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Alcan pulls out of Utkal project in India

Posted by François Meloche on April 16th, 2007
Groupe Investissement Responsable Inc. (Montreal)

Alcan, a Canadian company, has decided to sell its 45 percent stake in Utkal Alumina International Limited, a company aiming to produce alumina in the state of Orissa in India. Alcan had been under pressure for years to withdraw or at least ensure the project had obtained the free prior and informed consent of local communities.

Community members, mostly "scheduled tribes" Adivasis, have opposed the Utkal project, to protect their right to control local resources and avoid environmental damage. The project, which is in its "engineering phase" has already started to displace the 200 or so families living on the site of the future alumina plant. Herders and others would also be affected by the mining operation. It is unclear how many people would be affected but some critics have estimated that over 10,000 people would suffer. At least 23 villages would be affected by the project.

In December, 2000, police in Kashipur opened fire on protesters opposed to the Utkal mine and smelter, killing three people. One of the partner at that time, Norsk Hydro of Norway, immediately pulled out and sold its share to Alcan.

Activists from Alcan't in India, a solidarity group based in Montreal, Quebec, Canada, are pressuring Alcan to compensate people whose "lives have been ruined through jailings, beatings, displacement, and even death due to Alcan’s involvement."

Last year, Alcan promised it would provide an answer to shareholder activists by March 2007 on its involvement in the project. Shareholders had filed a proposal (see 'Tis the Season for Shareholder Activism) asking for an independent study on the consent of the community, a proposal that received a surprisingly high 37 percent. (Similar resolutions typically get between zero and ten percent. Any resolution that scores in the higher end of that range is taken seriously by management)

The Indian partner in the Utkal project, Hindalco, the industrial division of the Indian conglomerate Aditya Birla group, which owns 55% of the project, has not given any indication that it will change its plans.

Alcan, on the other hand, invests a lot of money in public relations to promote  its sustainability strategy, has portrayed itself as a minority partner that does not participate in the real decision making around this project.

“We have carefully weighed the opportunity and risk presented by the Utkal Project, and, given constraints within the governance structure that limit Alcan's ability to participate in key decisions, believe that we have acted in the best interests of all our stakeholders,” Jacynthe Côté, president and chief executive officer of Alcan Bauxite and Alumina, said in a statement.

Alcan says it will keep a commercial interest in the project by continuing to "benefit from an Alcan technology supply agreement", according to the Alcan press release, but it does not give further details.

Editor's note: The decision of Alcan to pull out of the Utkal smelter reflects similar dissatisfaction over aluminum smelters around the world. Sujatha Fernandes reported for us from Trinidad on a similar project in the Chatham/Cap-de-Ville area (see “Smelter Struggle: Trinidad Fishing Community Fights Aluminum Project") that was canceled in January 2007 although the Alcoa is now hoping to get permission to relocate the project to Otaheite Bay, which also serves as a nesting ground for the scarlet ibis, one of Trinidad and Tobago's national birds, as well as 36 other avian species.

And communities in Iceland have also been battling a proposed Alcoa smelter, for which the gigantic $3 billion Karahnjukar dam, north of Vatnajokull, Europe's biggest glacier, is being built. The Guardian did a great story ("Power Driven") on this in 2003, and the New York Times recently did a feature on what it called the angriest and most divisive battle in recent Icelandic history. Updates can be found at the Saving Iceland website
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