High Priority – There were 7 examples where a protected area falls within 1 km radius of operation / mine (1 at BMM, 3 at HZL and 3 at KCM);

• Medium Priority – 14 sites had a protected area falling within 1-10 km radius of operation / mine; and

• Low Priority – The remaining 26 sites has a protected area falling outside 10 km radius of operation / mine.

As biodiversity is a specialised and complex discipline, Vedanta plans to review its risk assessment process and conduct pilot studies to validate the risks identified via the IBAT tool, with a view to having a full suite of appropriate Biodiversity Action Plans (BAP) in place by 2015.

We have some comments on this exercise. Firstly, it is not clear whether this review also included the range of projects that are subject to an ESIA process. For example, the ESIA status sheet for the SZ Gergarub project in Namibia states that the proposed mine will be operating in close proximity to the Sperrgebiet National Park; the I-BAT tool identifies this as a Key Biodiversity Area (it also classed as an Important Bird Area by BirdLife International). The species list identifies the critically endangered Black Rhino and the endangered Ludwig’s Bustard as potentially present in this area although in practice they are unlikely to be affected by the project due to the ongoing operations. Similarly, the Gamsberg area is considered to be “unique in terms of its rare habitats and species composition, comprising 34 known Red Data Book species and constituting the single most important site for conservation in the region” and the Black Mountain BAP states that the “risks of biodiversity loss by current operational activities indicate that impact is wide spread.”

The distance criteria used in the classification are relatively short and may not reflect the true area of influence of an active mine / operation or a proposed project. Industrial sites are will often located in a mosaic of habitats with varying levels of human and/or natural disturbance and, as far as projects go, the biodiversity assessment process should not focus on the site in isolation; the level of impact on biodiversity and impacts should be determined with respect to the greater landscape/seascape in which the site is located. We would advise extending the distance criteria to <5, 5-15 and > 15km or even farther from any proposed new site.

Although useful, IBAT is only a preliminary screening tool for identifying potential ‘critical habitat’ as required by IFC Performance Standard 6. It requires further interpretation, consultation with experts and detailed research against both the IFC’s 5 Criteria / 2 Tiers, and their location in regard to any National / International protected areas, in order to fully determine whether a habitat is indeed ‘critical’.

Accordingly – and notwithstanding the possibility that these topics may be addressed in the proposed Guidance Note that is yet to be published - a more robust approach to critical habitat determination for new projects with a clearly documented output is advised (due to the increasing reluctance amongst Lenders to invest in any projects which will seriously degrade such habitats and/or result in a net loss of critically endangered or endangered species).

An existing BAP for Skorpion Zinc was reviewed and visits were made to topsoil stockpiles, vegetation rehabilitation sites, a plant nursery, reed bed and wetland (part of the sewerage system), and trial sites related to revegetation on different topsoils, subsoils and rock. The BAP is very strong on flora and this is reflected in the proactive measures being taken on-site.




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There is a need to keep the BAP under review and update to include all types of fauna (mammals, birds, reptiles and invertebrates).

Terms of Reference have been prepared for a BAP for KCM and a preferred consultant has been identified. We reviewed the Terms of Reference and considered it fit for purpose.

In addition, KCM has signed a Memorandum of Understanding with the Government of Zambia to enhance sustainable livelihoods through sustainable forest management and climate change mitigation in the Lamba Headwaters, Hippo Pool and Luano Forest Reserves, which are external to current and planned KCM facilities. The objectives of this Corporate Responsibility project, which is initially funded for five years, are to develop capacities for sustainable livelihoods in forested areas, to increase forest cover and to improve biodiversity conservation, land and watershed management,

Good progress is thus being made in terms of land management although some further improvements may be needed to ensure full compliance with current best practice. For example, the potential impacts upon eco-system services and their linkages with social aspects need to be fully addressed.

Again, although further progress has been made since our last review, we would like to see the appropriate Guidance Note(s) and/or the suggested amendments to the Technical Standard on Biodiversity Management before we can conclude that this Recommendation is fully closed out to our satisfaction. We believe that these changes can be made quickly and estimate that this Recommendation will therefore be suitable for closure at our next review.

4.3 Recommendation 2.5.23 Incident register

• Maintain a register of major environmental, social and labour incidents at their plants and report to Vedanta Resources (Original target = April 2011).


The Group-wide incident register has been in operation since April 1st 2011 and health, social, environment, labour and ‘other’ events are recorded on a monthly basis. Please see Section 7 for an in-depth appraisal of the social, environmental, labour and H&S incidents that were registered during the first two quarters of Vedanta’s reporting year (i.e. between April and September 2012).

We also note that although the Combined Incident Register only records Category 5 safety events (generally these are more dangerous accidents involving either injuries or fatalities), there are monthly safety meetings to underpin the focus upon safety improvement across the whole Group. The PowerPoint slides for the August 2012 safety meeting contain detailed statistical analysis of near misses, unsafe conditions lost time injuries and fatalities, plus the status of the various unsafe conditions elimination programmes for 12 types of machinery and equipment. More detailed information including key issues, corrected actions and the status is included for both Lost Time Injuries and fatal incidents. Details are provided of other safety initiatives at each of the businesses, including training, risk assessments, road safety campaigns and other activities such as the Sesa Goa “Suraksha Chetan Saptah PPE” day and electronic publication of a corporate Safety Magazine.

We confirm that this Recommendation remains closed and in accordance with our remit for on-going monitoring of incidents, we shall of course continue to scrutinise the register and investigate any significant issues on our subsequent visits.




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4.4 Recommendation 2.5.12 Environmental communications

• Communicate environmental monitoring regime at plants and regularly report to stakeholders, including local communities, on their environmental and social performance, benchmarking this against international standards (e.g. IFC Guidelines) and reporting in their 2012 Sustainability Report (Original target = November 2011).

Vedanta had issued its Technical Standard for Stakeholder Engagement and is still developing Stakeholder Engagement Plans for each of the Group companies / sites as appropriate. The Company had anticipated that this process would be completed by June 2012.

In terms of disclosures about forthcoming projects, a suitable range of information (e.g. Stakeholder Engagement Plans / Planning Sheets, press advertisements and records of events) was provided in relation to the Taraimar coal block proposal as well as the SZ Gergarub, Black Mountain Gamsberg and KCM Satellite Mining projects.

Further examples of communicating monitoring regimes, such as its Carbon Disclosure Project submission, and local reports to stakeholders were provided for review. The SZ Report to Society 2011/12 is a particularly good example of a report to national stakeholders and includes a summary of the operation’s contribution to the Namibian government and to the local economy as well as an indication of continuing capital expenditure.

At KCM, there is recognition that there are established channels of communication and a range of meetings addressing specific issues. There is, however, an acknowledgement that some sort of formalisation of stakeholder communication, perhaps via a community consultative forum, might be an appropriate improvement.

Findings in regard to Vedanta’s 2012 Sustainability report are discussed in regards to Recommendation 2.5.13 Reporting at paragraph 3.7 above.

We can confirm that Vedanta has made further progress since our previous visit and is on track to facilitate closure of this Recommendation by December 2012.

4.5 Recommendation 2.5.17 Consultation for new sites

• Develop a standardised approach to community consultation for new developments which responds to IFC guidelines and communicate this to all stakeholders via its web site (Original target = November 2011).

Vedanta’s intention was to address this recommendation through their Social policy statement, the new Management Standard for the Project Planning and Site Closure Process and the Technical Standard for Stakeholder Engagement, which together introduced standardised requirements for public consultations based upon the IFC standards and the Company’s own experience in this field.

We had previously acknowledged that some progress had been made against this Recommendation but that the timeline for providing suitable examples within our overall review timeframe was challenging. For example, the SZ Gergarub Project is at the Pre-Feasibility Study stage and ESIA consultants are yet to be appointed. We did however receive a copy of SZ’s stakeholder engagement planning sheet (inventory/ mapping) and the Stakeholder Engagement Plan for the eventual closure of the mine. The Black Mountain Satellite Mining Project is similarly at an early stage although press adverts in regard to the proposed Terms of Reference have been posted.




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Accordingly, we had also previously stated our intention to combine our assessment of this recommendation with that of the Stakeholder Engagement Plans required for 2.5.12 Environmental communications, and had considered this Recommendation to have been duly closed.


4.6 Recommendation 2.5.20 Vulnerable social groups

• Adopt a specific policy in relation to engagement with and assistance for social groups that may be vulnerable to change and communicate this to all stakeholders via its web site (Original target = November 2011).

The Sustainability Framework documentation on this topic is still at final draft stage and pending approval; the draft was reviewed and some feedback provided in regards to the process for determination of bona fide Indigenous Peoples status as a means of triggering Free Prior Informed Consent (FPIC) for the defined special circumstances and other obligations. As noted in regard to 2.5.6 Policies above, it is now important that the document is quickly approved and issued, preferably by December 2012 at the latest ensure there will be ample evidence of implementation for the final audit in June 2013.

We also reviewed the draft Guidance Note on Land Acquisition and Resettlement and provided feedback to ensure that the aged / disabled / sick and infirm / single parent families are considered as vulnerable stakeholders.

We were able to confirm that there is unlikely to be any potentially adversely Affected Communities of Indigenous Peoples by Skorpion or KCM activities or projects and that other vulnerable or locally disadvantaged stakeholders are being supported by actual or proposed programmes.

Both Scorpion Zinc and KCM are able to demonstrate a commitment to assisting vulnerable groups through corporate social responsibility initiatives. At Scorpion Zinc, an informal township, Tutungeni, has grown up just outside the modern mining town with a changing population of 2000-3000 people. RoshSkor, the company formed by Skorpion and the other mine located there to administer the Rosh Pinah mining township, has promoted a number of initiatives to enhance conditions in Tutungeni. These include the provision of improved toilet blocks, better water and electricity supply, and facilities for child care groups. Skills training is also being provided to assist local people in finding employment. In addition, the former health clinic situated in Tutungeni has been retained as the base for an outreach health programme in the informal settlement.

Scorpion Zinc has also, in cooperation with Government, contributed funds to the upgrading of the State Clinic and to new school buildings.

At KCM, the opportunity was taken to review two corporate sustainability initiatives designed to assist vulnerable groups. The first was a livestock rearing project devised to assist poor farmers. The project appears exceptionally well organised and with very clear objectives to address poverty, encourage community cohesion and enhance the role of women. Cattle are provided to farming families, following a training programme, and are used as pack animals for ploughing, for breeding and to provide dung fertiliser. Participants are required to provide their first born calves to other communities to spread the benefits. The project is organised and managed by a local Non-Governmental Organisation.

A second initiative involved the provision of child care facilities for women attending the local market in Chingola. Secure, colourful and attractive buildings with qualified staff have been constructed to provide pre-school education with facilities to feed the children involved.




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Volunteers also contribute to the running of the centre, which tries to target children at risk (e.g. orphans being cared for by family members).

These initiatives are part of larger corporate responsibility initiatives which demonstrate the wider commitment of the two companies to assisting vulnerable groups.

In addition, although less specifically targeted at vulnerable groups, the appointment of a Head of Sustainable Development at KCM is worthy of note and emulation. An important initiative involves publicising the purchasing requirements of the Mine and seeking to facilitate SME development through offering contracts to local producers. The contracts in turn improve the credit worthiness of the Small Medium Enterprises and provide security for bank loans. Other initiatives include the building of local housing, the development of a trade’s school, a residential hostel and the reuse and recycling of scrap from the plant.

Whilst some progress has been made since the last review, we still wish to reserve judgement on potential close-out until we have had an opportunity to review the final approved documents including any relevant Guidance Notes relating to vulnerable stakeholders. We believe that issues delaying approval of the remaining Sustainability Framework documentation can now be quickly overcome and that the Guidance Notes can also be finalised. We trust that this Recommendation will therefore be suitable for closure at our next review in December 2012.

4.7 Recommendation 2.5.22 Cultural heritage

• In developing new sites adopt a standardised approach to the identification of sites of cultural heritage value involving formal documentary sources, site surveys and community consultation (Original target = November 2011).


It is apparent that cultural heritage issues are being taken seriously by both Scorpion Zinc and KCM. At the former, as part of the draft Terms of Reference for the ESIA of the proposed Gergarub Mine, there is a requirement to undertake a specialist archaeological impact study. This will build on previous work carried out for the Mine by a specialist archaeologist.

At KCM, discussions have taken place with the National Heritage Conservation Commission regarding the conservation of structures, especially cooling towers, from the earlier mining activities. The Commission has also indicated its interest in contributing a heritage input to the proposed Biodiversity Action Plan for the KCM holdings.

It was also confirmed that ‘Chance Find’ procedures routinely apply to all new developments.





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5 LANJIGARH RECOMMENDATIONS

This section deals with the specific recommendations for the Lanjigarh refinery. We did not visit Lanjigarh during this Progress Review so we are unable to verify whether momentum has been maintained since our last visit. A limited amount of information has however been made available and, where feasible, our commentary is summarised in section 6.3 below which includes a table showing overall progress in addressing the Corporate Recommendations.

The court order prohibiting any work on the Expansion Project remains in force although management remains optimistic that the situation can be resolved.

5.1 Recommendation 3.3.20 Environmental management

• Undertake a systematic gap analysis of its EMS against the Industry Best Practice Criteria and update it accordingly (Original target = April 2011).

At our last progress review, this recommendation was considered to be “on track for closure in June 2012”.

We note that some further progress has been made and the ongoing implementation plans for both our Recommendations and the findings of the ERM gap analysis, but work is still progressing on Lanjigarh’s integrated Environmental and Social Management Plan and a range of additional plans. A copy of the Tribal Development Plan was made available for review but we wish to discuss this with Lanjigarh before commenting upon it: some amendments may also result once the final Sustainability Framework documentation on vulnerable groups is issued.

Vedanta now anticipates that the remainder of the required work will now be completed approximately 6 months later than originally proposed. So, given the range of documents still in preparation, we shall defer any review of progress on this recommendation until our next visit to Lanjigarh.

We are aware of some progress since our last review and currently estimate Lanjigarh is on track to be able to demonstrate sufficient progress to achieve close-out by the proposed final assurance audit in June 2013.

5.2 Recommendation 4.5.8 Grievance mechanism

• Establish and strengthen a simple and accessible grievance mechanism by which villagers can identify any concerns about the operation of the refinery by using the village coordinators already deployed by VAL (Original Target = May 2011).

This item was considered ‘closed’ in our second progress review report although we identified some minor adjustments that would improve the grievance mechanism (i.e. ensure that any complaints received from vulnerable communities and individuals are clearly identified, and consider additional awareness raising and/or capacity building for all local communities).

It was confirmed that the grievance mechanism is still functioning and being monitored. We shall defer any detailed review of performance on this recommendation until our next visit to Lanjigarh.

We confirm that this Recommendation remains closed out and we will verify its continuing application at our next visit to site.




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5.3 Recommendation 3.3.3 Housekeeping

• Notwithstanding the current problems arising from equipment storage, VAL seek to improve site housekeeping with particular regard to ensuring the correct segregation, collection and disposal of waste materials and the fitness for purpose of the refinery’s storm water drainage systems (Original target = immediate).

This recommendation was closed out during our previous progress reviews; no further actions are considered necessary other than a brief check during our next visit to the plant.

We confirm that this Recommendation remains closed out.

5.4 Recommendation 3.4.3 Proposed expansion

• If the expansion of the refinery is to proceed, a supplementary report be prepared to augment and update the existing EIA, thus meeting international best practice. This report would be used to guide further development and would be made available to key stakeholders (No defined target date = dependent upon court approval to proceed).

The refinery’s Expansion Project currently remains ‘on hold’ and, despite management optimism for early resolution, there is still no certainty when the court order might be lifted.

Development of the proposed Orissa Mining Corporation (OMC) Niyamgiri bauxite mine also remains ‘on hold’ as a result of the imposed court order and Lanjigarh continues its suspension of any activities relating to Niyamgiri. Any future projects affecting Niyamgiri will be subject to the Lenders’ requirement to apply the Equator Principles and the IFC Performance Standards.

We remain satisfied that VAL-Lanjigarh is committed to applying the requirements of both the corporate Sustainability Framework and the relevant IFC standards and guidelines to any new or remedial baseline studies, impact assessments, management plans or other measures needed for any new approval process.

This recommendation remains ‘open’ pending resolution of the Expansion Project’s approval to proceed. If a decision to allow the project to proceed is forthcoming before our next progress review, we will want to examine any supplementary reports, the evolving Environmental and Social Management Plan and corporate due diligence of the ESIA process in some detail.

5.5 3.3.79 Disaster management plan

• Review the Disaster Management Plan against recognised industry guidance (such as the ICMM / UNEP publication “Good practice in emergency preparedness and response”, 2005) and upgrade its emergency prevention and response arrangements including improved drill and simulation exercises (Original target = April 2011).

This item was considered ‘closed’ in our second progress review report and we note that a number of emergency rescue drills have been carried out on site.





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5.6 Recommendation 3.3.32 Retrenchment plans

• Develop suitable and sufficient retrenchment plans to mitigate the adverse impacts of future suspension or closure of the refinery on both direct and indirect employees (Original target = November 2011).

At our last progress review, this recommendation was considered to be “on track for closure in June 2012” – with the caveat that additional work was considered necessary to develop the new Retrenchment Policy in line with industry best practice (e.g. in regard to consultation on retrenchment). A recently revised version was provided for our review and it now covers “Communication and Consultation on Retrenchment with Local Community on plausible retrenchment”.

We can confirm that the revised Retrenchment Policy permits the close-out of this Recommendation.

5.7 Recommendation 3.3.48 Contractor accommodation

• Undertake a gap analysis for contractors’ labour accommodation against IFC / European Bank of Reconstruction and Development guidance and address any serious deficiencies. VAL should therefore amend its contractual documentation to specify minimum expectations for contractors in regard to labour accommodation, and then enforce contractors’ adherence to its specified requirements (Original target = November 2011)

This item was considered ‘closed’ in our second progress review report and we note that arrangements are in hand to apply suitable standards to the Expansion Project contractors once approval to proceed is obtained.


5.8 Recommendation 4.5.5 Dust emissions

• Review the issue of sporadic dust nuisance, seek to reduce such pollution and monitor both dust emissions and incidence of respiratory infections in the immediate locality of the refinery (Original target = within 12 months)

This item was considered ‘closed’ in our second progress review report and we note the continuing switch of bulk bauxite movements to rail transport. No further actions are considered necessary other than a suitable check during our next visit to the plant, when we shall also assess the outstanding actions to address the update of the Health Impact Assessment in relation to Recommendations 3.3.20 and 3.3.63.

We confirm that this Recommendation remains closed out subject to a further check in June 2013.

5.9 Recommendation 4.6.8 Livelihood support

• Give further consideration to accelerating livelihood training programmes for villagers via self-help and business start-up support, especially in those villages close to the refinery, and monitor local employment creation in these villages and the Lanjigarh block (Original target = November 2011).




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This item was considered ‘closed’ in our second progress review report and we note Lanjigarh’s continuing support for the Lanjigarh Project Area Development Foundation (LPADF) and others. No further actions are considered necessary other than a brief check during our next visit to the plant.


5.10 Recommendation 4.6.12 Integrated development

• Work together with local government to develop and publicise an integrated rural development strategy for the area (Original target = November 2012).

This item was considered ‘closed’ in our second progress review report and we note Lanjigarh’s continuing support for the LPADF and others. No further actions are considered necessary other than a brief check during our next visit to Lanjigarh.


5.11 Recommendation 3.3.63 Health and safety management

• Undertake a gap analysis against the occupational and community health and safety requirements set out in the Lender’s Industry Best Practice criteria (specifically the IFC’s General and applicable sector EHS Guidelines) and take appropriate measures to address any outstanding gaps (Original Target = November 2011).

This recommendation is intrinsically linked to 3.2.20 Environmental Management above and the same comments apply, viz: “at our last progress review, this recommendation was considered to be “on track for closure in June 2012”

We note that some further progress has been made and the ongoing implementation plans for both our Recommendations and the findings of the ERM gap analysis. However, Vedanta now anticipates that the remainder of the required work will now be completed approximately 6 months later than it had originally proposed. So, given the range of documents still in preparation, we shall defer any review of progress on this recommendation until our next visit to Lanjigarh.

We are aware of some progress since our last review and currently estimate Lanjigarh is on track to be able to demonstrate sufficient progress to achieve close-out by the proposed final assurance audit in June 2013.




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6 OVERVIEW OF PROGRESS AND REMEDIAL ACTIONS

6.1 Group Level Recommendations

There were 11 Recommendations set for the corporate level that required varying degrees of effort from Vedanta to address successfully and complete. An overview of our assessment of progress for these Recommendations can be seen in Table 6.1 below.

Two (2.5.4 Value Statement and 2.5.2 Code of Conduct) were closed out following our first Monitoring Review and a further five were considered as suitable for closure - 2.5.7 Sustainability Committee (SDC); 2.5.8 Sustainability Officer (CSO); 2.5.3 Stakeholder engagement; 2.5.9 Sustainability oversight; and 2.5.16 Human Rights policy – during our second review. Significant progress has been made across other Recommendations and we are pleased to confirm closure of 2.5.13 Reporting and 2.5.9 Professional competencies.

One item – the delayed Sustainability Framework documentation on Indigenous People which represents a significant gap in the core Sustainability Framework documentation - currently requires a higher priority and remedial actions need to be completed by December 2012 at the latest in order to ensure suitability for close-out next June. We have suggested some other largely minor refinements that we believe will help the Company although these are not considered to be critical.

Vedanta agrees that there is still some work to be done in order to complete the outstanding corporate level Recommendations, but it anticipates that they will largely be completed by the end of 2012 and that all the actions will be suitably developed to facilitate the final audit in 2013. We consider that timeframe to be achievable, although we would expect that the self assessment / assurance results are improved so that as a minimum a ‘satisfactory’ level of performance is achieved on all 16 points by June 2013.

The remaining Recommendations and our comments regarding their progress are as follows:

• 2.5.6 Policies: The delay in completing the remaining documentation needs urgent attention; otherwise the suite of Sustainability Framework policies and standards is largely complete. However, we have only been able to review a single Guidance Note, although we understand that the remainder are in hand and being developed in concert with training materials. We would still like to see further examples prior to June 2013; and

• 2.5.24 External audit: Although not yet due, we currently estimate that full implementation is likely to be achieved by the end of 2012 at the earliest, when global roll-out of the new policies and management / technical standards will be largely completed, the training programmes delivered and the first internal audit-assurance cycle will be well advanced if not fully concluded.

6.2 Company Level Recommendations

Seven Recommendations were initially set for implementation across the Group’s subsidiary companies in India and overseas. An overview of our assessment of progress for these Recommendations can be seen in Table 6.2 below.

The core documentation of Vedanta’s Sustainability Framework is substantially complete and significant progress is being made implementing its requirements across the Group, both in India and in other countries, although not all the detailed Guidance Notes have been made available as yet. These are being developed with training materials and should therefore be in place ahead of the final audit in June 2013.




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We are therefore reasonably confident that the Vedanta timeframe is broadly achievable, although some Sustainability Framework documentation is ‘overdue’.

We have been unable to close any company level Recommendations during this review; the four remaining Recommendations and our comments regarding their progress are as follows:

• 2.5.15 International best practice: Although further progress has been made since our last review, we would like to see significant improvement in the self assessment/assurance process results in regard to the key subjects of New Projects, Human Rights, Social and Security, and Stakeholder Engagement (as discussed in 2.5.8 Sustainability oversight above) before we can consider this Recommendation to be fully suitable for closure;

• 2.5.11 Land management: Although acceptable for existing operations, a more robust approach is needed for critical habitat assessment in relation to new projects and ESIAs. The I-BAT is a useful tool but Lenders may need to see a more detailed analysis of habitat and species to ensure that there will be no degradation of such habitat or net reduction in critically endangered or endangered species as a result of new project activities;

• 2.5.13 Environmental communications: Vedanta are still in the process of finalising arrangements on this topic but anticipate that this process will be completed at year end; and

• 2.5.20 Vulnerable social groups: Once again, due to the complexities of evolving international legislation in regards to this issue, we are currently unable to close out this Recommendation as we need to review the final approved version of the relevant documentation which is still in the process of being finalised.

6.3 Lanjigarh Refinery Recommendations

Eleven Recommendations were originally identified for the Lanjigarh refinery and an overview of our assessment of progress for these Recommendations can be seen in Table 6.3 below. At the current time, it is envisaged that a further visit to Lanjigarh should be undertaken prior to the final close-out audit, provisionally in either December 2012 or January 2013.

Seven Recommendations had been closed out during previous reviews and we now are able to close out another one, 3.3.32 Retrenchment plans.

Our comments regarding the remainder are as follows:

• 3.3.20 Environmental management and 3.3.63 H&S management: Although the gap analyses had already been completed, the actions are still on-going and we will need to check the new documentation and progress made in implementing the recommendations in the ERM report prior to the final audit; and

• Recommendation - 3.4.3 Proposed expansion: This remains dependent upon a Court decision which, despite current management optimism for speedy resolution, this is not yet certain. Accordingly, this item remains open although we will assess Lanjigarh’s progress and any Sustainability Team due diligence during the final audit should the plant receive the official sanction in the meantime.




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Recommendation Vedanta status Feb 2012

URS-SW status Feb 2012

Vedanta status CURRENT

URS-SW status CURRENT

COMMENTS

Table 6.1 CORPORATE LEVEL 2.5.7 Sustainability Committee (SDC) Closed-out

Closed Previously closed Confirmed as

closed No post reorganisation changes affecting membership, meetings continue…

2.5.8 Sustainability Officer (CSO) Closed-out

Closed Previously closed Confirmed as closed

No changes to responsibilities or departmental structure.

2.5.4 Value Statement Closed-out

Previously closed

Previously closed Confirmed as closed

Value statement unchanged and still available on-line

2.5.2 Code of Business Ethics Closed-out

Previously closed

Previously closed Confirmed as closed

Code unchanged and still available on-line

2.5.6 Policies Anticipate full closure by June

2012

On track for closure in June

2012

Anticipated full closure in Aug

2012

On track for closure by

December 2012

All core policies, management and technical standards completed – except for the documentation on vulnerable stakeholders and the Guidance Notes.

2.5.3 Stakeholder engagement Closed-out


Details of requests for information verified – no issues.

2.5.13 Reporting Anticipate full closure by June

2012


2012

Suitable for closure

Confirmed as closed

Reporting benchmarking study completed

2.5.8 Sustainability oversight Closed-out

Closed Previously closed Previously closed However, EXCO Committee to drive improvements in self assessment / assurance scores

2.5.9 Professional competencies Anticipate full closure by June

2012


2012

Anticipate full closure in Aug

2012

Now suitable for closure

Training is on-going and significant progress made at all subsidiary companies

2.5.16 Human rights policy Closed-out


-

2.5.24 External audit Anticipate full closure by June

2013

Uncertain that Framework will be suitably developed

Anticipate full closure by June

2013


2013

_




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Recommendation Vedanta status Feb 2012

URS-SW status Feb 2012

Vedanta status CURRENT

URS-SW status CURRENT

COMMENTS

Table 6.2 COMPANY LEVEL

2.5.15 International best practice Anticipate full closure by June

2012


2012

Anticipate full closure by Aug

2012


December 2012

EXCO Committee to drive improvements in self assessment / assurance scores relating to ESIA implementation

2.5.11 Land management Anticipate full closure by June

2012


2012

Anticipate full closure by Aug

2012


December 2012

Still need to clarify use of IFC critical habitat determination criteria for new projects and update BAP requirements for potential high risk sites/projects like SZ Gergarub and Black Mountain Gamsberg

2.5.23 Incident register Closed-out


closed URS still monitoring incident registers for the Lenders. One discrepancy between Register and incidents reported in national / international media (the Lanjigarh fatality in April guest house fire was not in the Register)

2.5.12 Environmental communications Anticipate full closure by June

2012


2012

Anticipate full closure by Dec

2012


December 2012

Adequate evidence of communications and stakeholder reports to facilitate closure at the current time.

2.5.17 Consultation for new sites Closed-out


closed -

2.5.20 Vulnerable social groups Anticipate full closure by June

2012


2012

Anticipate full closure by Dec

2012


December 2012

Still outstanding some documentation – see also comments regarding 2.5.6 Policies in Corporate Level.

2.5.22 Cultural heritage Closed-out


closed

-




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Recommendation Vedanta status

Feb 2012 URS-SW status

Feb 2012 Vedanta status

CURRENT URS-SW status

CURRENT COMMENTS

Table 6.3 LANJIGARH 3.3.20 Environmental management Anticipate full

closure by June 2012


2012

Anticipate full closure by

December 2012


2013

Check new / revised documents as become available then verify during next site visit

4.5.8 Grievance mechanism Closed-out Closed Previously closed Confirmed as closed -

3.3.3 Housekeeping Closed-out

Previously closed

Previously closed

Confirmed as closed

-

3.4.3 Proposed expansion Pending Pending

Pending Pending

Awaiting Supreme Court decision

3.3.79 Disaster management plan Closed-out


closed -

3.3.32 Retrenchment plans Closed-out


2012

Suitable for closure in Aug

2012

Now suitable for closure

Revised VAL-L retrenchment policy provided

3.3.48 Contractor accommodation Closed-out


-

4.5.5 Dust emissions Closed-out


closed -

4.6.8 Livelihood support Closed-out


closed -

4.6.12 Integrated development Closed-out


-

3.3.63 H&S management Anticipate full closure by June

2012


2012

Anticipate full closure by

December 2012


2013

As per 3.3.20 above = Check during next site visit




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7 SOCIAL, ENVIRONMENTAL AND H&S INCIDENCES

All Group companies are now required to implement an incident register and report health, social, environment, labour and safety event categories. Our previous review covered the period from July to December 2011; there were two further fatalities and further significant incidents during the period of the 2011-2012 reporting year giving a total of 6 employee and 22 contractor deaths for the year.

This progress review examined recorded events during the first two Quarters of Vedanta’s 2012 reporting year (i.e. Q1: April and June and Q2: July to September). Table 7-1 below summarises the results for Group operations.

Note that Vedanta uses a 5-tier classification for recording incidents and that all Environmental, Health, Social (community) and Labour events are recorded, but in the information supplied for this period only Tier 5 events were recorded for the safety category. This approach tends to skew results considerably towards a potential over-exaggeration of poor environmental performance (especially at KCM), but Vedanta views this is as part of the implementation process and expects that any over-reporting of minor environmental problems will gradually decline as the individual companies become more attuned to the corporate procedure.

Table 7-1: Summary of Incidents for Group Incidents Q1 and Q2

Period Incident Category

Envir. Health Social Labour Safety

TOTAL

Q1 1308 1 3 3 11 1326

Q2 646 0 0 0 7 653

2012 YTD 1956 1 3 3 18 1979

Incidences of particular note in the registers during the first half of 2012 included:

Environment:

Most of the recorded events involve minor (tier 1 or 2) spillages or other situations within the industrial sites that are quickly resolved by direct interventions or small improvements to facilities or procedures.

However, KCM did not initially categorise its environmental incidents and there were some notable events, including:

• In April, a leak of c. 8000 litres diesel at the Smelter was apparently caused by vandalism and there was another leak of c. 2500 litres of lubricant oil at the oxygen plant compressor; both spills were contained by the response efforts.

• In May, a power outage caused an overflow of final tails that resulted in the collapse of a fence and affected the Kitwe road, Nchanga station and the entrance / car parks of the Nchanga North hospital. The regulators attended and clean-up operations were instigated. However, during our site visit, effluent consisting of wash waters from routine crusher maintenance was observed to be still leaking and depositing silts onto the road here




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opposite the hospital. Plans to deal with this were in hand but, if possible, should be prioritised to minimise possible reputational risks.

• There were further tailings slurry overflows and pregnant solution at the plant in June, one of which resulted in an 800 m slurry deposition on a neighbouring farm while another contaminated the Nchanga stream.

• Also in June, the regulators issued a warning directive following complaints about noise levels from the Nchanga North Hospital; the hospital also complained about dust emissions from the ore stockpile.

• On 6th July 2012 a power failure caused a reservoir to overflow at the pollution control dam. The released waters had elevated Total Suspended Solids levels and pumping capacity was reduced to minimise flow rates. Later in the month, another power supply failure triggered a similar problem with tailings.

At other Group sites:

• Sesa Goa reported the publication in May of what was considered to be a malicious article at www.downtoearth.org.in/content/unruffled-flakes - (Tier 4 incident)

• In June, Lisheen recorded some complaints about excessive vibrations from blasting activities and an ‘out-of-hours’ blast.

• There was a fire at the industrial waste dump at Skorpion Zinc, which was allowed to burn out after 3.5 hours of unsuccessful efforts to extinguish it.

• At Black Mountain in April, a containment wall for underground wastewater failed releasing effluent onto the Plaatjiesviei rod and affecting soil and surface waters. In July, a Category 4 incident was registered when drilling water was found to be draining directly onto the soil and was considered to be a possible breech of Regulation 704 of the National Water Act; all the sumps were lined out to prevent further drainage. A further Category 4 event was registered in August when the Horse Shoe Dam overflowed due to a fault in the telemetry system.

Also at Black Mountain, approximately 40 animal carcasses were discovered at the game camp, apparently the result of a disease called "lamb sickness."Health:

• There was only one recorded incident during the 2 periods; it involved 76 employees who contracted malaria at KCM prompting an insecticide spraying campaign.

Social (community):

• There were two minor incidents at KCM, both in April. A slurry pipe burst spraying its contents onto two shops in the market at Nchanga North, Chingola; the buildings were cleaned and redecorated and residents sought compensation. In the other incident, a lightning strike damaged power cables so the electricity supply to the community was shut off on safety grounds pending repairs.

• In June, there was a short protest involving approximately 400 villagers following a fatal road accident outside the HZL plant at Chanderiya. A contractor’s employee died as a result of injuries sustained in the crash, which happened as the man drove home after work; this is not considered to be a work-related fatality and was not recorded as such.

• No social incidents were recorded in Q2.

Labour:

• In May, a number of Talwandi Sabo Power Limited (TSPL) employees initiated a strike (no details provided)




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• At KCM, 110 contractor employees refused to work underground as they had not been paid their May salaries.

• There was a protest by workers following the fatalities at the HZL Dariba site in June that disrupted production; this was recorded as ‘social’ rather than labour.

• No labour incidents were registered in Q2.

Safety:

As noted above only workplace fatalities were recorded in the Q1 incident register. Note that information on Q2 fatalities (July) was also provided for our review. Each incident has been thoroughly investigated to identify the root causes and has been subject to a range of appropriate corrective and preventive measures ranging from a review of Company / contractor procedures, providing new training and / or equipment, disciplinary measures and/or changes to emergency response arrangements (e.g. identification of suitable routes for evacuation by ambulances).

• A Sesa Goa worker was run over in April by a reversing vehicle while spotting; the accident was caused by an apparent combination of lack of attention, the victim man being otherwise engaged, PA and CCTV systems inoperable and lack of driver training.

• Also in April, a KCM worker was hit by falling rocks when undertaking a visual inspection of an embankment above a road prior to commencing grouting operations to stabilise the area; he died as a result of the injuries 10 days after the accident.

• At BALCO in April, a worker on a motorbike collided with a heavy goods vehicle (which was in breach of site traffic rules) at a crossing in the plant and died from his injuries.

• In June, a VAL-Jharsuguda operative was seriously injured (hit in the jaw by the cartridge and cap top) by a malfunctioning extinguisher when tacking a small fire and later succumbed to his injuries. During the same month, a contractor employee at the same plant was run over by a truck, the driver of which was observed to be using a mobile phone.

• A KCM employee was electrocuted and fell into water when investigating a maintenance problem in June.

• The most serious incident so far this year involved a release of hot calcine under high pressure through manholes when trying to clear a blockage. The calcine caused serious burn injuries to three HZL employees and 12 contractor employees attending the operation, with 2 HZL and 3 contractor people tragically dying as a consequence of the incident.

• A TPSL employee fell to his death when descending from a crane in July; lack of fall arresters and non-adherence to PPE requirements were contributing factors.

• A VAL-Jharsuguda employee was killed in August when she fell off her pillion position on a motorbike and was run over by a water tanker. Both vehicle drivers were deemed to have been driving in an unsafe manner. In the same month, 3 contractor employees were badly burnt by a flash over during maintenance works in an electricity substation on site; 1 later died from his injuries.

• A BALCO employee died in August as a result of burn injuries sustained in July when the bud from an incense stick fell into a container of thinner and ignited. Poor contractor safety arrangements appeared to be the primary factors in this incident.

• A BALCO subcontractor died in September when he fell 20 m while engaged in roofing work on the new power plant. This activity has been added to the fatal risk control protocol and additional requirements for working at height have been imposed.




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• At VAL-Jharsuguda, a junior engineer received a serious burn whilst engaged in electrical work due to a combination of procedural failures (i.e. no permit-to-work / machinery isolation, inadequate personal protective equipment),

• A worker was killed at Sterlite Energy Limited (SEL) in September when hit by the boom of a hydra (lifting equipment) which toppled during unloading operations. Inadequate risk assessment was identified as a primary contributor to the accident and improvements made to the area in which the hydra was operating (turning radius and reduced slope).

As noted above in regard to Recommendation 2.5.23 Incident register above, further safety information is collated on a monthly basis and presented at Safety Meetings and complements that included in the Combined Incident Register, whilst a summary is publicised in the relevant section in Vedanta’s 2011-2012 Sustainability Report. Performance information includes an analysis of monthly lost time injury frequency rate (LTIFR

*) for both own staff and contractor

workers for each operation and other relevant safety performance information. Data is also collated on injuries that do not result in lost time (i.e. victim receives medical attention of first aid but can continue working) and near misses, unsafe acts / conditions.

The fatality figures recorded for the Group during the period September 2011 – August 2012 correlate with information in the Combined Incident Register. We note that since the peak of 67 fatalities in Vedanta’s Fiscal Year (FY) 2010, there was a marked improvement in both FYs 2011 and 2012; it is hoped that this trend continues. (Interestingly, according to Vedanta’s gap analysis on sustainability reporting for the 2010-2011 period, Anglo American recorded 17 deaths, Vale had 15 and BHP Billiton suffered 2 fatalities).

We are pleased to confirm that we did not find any significant discrepancies between what Vedanta recorded and what appeared in newspapers and on the internet in regard to non HSE issues, although, as per previous reviews, there have been examples of ‘running stories’ on activist web sites.

However, we note that both UK and Indian media reported a fatal incident at Lanjigarh in April that was not originally included in the incident register. A project manager working for a contractor firm was burned to death and four others received minor injuries in a fire at a guest house at the VAL-L colony. This was an oversight and the Incident Register has now been updated to include the incident.

In summary, based upon the information made available and our discussions with Vedanta management, we have no significant concerns regarding the Group’s handling of social, environmental and H&S incidences although the level of fatalities is still relatively high.

* A lost-time injury is defined as an occurrence that resulted in a fatality, permanent disability or other injury that results in time being

lost from work of one day/shift or more. LTIFR is calculated as number of lost-time injuries per million hours for the total hours worked in the accounting period.




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APPENDIX 1: COMMENTARY ON “THE LANJIGARH DEVELOPMENT STORY: VEDANTA’S PERSPECTIVE” AND AMNESTY INTERNATIONAL’S RESPONSE, “VEDANTA’S PERSPECTIVE UNCOVERED”

We have undertaken a preliminary review of the two reports but, as yet, have not had the opportunity to undertake a detailed review of the new claims made in Amnesty International’s response. Thus, we are able to make some general comments in regard to the reports on the basis of our understanding of the context and our previous reviews and recommendations. When considering the two reports, it is important that readers understand the context that shapes Amnesty International’s and Vedanta’s various claims and counterclaims. In our opinion, the central and critical issues relate to the definition of and rights of indigenous groups and we therefore concentrate our commentary on those topics. We will continue to monitor developments in our future progress reviews.

The Context in Regard to Human Rights and Indigenous Peoples:

Firstly, there have been a number of significant developments in a number of international legal or quasi-normative sources during recent years in regard to human rights, Indigenous Peoples and the principle of Free Prior Informed Consent (FPIConsent). For example, the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) encourages all parties to obtain FPIConsent of indigenous peoples in the context of development projects that affect them. UNDRIP is ‘soft law’ but will have increasing influence on national laws and jurisprudence, particularly since the USA, Canada, and Australia reversed their original opposition to the Declaration and declared their support for it in 2010.

FPIConsent is quickly gaining international momentum and has been supported or adopted by several organisations including the World Resources Institute, the Inter-American Development Bank, the Roundtable on Sustainable Palm Oil and some socially responsible investment funds. It is also now enshrined in the national statutes of a small but growing number of countries such as the Philippines.

However, the absence of any universally accepted definitions of indigenous peoples or FPIConsent is a central problem, which is not fully resolved by the IFC in its revised 2012 version of Performance Standard 7, especially where the host jurisdiction is at odds with international expectations. In some circumstances, determination as to whether a community affected by a project should be considered as bona fide indigenous peoples in line with the IFC’s criteria is therefore a difficult and convoluted process.

Indigenous peoples are generally considered to be amongst the most socially and economically marginalised communities around the world. They often have restricted or no access to formal political processes and decision-making structures and can therefore be deprived of justice or basic social services, including health and education. They may also be impacted by ecological degradation in traditional homelands. This situation has led to concerted efforts by a range of interested parties at both national and international levels to improve the recognition of Indigenous peoples’ rights.

India has the largest tribal population in Asia, comprised of over 500 distinct communities of varying sizes (e.g. from less than 50 to more than 7 million). Adivasis (original inhabitants) are often geographically and/or socially isolated and have been largely underrepresented in the political process. They tend to inhabit regions like Odisha which are economically underdeveloped, but the Adivasis do not constitute a homogenous or unified community. There is substantial diversity amongst the peoples considered as Adivasis. Some, like the Naga, have a distinct identify and different political and constitutional aspirations from other Adivasis.




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However, it should be noted that the Government of India (GoI)’s stance is that all its citizens are ‘indigenous’ and generally avoids that term in regard to its tribal communities, which are widely referred to as ‘Adivasis’. Moreover, the specific term ‘Indigenous Peoples’ does not feature in the Constitution of the Indian Republic so that it therefore has little or no validity in India’s laws.

There are legal protections for the Adivasis. As a legally recognised social group on account of their deprivation and exclusion, the individual populations that together make up the Adivasis are referred to as Scheduled Tribes, although the Indian Constitution does not clearly define ‘Scheduled Tribes’. Scheduled Tribe status under the Indian Constitution means that Adivasis have reserved seats in parliament and job guarantees in the civil service and educational institutions.

Also, in some instances, areas hosting Scheduled Tribes have been designated as ‘Scheduled Areas’ and land transactions therein between private parties and the local populations are prohibited and authority for land contracts has been assigned to the authorities.

There is a further designated legal status for tribal communities, Primitive Tribal Group (PTG), and a list of some of 645 district tribes is attached to the Constitution. This status is applied to various individual tribal communities that make up the Adivasis, including both the Dongria Kondh and Kutia Kondh in Odisha, and is acknowledged in national legislation.

Over the years, GoI policy formulation and implementation has been addressing various issues related to minority groups and there have been several targeted interventions to improve their socio-economic development (such as through the recognition of ‘Forest Rights’) and a shift, albeit somewhat patchy and incomplete, towards a rights-based approach to tribal development.

The country has ratified a number of international human rights and minority rights instruments, including the ILO’s Convention on Indigenous and Tribal Populations (No.107) and was also one of the signatories in the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) in 2007. It is also a party to the International Covenants on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights - but with a formal ‘reservation’ to Article 1 of both these treaties, in effect denying the application of the right to self-determination, particularly in regard to groups like the Kashmiri and Naga. India also failed to ratify the revised ILO convention concerning Indigenous and Tribal Peoples in Independent Countries and has continued to contest the criteria used for the UN’s definition of ‘Indigenous People’.

Despite some progress at the national policy level, it can be claimed by some that that the Adivasis remain victims under India’s post-colonial administrative systems and continue to suffer from discrimination and ostracism. There have also been substantial difficulties in implementing GoI policies, such as those dealing with property rights and interests and restructuring of rights of religious minorities, at the regional level. For example, in January 2009 the United Nations Special Rapporteur on Freedom of Religion or Belief expressed concerns that the level of action to implement GoI policies was unsatisfactory at both regional and local levels.

Moreover, over the years in Odisha, there have been a number of incidents unrelated to Vedanta - such as the 2006 Kalinganagar shootings when 12 Adivasis were killed and 37 others injured – that have been interpreted in some quarters as persecution by regional or local authorities and other elements of society.

This is the backdrop for Amnesty’s campaign, which targets the national and Odisha regional authorities as well as Vedanta in regards to their respective roles in the Lanjigarh-Niyamgiri project, to improve the situation of the Dongria Kondh and protect the local environment.




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General Observations on the Reports:

1. We have been asked to comment on the two reports in relationship to the IFC Standards and Vedanta’s Sustainability Framework. As such, we have not commented in detail on all the new allegations made by Amnesty in their most recent report or on issues relating to the other parties (e.g. the national and regional authorities and agencies or the Orissa Mining Corporation (OMC).

2. The integrated project involved the development of the alumina refinery by Vedanta while the state owned Orissa Mining Corporation (OMC) would have been responsible for developing the bauxite mine with support from Vedanta. The respective responsibilities of the two organisations have not been precisely defined or put into the public domain. We are unable to comment on OMC’s position in regard to this issue as we have had no interaction with that organisation on the issues surrounding the proposed mine.

3. Vedanta state that the original impact assessments for the mine and refinery were undertaken in strict accordance with the Indian legal framework and the specific requirements for both ‘rapid’ and ‘full’ impact studies in force at that time. Both parties acknowledge that there were some deficiencies in the original impact assessments and consultation processes (e.g. in regard to biodiversity baseline information).

4. Vedanta has consistently stated that, as “the future of the mining of bauxite on the Niyamgiri hill ranges” remains sub judice pending an eventual Supreme Court decision, it is unable to comment on any issues relating to the proposed mine project. In India it is generally considered inappropriate to comment publicly on sub judice cases; this can be an offence in itself and can lead to contempt of court proceedings. In acknowledging this, the scope of the original URS / Scott Wilson strategic and implementation progress reviews was limited in respect of the mine except in so far as consideration of the situation contributed to corporate learning.

5. We have confirmed that Vedanta complies with the obligations of the separate court order placed upon the refinery expansion programme. Recommendation 3.4.3 Proposed expansion remains ‘open’ pending resolution of the Expansion Project’s approval.

6. This imposed inability to comment on the Niyamgiri mine also extends to what precise approach would be taken by Vedanta and/or OMC in the event that the Court lifts its sanctions and whether a new impact assessment or a supplemental report would be stipulated for the mining component. For example, one alternative outcome of the legal process might be to confirm the previous EIA approvals without stipulating any new or supplementary impact assessment studies, in which case there would be no legal compunction for Vedanta or OMC to revisit the original EIAs. The situation is unlikely to develop any further until the case is determined by the Supreme Court.

7. We noted in our first Progress Report in 2011 that following any decision to allow the refinery to expand, Vedanta “committed to preparing a supplementary report, which should reflect the requirements of Recommendation 2.5.15 (company level example on international best practice) and the detailed findings of the updated gap analyses required for Recommendation 3.3.20 (Lanjigarh)”. Our view is that Vedanta should prepare a supplemental report, even if consent to proceed with the report is granted, in accordance with Recommendation 2.5.15 which specifically requires that “EIAs should be expanded in relation to biodiversity and habitat identification, the identification of cultural heritage and social and human rights impacts”.

8. Vedanta did not seek project finance for the initial development of its Lanjigarh refinery so was not contractually obligated to adhere to any World Bank Group or other similar standards at that time. The current Lenders’ interest in the Company relates to loan finance in respect of Vedanta’s acquisition of Cairn Energy’s oil business in India, not a specific mining or metals development project.




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9. Conception of Vedanta-OMC’s joint Lanjigarh-Niyamgiri alumina refinery and bauxite mine project predated the launch of the Equator Principles in 2002, which at the time were based on the IFC’s Safeguard Policies. (The Equator Principles were subsequently revised following the IFC’s adoption of its Performance Standards in 2006.)

10. International project finance standards are basically intended to be applied by proponents early in the development of new projects. They are typically not retro-fitted to existing projects that have already been financed by development finance or Equator Principles institutions. Indeed, the preamble to the current version of the Equator Principles states that “the Principles are not intended to be applied retroactively”.

11. Depending upon the timing of financial closure in relation to a project and/or the policies of the lenders involved, adherence of these standards can however be stipulated at a later stage of a project (e.g. when a newer version of those standards is being introduced during the project’s impact assessment process) or more generally in respect to other types of loans.

12. As is typical with disputes of this kind, the issues are complex and, while both sides make valid points in their documents, there is also conjecture and propaganda in support of their arguments.

The extent to which the Vedanta Sustainability Framework addresses the issues:

13. In addressing our recommendations, Vedanta has articulated and published a number of overarching Group policy statements. These include the following examples which are relevant to the issues raised by Amnesty: Health, Safety and Environment; Biodiversity; Social Policy; Water Management Policy and Human Rights. Our opinion is that the policy statements are generally fit-for-purpose and are capable of addressing the types of concern raised in conjunction with the various management and, more particularly, technical standards in the Sustainability Framework.

14. The Sustainability Framework’s management and technical standards are now more or less complete although the majority of supporting Guidance Notes are still in the process of being finalised. These documents, which have benefitted from expert input from competent international consultants (ERM), are generally closely aligned with the 2012 version of the IFC Performance Standards.

15. However, we note that some of Vedanta’s documents may need to be updated in light of the more detailed information contained in the IFC’s Guidance Notes for the Performance Standards, which were published at later date and which provide additional clarification on requirements for project proponents. Topics identified as potentially requiring further attention are listed in our commentary in regards to progress made on Recommendation 2.5.6 Policies (see section 3.5 of the report).

16. Elsewhere in this report we raised concerns about the delay in completing and issuing the detailed instructions and guidance for addressing Indigenous Peoples issues. Once completed, this documentation will partly address Amnesty’s criticism of the lack hitherto of systems and procedures that would facilitate a “human rights due diligence” process.

17. In this respect, we reviewed a draft of Vedanta’s Indigenous Peoples documentation and provided feedback on Vedanta’s proposed due diligence process. The changes we suggested will help to ensure that the process will include:

• Confirmation of whether there is likely to be any involvement of or interaction with indigenous peoples – however remotely - in any project and due determination of IFC indigenous peoples status, including provisions for independent arbitration where a negative decision is contested by stakeholders;

• Assessment of host country legislation on the consultation and/or consent of indigenous peoples;




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• Working with the host government, to the extent possible, to ensure basic legal compliance; and

• Application of the IFC Performance Standards, ICMM and other best practice guidance in a way that will demonstrate to funders / investors, society at large and affected communities of indigenous groups that the Vedanta follows international best practice.

18. Although the policies, standards and guidance are still being rolled out across the Group, the early signs are that their requirements are being implemented by those business units currently developing projects that require an impact assessment. A number of recommended refinements to the ESIA documentation and implementation processes have been suggested and will help ensure adherence to Vedanta’s new policies and Lenders and other stakeholders’ expectations in regard to international best practice. However, to date, none of those projects have triggered any human rights or Indigenous Peoples issues.

19. Generally, Vedanta expends considerable effort and achieves a certain degree of success with its business units’ social programmes and community initiatives, especially in improvements to health and education. Lanjigarh has implemented some good social development initiatives, although we have recommended that their approach be more participative and allow local stakeholders a greater role in decision-making. A Tribal Development Plan is currently being developed at Lanjigarh and, when we next visit the site, we look forward to discussing options for ensuring that a more participative approach is adopted.

20. In terms of environmental issues, Lanjigarh has implemented a number of programmes that have significantly reduced dust emissions, and improved water consumption and effluent discharges, waste and tailings management. However, we cannot comment upon the potential for any adverse impacts to health in the local communities as there was no baseline information from medical checks that subsequent health monitoring might verify as being the result of environmental pollution from the refinery. As noted in the body of our report, we shall assess the outstanding actions to address the update of the Health Impact Assessment in relation to Recommendations 3.3.20 and 3.3.63. Where appropriate, an explicit community health impact assessment could be a useful addition to Vedanta’s Sustainability Framework for new projects.

The extent to which the IFC Performance Standards address the issues:

21. As noted above, the IFC has revised its Performance Standards and the 2012 versions would apply to any ESIA for a new project being financed by the IFC or Equator Principles financial institutions. There is however some ‘leeway’ in respect of any application to ESIAs that were completed before the 30th June 2012 where financial closure has not been reached.

22. The 2012 revision aims to go beyond the IFC’s previous “Do no harm” mantra and to pursue positive development outcomes. They also clarify IFC commitments in key areas such as Project Categorisation. In terms of the issues under consideration here, the main changes are as follows:

• Ecosystems and Biodiversity: Project proponents need to consider ecosystem services and their environmental, ecological and social impacts. The concept of ‘no net loss’ of critically endangered / endangered species is embedded in the requirements and no significant loss of ‘critical habitat’ (as defined using the criteria in the IFC’s Guidance Note to PS 6) will be sanctioned unless a suite of demanding conditions are met;




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• Stakeholder Engagement: The IFC’s guidance is strengthened in regards to the proponent’s stakeholder engagement, especially with Affected Communities and biodiversity experts and interested parties in the determination of ‘critical habitat’, and in relation to gaining broad community support for a project.

• Human Rights: The need for appropriate human rights due diligence at an early stage of a project’s development is identified, but no other requirements are explicitly specified (see paragraph 22-24 below). The IFC Guidance Note on PS 1 does however mention voluntary human rights impact assessments as an alternative approach to due diligence; and

• Indigenous Peoples: The principle of Free, Prior and Informed Consent has been introduced but the IFC provides its own definition so that it “does not necessarily require unanimity and may be achieved even when individuals or groups within the community explicitly disagree”. In addition, FPIConsent for Indigenous Peoples only applies under the circumstances described in paragraphs 13–17 of PS 7.

23. The revised PS 1 states in paragraph 3 that “Business should respect human rights, which means to avoid infringing on the human rights of others and address adverse human rights impacts business may cause or contribute to. Each of the Performance Standards has elements related to human rights dimensions that a project may face in the course of its operations. Due diligence against these Performance Standards will enable the client to address many relevant human rights issues in its project.”

24. No further guidance is offered on the due diligence process – or the consequent actions - but it is generally assumed that it should involve consideration of human rights issues in regard to labour, diversity, environmental quality, indigenous peoples, resettlement / land tenure, community development and supply chains. Potential for host government abuses of human rights is another factor that also should normally be included. If properly applied to projects, this IFC requirement can at least identify potential for abuse or complicity but, without enforcement by the financial institutions applying these standards to projects, there is no guarantee that the process will be suitable and sufficient and that consequent actions will be robustly implemented.

25. With regard to Indigenous Peoples, the IFC’s latest stance does not resolve the lack of a universally accepted definition for the terminology it uses and its definitions are not considered to be acceptable in the Indian legal context. The IFC’s definitions and generic characteristics of Indigenous Peoples are therefore open to some interpretation so that, even if they were applied to a new ESIA for the Lanjigarh-Niyamgiri development, it could be argued that the Dongria Kondh do not fulfil the IFC criteria as interpreted in India. This could mean that the FPIConsent principle would not then be triggered.

26. In conclusion, although the current IFC position on human rights and Indigenous Peoples has advanced somewhat, the Performance Standards (probably) still fall short of high expectations for best international practice on these issues. At the same time, Vedanta is to some extent constrained by legal advice and is naturally reluctant to act in a manner contrary to current Indian practice.




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Please refer all questions on this report to the Agent for the lenders to Vedanta Resources – Standard Chartered Bank at [email protected]

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