Unearthing the Facts :
Corporate Rampage in Orissa

Radhika Krishnan

Felix Padel and Samarendra Das’s recent book Out of this Earth: East India Adivasis and the Aluminium Cartel, which essentially deals with the impact of bauxite mining and the manufacture of aluminium on the tribals of Orissa, has been published at a time when the aluminium industry is desperately trying to acquire land for new projects in the mineral-rich states of the country. It is a much-needed and fitting rejoinder to the myths that corporations, governments as well as the media continuously propagate – that this ‘sustainable’ and ‘environment-friendly’ industry will automatically lead to ‘development’ and prosperity.
Out of this Earth explores the impact of the aluminium industry in Orissa over its entire life cycle, from the mining of bauxite to its various end uses. The book talks of the massive scale of destruction of ecology, as well as corporate land grab and the subsequent displacement in Orissa. The authors explain why (despite the obvious and highly visible adverse impacts) India is emerging as a hotbed of mining activity. Mining and metal production today are being ‘outsourced’ by highly industrialised countries to ‘developing’ countries: “In Europe, the US and Japan, the tendency has been growing to shift the industry out ... to save costs and avoid environmental criticism back home” (page 53).
For anyone who has been following the process of industrialization in the mineral-rich states of Orissa, Jharkhand and Chhattisgarh, the detailed accounts of the social and environmental impacts of mining activity, of state repression, or of the police-government-company nexus in the process of facilitating industrialization would come as no surprise. Neither would it be unduly surprising to hear of the manner in which the ‘law’ in the country operates to protect corporate interests over legitimate environmental concerns, or tribal and workers’ rights. The real contribution of Out of this Earth is however the commendable effort of the authors to painstakingly trace the forces that actually drive and control the global aluminium industry – the global arms industry, international financial institutions and funding agencies.
Aluminium, the Arms Industry, and the Military-Industrial Complex
As the authors point out, the aluminium industry does not exist merely to provide pots and pans for domestic use. Aluminium today finds large-scale use in the manufacture of cars, for packaging in the food processing industry, in the construction sector and for electrical wiring. However, by far the most influential use of aluminium is in the arms industry. A high percentage of the aluminium output (the authors quote estimates of around 30 per cent) has always gone directly into the arms industry. As the book mentions: “All major aluminium companies have contracts to supply arms companies ….Kaiser’s first contract was for Boeing bombers, Alcoa was the main supplier to Lockheed, Balco had a contract to supply aluminium to India’s nuclear weapons programme … Alcan ….is a principal supplier to the three biggest US arms companies …..India’s mining barons have made a series of recent deals with the arms makers: Mittal with BAe, Tata and HAL with Lockheed, and Hindalco with Boeing and Airbus….The quest for military supremacy… is a driving force and key source of profit behind aluminium production, now as much as ever.” (pp 284-285).
Aluminium has become a product of ‘strategic’ use to war-mongering forces in the world, which naturally push for the growth of the aluminium industry at any cost in order to ensure a constant supply of aircrafts, tanks, bombs and missiles. Out of this Earth quotes the official biography of Alcoa (Aluminum Company of America, one of the world’s oldest and biggest aluminium companies) which says: “War was good to Alcoa”!
Investment Patterns in the Aluminium Industry
Out of this Earth reveals the investment patterns in the aluminium industry and analyses the implications of these patterns. The authors point out that the industry today is dominated by a few US- and UK-based multinational corporations and funded by a multitude of international funding agencies, financial institutions and banks. For instance, almost all Indian aluminium companies (Malco, Balco, Hindalco, Nalco, Indal) have been set up in close financial and technical collaboration with foreign giants such as Alcan, Kaiser and Pechiney. Detailed financial analysis shows that a consortium of banks owns and controls all the aluminium majors in the world – Vedanta for instance has Volcan Investments (based in Bahamas) owning 54% of its shareholdings. Its other shareholders include Merill Lynch, Barclays Bank, Standard Life, ABN AMRO, ANZ Investment Bank, banks from Italy, France, US, Singapore, Dubai, Bahrain, as well as 13 Indian banks. And not surprisingly, several politicians and bureaucrats, as well as CEOs of major banks and financial institutions figure on the Board of Directors of practically all major aluminium companies.
Any serious attempt to change this equation – to nationalise mining or to curb the power of corporations – has been ruthlessly quelled by companies, aided and abetted by the US and UK governments, the CIA, the World Bank and the IMF. Out of this Earth documents several experiences from Guyana, Surinam, Jamaica and elsewhere to make this point. Guyana’s Prime Minister Cheddi Jagan’s attempts in the 1960s to nationalise bauxite mining for instance led to his patently illegal ouster. Later on, WB-IMF dictated economic policies in the 1990s increased the privatisation of the mining sector in Guyana.
Manufacturing Consent and Sanitizing the Industry
In another section of the book, Padel and Das point out recent attempts by the industry to project a tribal-friendly, environment-friendly, responsible image, given the massive opposition to mining and related projects and its obvious social and environmental impacts. In this project of subterfuge and the much-needed image makeover in order to pave the way for future projects, the industry finds ample support from local governments as well as funding agencies like UK-based Department for International Development (DfID).
In this regard, Out of this Earth mentions the role played by the International Fund for Agricultural Development (IFAD, a UN initiative) as well as the DfID in promoting bauxite mining projects in Orissa. IFAD for instance, in collaboration with the government of Orissa, set up the Orissa Tribal Development Project (OTDP). As the authors point out: “Villagers claim that they found mining company surveys being carried out by people who said they were officials of the OTDP”. Also, loans disbursed for ‘tribal development’ by the OTDP were used to create essential infrastructure like roads and railways needed by mining companies.
The authors also discuss the role of industry-sponsored organisations like the Utkal Rural Development Society (URDS) and other initiatives like the Corporate Social Responsibility (CSR) which essentially aim at diffusing the mass anger against upcoming projects. Under the garb of self-help groups and tree plantation efforts, such organisations and initiatives try to break the resistance movement and gain legitimacy. Further, consulting and accountancy firms and think-tanks based in US and Europe (such as Ernst and Young and Price Waterhouse Coopers) have played a major role in furthering corporate interests by legitimising the operations and pushing concepts of ‘Global Reporting Initiative’, ‘Sustainable Development’ and the like.
Out of this Earth also contains a lengthy critique of industry-sponsored initiatives like World Business Council for Sustainable Development (WBCSD) and Mining and Minerals for Sustainable Development (MMSD). As the authors point out: “[MMSD] was orchestrated by the world’s top mining companies with a view to short-circuiting calls for regulation. It starts with frank admission of the harm and conflicts mining causes, but all it recommends is ‘voluntary regulation’ to ‘best practice standards’”(page 196).
How ‘Profitable’ is the Aluminium Industry?
The ‘profitability’ of the aluminium industry is something that the industry and its sponsors are very fond of projecting. Out of this Earth explains how exactly the manufacture of aluminium is made so ‘profitable’ – through massive state-sponsored tax breaks and subsidies (on land, water and electricity for instance) and more importantly by keeping the price of the main raw material bauxite abysmally low. To quote some examples, Hindalco’s Renukoot factory receives electricity from the state at a twentieth of the going rate! The global average price of bauxite is just $30 per tonne, compared to aluminium’s average price of around $2500 per tonne (quoted in page 308). It is yet another matter that India is one of cheapest sources of bauxite in the world (the cost of extracting a tonne of bauxite in India is less than $5), and the royalties received by the state governments (Rs 64 per tonne) is a pittance compared to the massive profits made by companies.
The authors document the efforts to maintain these conditions of profitability: “When Jamaica led the way to remedy this [low bauxite price] … the World Bank immediately withdrew loans, and the CIA orchestrated a campaign of destabilisation” (page 53). And in order to explain the essentially unstable nature of the profits made by the aluminium industry, Padel and Das quote the sudden breakdown of Iceland’s entire economy (as a result of what they term ‘aluminium capitalisation’), with high loans amounting to more than ten times what the country really had taken to finance aluminium companies.
Out of this Earth provides a wealth of data and information on issues related to mineral extraction. Though it concentrates on the aluminium industry in a single state (Orissa), it provides several pointers to the manner in which the mining industry operates in countries like India.