Home > Corporate Social Responsibility > Delhi to target mining groups with ethics law

Delhi to target mining groups with ethics law

May 15, 2010

“India plans to make corporate social responsibility obligatory for mining companies in reaction to concern over pollution and rebel violence. Santha Sheela Nair, the secretary at the mines ministry, said yesterday the draft Mines and Minerals (Development & Regulation) Act sought to address the breakdown in trust between mining companies and communities. The law, said Ms Nair, would enforce corporate responsibility programmes to provide employment and development. …

Mining companies operating in India should make their local stakeholders also their shareholders to overcome hostility towards the industry, she said, but cautioned that negative perceptions of mining would have to be overcome. The draft legislation contains proposals to offer equity to communities whose land is acquired for mining projects.

India is the fourth-largest iron ore producer in the world and has significant deposits of coal, bauxite and chromite. Local mining companies include listed companies such as Sesa Goa, Sterlite, Tata and the Steel Authority of India. They also number less internationally known iron ore miners such as Obulapuram Mining and Anantapur Mining, owned by the powerful Reddy political dynasty in Karnataka.”

Source: Financial Times, May 3 2010

Observations:

  • Conflicts about the distribution of benefits from mining have fueled unrest caused by Maoist rebels and other minority groups in India.
  • A large proportion of the mines in India are run by relatively small mining companies. Many of these companies do not have a strong corporate social responsibility (CSR) program.

Implications:

  • The Indian government will slowly enforce social responsibility standards that are in line with the standards used by the established multinational companies. However, in some areas with strong minority groups, this will not be enough to satisfy the local population.
  • Similar problems can be observed in any mining area where groups of disadvantaged minorities claim ownership over the land and resources (e.g. Australian aboriginals, Latin American indigenous people, African tribal regions). Mining companies should put effort into specifically meeting the development needs of these groups.
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