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Final Version

Vedanta Resources plc

13th July 2012

Vedanta Resources plc Third Progress Report on the implementation of the Scott Wilson recommendations

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Executive Summary Vedanta Resources is committed to implementing all of the Scott Wilson recommendations within a wider program of fully integrating a new Sustainability framework and policies consistent with a multinational metal and mining enterprise operating 44 operating sites on four continents. This is the third progress report against the recommendations made by Scott Wilson in their report dated 17th November 2010. It will be publically available at http://www.vedantaresources.com/sustainability/scottwilson.html

At the Corporate / Group level, having modified the governance structure in 2011, the Sustainability Committee has continued to meet quarterly and the ExCo Sustainability Sub Committee has continued its focus on safety improvements at its monthly meetings.

During the last six months the Corporate Sustainability team has reissued a number of Technical Standards and completed and rolled out the assurance process. All companies have responded and we have mapped our current performance.

During the period significant progress has been made at the group company level. We have engaged international consultants on all our new projects in order to complete ESIAs to international standards and within our existing operations the CEOs are leading the programme to remove gaps identified in the assurance process. This will take time and we have followed Scott Wilson’s advice and arrange the final audit in June 2013 to allow time for the changes to be made and the new systems to bed in.

At plant level, at VAL-Lanjigarh the ESMP has been developed with many sub plans in place. It will take longer to complete the tribal development plan which is now expected to be completed before the end of the year.

We believe that the current situation is as follows:

Corporate level:

Two recommendations were previously closed out by Scott Wilson in July 2011

Five recommendations were previously closed out by Scott Wilson in March 2012

Three recommendations are considered as being ‘closed out’ at this time

The final audit is on track and commissioned for completion in June 2013

Company level:

Three recommendations were previously closed out by Scott Wilson in March 2012

Two recommendations are considered as being ‘closed out’ at this time

Two more are ‘on track’ to achieve closure within 6 months in December 2012

Lanjigarh:

One recommendations were previously closed out by Scott Wilson in July 2011

Six recommendations were previously closed out by Scott Wilson in March 2012

One recommendations are considered as being ‘closed out’ at this time

Two more are ‘on track’ to achieve closure within 6 months in December 2012

One, the Proposed Expansion remains “Pending”

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Table of Contents

Executive Summary _________________________________________________________ 1

Table of Contents ___________________________________________________________ 2

Background ________________________________________________________________ 4

Section 1 Corporate Level Progress __________________________________________ 7

Recommendation 2.5.7 Sustainability Committee _________________________________ 7

Recommendation 2.5.8 Chief Sustainability Officer ________________________________ 7

Recommendation 2.5.4 Value Statement ________________________________________ 7

Recommendation 2.5.2 Code of Conduct ________________________________________ 7

Recommendation 2.5.6 Policies ________________________________________________ 8

Appendix 1 – TS6 Supplier and Contractor Management – Technical Standard ____________________ 9

Appendix 2 – TS8 Conducting ESIAs to International Standards ________________________________ 9

Appendix 3 – Acquisitions, Divestment and Joint Venture Due Diligence Management Standard _____ 9

Recommendation 2.5.3 Stakeholder Engagement _________________________________ 9

Recommendation 2.5.13 Reporting ____________________________________________ 10

Appendix 4 – Vedanta Resources Sustainable Development Report 2011-12 ____________________ 10

Recommendation 2.5.8 Sustainability Committee Oversight _______________________ 10

Recommendation 2.5.9 Professional Competency Review _________________________ 11

Recommendation 2.5.16 Human Rights Policy ___________________________________ 12

Recommendation 2.5.24 External Audit ________________________________________ 12

Appendix 5 – Self Assessment Questionnaire _____________________________________________ 12

Section 2 Company Level Progress _________________________________________ 14

Recommendation 2.5.15 International Standard Best Practice ______________________ 14

Appendix 6– Screening Report - Liberia __________________________________________________ 14

Appendix 7 – Screening Report – Gamsberg ______________________________________________ 14

Appendix 8 – Screening Report – Chhattisgarh Coal Block ___________________________________ 14

Appendix 9 – Screening Report – HZL new sites ____________________________________________ 14

Recommendation 2.5.11 Land Management ____________________________________ 15

Appendix 10– Black Mountain Mine BAP _________________________________________________ 16

Appendix 11 – Expression of Interest KCM BAP ____________________________________________ 16

Appendix 12 – Zambia Environment Management Agency TOR Approval _______________________ 16

Recommendation 2.5.23 Register of Social and Labour Incidents ____________________ 16

Recommendation 2.5.12 Environmental Communication __________________________ 16

Recommendation 2.5.17 New project planning and development ___________________ 16

Recommendation 2.5.20 Vulnerable Social Groups _______________________________ 17

Recommendation 2.5.22 Cultural Heritage ______________________________________ 17

Section 3 Lanjigarh Progress ______________________________________________ 18

Recommendation 3.3.20 Environmental and Social Management ___________________ 18

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Appendix 13 - Lanjigarh-ESAP-(as-per-ERM-Feb-12-Rpt)-Status Update -30-June-12 ______________ 19

Recommendation 4.5.8 Grievance Mechanism __________________________________ 19

Recommendation 3.3.3 Housekeeping _________________________________________ 20

Recommendation 3.4.3 Proposed expansion ____________________________________ 20

Recommendation 3.3.79 Disaster management plan ______________________________ 20

Recommendation 3.3.32 Retrenchment Planning ________________________________ 21

Recommendation 3.3.48 Contractor accommodation _____________________________ 21

Recommendation 4.5.5 Dust reduction plus health monitoring _____________________ 21

Recommendation 4.6.8 Additional livelihood programmes_________________________ 22

Recommendation 4.6.12 Integrated Community Development _____________________ 22

Recommendation 3.3.63 Contractor and Community Health and Safety ______________ 22

Closed

Will be closed in December 2012 Will be closed in June 2013 Pending

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Background Vedanta Resources is a London Stock Exchange company with major assets in mining and processing

of copper, zinc, and aluminium and iron ore and oil and gas. Operations are located primarily in India

with mines and processing plants in South Africa, Zambia, Namibia, Liberia, Australia and Ireland.

Vedanta Resources is committed to implementing all of the Scott Wilson recommendations within a

wider program of fully integrating a new sustainability framework of policies and standards

consistent with international standards such as the IFC, ICMM and OECD and consistent with

operating a multinational metals, mining and energy enterprise with 44 sites on four continents.

In 2010, the Vedanta board set the sustainability goal to be recognized internally and externally as

the global benchmark company in sustainability performance.

Of our 44 major metal and mining sites (up from 33 mentioned in the last report due to ISO

certification of individual units on the same site), 39 are approved to ISO14001 and OHSAS 18001

and Sesa Goa, Hindustan Zinc, Sterlite and Cairn India are companies quoted on major stock

exchanges. Group companies operate under their own Board of Directors.

This is the third progress report and details the actions we have taken since the Scott Wilson Report

was published on 17th November 2010. It contains supporting documentation where relevant and

possible.

At the corporate level, we have developed an appropriate model for our business that has strong

subsidiaries and many operations in developing countries.

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This model develops the Responsible Stewardship of all our the assets we manage including their

effect on the health and safety of our people and the environment but it goes further and

encourages us to develop Strong Relationships with all our stakeholders, be they shareholders or

lenders, employees, neighbours, members of our industry, the governments where we operate or

civil society with valid interests in our business. The goal of this second pillar is to create platforms

for creating sustainable development opportunities and hence support the third pillar in which we

aim to find ways to Add and Share Value with each of our stakeholder groups and thus meet the

Board’s sustainability objective.

Following the restructuring of a Sustainability Department in late 2010 and changes to our

governance structure in early 2011, we have embarked on a programme to make sure we manage

responsibly across all our businesses. We are fulfilling the recommendations of the Scott Wilson

report by the creation and group-wide implementation of a sustainability framework of eight

Vedanta policies and thirty four standards aligned to our sustainability model that will lead to a

consistency of process and to superior performance. Since the last report we have included the

recommendations of the last Scott Wilson progress report into the ESIA, Supplier and Contractor

management and Mergers and Acquisitions Technical standards which have been reissued. We

continue to develop our Indigenous People’s Technical Standard in line with the recommendations

in the last Scott Wilson progress report.

We intend to continue to develop our external reporting and to this end, we have taken the

opportunity to align our sustainability reporting calendar with the financial reporting timetable. We

will publish our Sustainable Development Report 2011-12 in July 2012 and a PDF has been attached

to this document for Scott Wilson’s review. It will be available on our website

http://www.vedantaresources.com/sustainability/griindex.html in July. The new report was

externally assured by Det Norske Veritas (DNV) and received an A+ level against the GRI reporting

framework.

Following our second six monthly progress report, Scott Wilson visited our sites at VAL – Lanjigarh,

BALCO and Sesa Goa where they reported the following:

“We confirm that arrangements were in place to display the mandated environmental information

(emissions) at Balco and Sesa Goa plants and confirmed that progress was being made on the

Stakeholder Engagement plans at Balco and Sesa Goa”

“We used our visit to Vedanta’s BALCO and Sesa Goa operations to calibrate the Lanjigarh facility

against an established operation. Apart from some relatively minor issues in relations to hazardous

waste material management generally and housekeeping /HSE arrangements at the Rodding Shop at

Balco, we are pleased to report that we have no major concerns with anything we saw at either of

the Group operations during this trip and we would generally commend them on their HSE and CSR

commitments and achievements. “

Since the Scott Wilson visit, we have introduced a series of measures at Balco including a

housekeeping audit and behavioural safety training with our shop floor employees to ensure that

similar scenarios/situations do not re-occur.

Scott Wilson reported that of the eleven corporate level recommendations seven were closed,

three were progressing towards closure in June 2012 and one was not due being the final sign off

audit. At the company level, of the seven recommendations, three were closed and the remaining

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

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four were progressing towards closure in June 2012. At Lanjigarh, seven recommendations were

closed out, two were progressing towards closure in 2012 and the expansion is on hold.

During the last six months, we have continued the roll out of the sustainability framework and all

companies in the group have complete a formal self assessment assurance of their own performance

which will be reported to the ExCo on a quarterly basis. All are working to close any gaps identified.

We have worked with our lending banks to receive permission to complete the final sign off audit in

June 2013 and have commissioned URS Scott Wilson to complete the final audit.

We believe that ten corporate recommendations are now closed and the final signoff audit has

been commissioned to take place in June 2013.

At the company level, we have made more progress and we believe that five recommendations are

now closed. The final two recommendations should be closed by December 2012.

At Lanjigarh, we have continued to make significant strides to develop the Environmental and Social

Management Plan, however the work is not complete and the two recommendations relating to this

are not yet closed. We believe that eight of the eleven recommendations are now closed and the

proposed expansion remains pending.

The following three sections describe in details our progress at the Corporate, Company and

Lanjigarh levels.

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Section 1 Corporate Level Progress During the period between January and June 2012, we have continued to make progress on our

programme to implement the Vedanta Sustainability Framework. We have completed the Assurance

programme and all companies in the group have submitted their assurance self assessment.

Recommendation 2.5.7 Sustainability Committee 2.5.7 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. Target: May 2011

Following a recommendation by the HSE committee, the Board of Directors evolved the HSE

Committee into the Sustainability Committee at their meeting on 17th March 2011. The

Sustainability Committee met twice between January and June. We now consider this committee an

integral part of the management of the company along with the other board appointed committees.

The committee has full ownership to oversee the process of implementation of the Scott Wilson

recommendations and approved the interim submission of information in September 2011.

This item was closed by Scott Wilson (Review of Progress Report – March 2012)

Recommendation 2.5.8 Chief Sustainability Officer 2.5.8 Appoint an appropriately qualified Chief Sustainability Officer 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. Target November 2011

A Chief Sustainability Officer was appointed on 8th November 2010. The Chief Sustainability Officer’s

position reports directly to the Vedanta Resources Chief Executive Officer.


Recommendation 2.5.4 Value Statement 2.5.4 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.” Target: January 2011

A copy of the Vedanta Mission Statement and updated Corporate Values can be found at

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

This item was closed by Scott Wilson (Review of Progress Report - July 2011)

Recommendation 2.5.2 Code of Conduct 2.5.2 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. Target: January 2011

A copy of the updated Vedanta Code of Conduct can be found at http://www.vedantaresources.com/sustainability/our_policies.html This item was closed by Scott Wilson (Review of Progress Report - July 2011)

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Recommendation 2.5.6 Policies 2.5.6 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. Target: To be implemented in time for the 2011 Annual Report and Sustainability Report to be published in June 2012.

Under the umbrella of the Company’s, Vision, Values, Code of Conduct and Sustainability Model, the

Sustainability framework of policies, management and technical standards has been substantially

completed. Our policies are publically available at

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

This framework has been mapped against IFC and ICMM performance standards and guidelines and

our external assurance provider states the following:

“As part of the development and implementation of the Vedanta Sustainability Framework, ERM has

mapped the elements of the Framework to meet IFC and ICMM requirements. The IFC and ICMM

requirements are generally met by the Vedanta Framework elements as set out in the mapping

document attached. It is noted that some of the more technical elements of IFC Performance

Standard requirements are currently being addressed through the development of additional

Standards and/or Guidance Documents. It is anticipated that the remaining technical elements will

have been addressed during the first half of 2012”.

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

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We noted the comments of Scott Wilson during their last visit and have reissued our Technical

Standard, TS8 Conducting ESIAs to International Standards, with the added requirement to complete

a screening process for all new projects. We have also reissued our Technical Standard TS6, Supplier

and Contractor Management, with an additional checklist for screening suppliers and contractors

and issued our Acquisitions, Divestment and Joint Venture Due Diligence Management Standard

including the requirement to complete Sustainability Screening and Scoping checklists.

We believe this item is suitable for closure by Scott Wilson during their next visit in August 2012.

Appendix 1 – TS6 Supplier and Contractor Management – Technical Standard

Appendix 2 – TS8 Conducting ESIAs to International Standards

Appendix 3 – Acquisitions, Divestment and Joint Venture Due Diligence Management Standard

Recommendation 2.5.3 Stakeholder Engagement

2.5.3 Adopt internal procedures to ensure that all requests for information from stakeholders (including investors, NGOs, international organisations and the press) are dealt with 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. Target: April 2011

An important part of the new sustainability framework is the Social Policy and the supporting

technical standards. These standards require all operations to identify stakeholders and determine

engagement plans together with a method to record and reply to stakeholder enquiries and

grievances.

At the Corporate level, we have set up an email address [email protected] for enquiries

which are registered. This address was publicised in our latest sustainable development report and is

available on our website at http://www.vedantaresources.com/sustainability/griindex.html

This centralised system (email address of [email protected] via the corporate website) for providing timely reply to all stakeholders is now fully functional.

[email protected]

Period: FY 2012-13 Q1 (April 2012-Jun2012)

Reply sent or Action Taken /

Closed

No Reply needed / No Action

taken Total

Marketing Offers / Offer of services 5 17 22

Request for Sustainability Information 10 0 10

Employment seeking 29 0 29

Others (survey, int. mail, Invitations, spam)

9 52 61

All Mails 53 69 122

An analysis of enquires received shows that total 160 emails have been received between 1st April

2012 and 30th June 2012. Of this total, 10 are requesting information about Sustainability topics

while 22 are companies sending unsolicited marketing information, 61 are categorized as “Others”

(surveys, invitations, informative emails and spam) plus 29 requests for employment. Replies have

been sent to all requests for information and employment while for others, appropriate action was

taken or they did not require action.

mailto:[email protected]

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


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To further strengthen our process, a mechanism has been established where all the sustainability

related emails received by the Vedanta Corporate Communication and Investor Relation

departments are directly forwarded to the Chief Sustainability Officer or to the

[email protected] address. In the last two quarters since this final change was

implemented, five sustainability related emails from the Corporate Communication department and

four emails from our Investors Relation department were received via these routes.

Further, in line with the international best practice, the Vedanta Corporate Communication team has

started engaging with stakeholders via social media forum such as Facebook and Twitter.

A media monitoring agency which looks at national and international news pertaining to

sustainability and business has also been contracted.


Recommendation 2.5.13 Reporting 2.5.13 Report, where possible, on Group environmental and social performance as a whole and seek to benchmark performance against industry best practice and seek assurance from appropriate bodies with industry and sustainability expertise. Target June 2012

In their July progress report, Scott Wilson commented on the need for external benchmarking. We have drafted an Internal Benchmark study and completed our Sustainable Development Report 2011-12 (SDR). The SDR will be available on 23rd July 2012 in hard copy and on our website. Our assurance provider was again Det Norsk Veritas and we are pleased that they considered the report to have met the criteria for the Global Reporting Initiative (GRI) A+ reporting level. We used the Vedanta Sustainability Model as the guide for the report and the key sections are as follows: Introduction (including a performance summary), Responsible Stewardship, Building Strong Relationships, Adding and Sharing Value and Assurance

Appendix 4 – Vedanta Resources Sustainable Development Report 2011-12


Recommendation 2.5.8 Sustainability Committee Oversight 2.5.8 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. Target November 2011 During its meetings in 2011-12, the ExCo subcommittee focussed on safety and reviewed the results

of a number of specific plant and equipment audits across the group. It also instigated an audit of

near misses. Both these actions have led to direct reduction of risk to our employees and contractors

as improvements have been implemented.

The Report by the Chairman of the Sustainability Committee to the Vedanta Board for 2011-12

follows:


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Recommendation 2.5.9 Professional Competency Review 2.5.9 Keep under review the full range of HSE and CSR competencies required across the 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. Target November 2011. Across the group we employ a wide range of competent trained business and sustainability

professionals. A training programme has been developed for management, project and operations

staff and technical experts to raise awareness and build capacity around the requirements of the

Vedanta Sustainability Framework and to raise awareness of international standards focusing on the

IFC performance standards, guidance notes and EHS guidelines.

All CEOs and senior managers have attended a summary course. Thirty operations and project staff

plus 67 sustainability professionals have attended three full courses held to date. This programme

included a section to train trainers who have returned to their respective companies and have begun

relaying the training and information from the courses to all staff. Since our last report, the trained

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trainers have held numerous training sessions in the individual businesses bringing the total number

of people trained across the group to 2,951.

We are in the process of providing specific training such as that to the M&A department on the

requirements of the M&A management standard.


Recommendation 2.5.16 Human Rights Policy 2.5.16 Adopt a specific human rights policy demonstrating its commitment to the UN Declaration of Rights and procedures to ensure its implementation. This should be communicated to all stakeholders

via its web site. Target November 2011.

Following the modifications to the Vedanta Code of Conduct and as a part of the Vedanta

Sustainability Framework, we have developed and published the Vedanta Human Rights Policy,

reflecting our commitment to the UN Declaration of Rights. It was approved by the sustainability

committee in July 2011 and has been rolled out across the group as part of the Sustainability

Framework roll out programme. It is available for view at the Vedanta website at

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


Recommendation 2.5.24 External Audit 2.5.24 Undertake an audit of Group and Company environmental and social performance against international standards (IFC, ICMM, OECED) after 12 months of implementing the recommendations in this 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. Target: June 2013

Internal Audit Programme An important part of the sustainability programme at group level is the assurance programme. A

Self Assessment Questionnaire was completed by all Group Companies in June 2012. This has given a

detailed global baseline of performance across the group and will be the foundation for monitoring

the implementation of the changes needed to meet the Sustainability Framework. A programme of

site visits has begun to verify the self assessments.

The results will be reviewed by the ExCo committee each quarter so that changes can be documents

and progress can be tracked effectively. In this way, a systematic programme of continuous

improvement will be created and compliance with the requirements of the group sustainability

policies and standards will be assured to the Vedanta Board and to other stakeholders.

This is a significant step in moving to the last part of the programme and completing the final

external audit.

Appendix 5 – Self Assessment Questionnaire

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Final External Audit As recommended by Scott Wilson in their March 2012 report, we have agreed with all our lenders

that the Final Audit will take in June 2013. This will give adequate time for the Sustainability

Framework and changes to the management systems to be fully implemented.

We have also agreed with URS Scott Wilson that they will undertake the Final Audit in June 2013.

We consider this recommendation to be on track for closure in June 2013.

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Section 2 Company Level Progress During the first half of 2012, significant progress has been made at the group company level. All our

new projects are following the new management standard for New Project Development and

international consultants have been appointed to support the completion of the ESIA’s for each new

project; this process is supported by the implementation of the following technical standards:

Production of ESIAs to International Standards, Stakeholder Engagement, Water, Biodiversity,

Cultural Heritage, Grievance Mechanisms and Land and Resettlement. These standards include

specific sections on vulnerable social groups.

Further, all companies have carried out a formal assurance self-assessment comparing their own

policies and management systems and the requirements of the Vedanta Sustainability Framework.

The results will be reported to the ExCo committee every quarter and a summary reviewed by the

Sustainability Committee.

Of the seven company level recommendations we consider five to be completed and the remaining

two to be well advanced and ready for closure inDecember2012.

Recommendation 2.5.15 International Standard Best Practice 2.5.15 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. Immediate implementation

All our new projects will follow the Vedanta Sustainability Framework of Policies and Technical

Standards. As such they are aligned to the IFC Performance Standards and Guidance notes together

with the EHS guidelines.

Specific standards include:- New Projects, Planning Processes & Site Closure Management Process;

Stakeholder Materiality and Risk Management Standard; Land and Resettlement Management;

Security Management; Cultural Heritage; Stakeholder Engagement; Social Investment Management

and Grievance Mechanisms.

Following the recommendation of Scott Wilson at their last review, we have reissued our technical

standard TS8 Conducting ESIAs to International Standards to include a Screening process with an

assocaited checklist.

See Appendix 2 – TS8 Conducting ESIAs to International standards

Appendix 6– Screening Report - Liberia

Appendix 7 – Screening Report – Gamsberg

Appendix 8 – Screening Report – Chhattisgarh Coal Block

Appendix 9 – Screening Report – HZL new sites


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Recommendation 2.5.11 Land Management 2.5.11 Develop a policy and implementation practices to more proactively manage land in their ownership in order to maximise environmental gains and 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. Target: To be implemented in time for the 2011 Annual

Report and Sustainability Report to be published in June 2012

Our biodiversity policy commits us to minimise and mitigate biodiversity risks throughout our

business. Inherently, mining operations can affect local ecology but we strive to avoid any impact on

natural habitats. We plan to manage and use land in our operations in a manner that allows

biodiversity conservation to be integrated through the project life cycle including decommissioning,

closure and rehabilitation.

Further, we have joined forces with the World Business Council for Sustainable Development and

other like minded companies to help refine the granularity of their World Water Tool for better use

in India. This will take some time to complete after which we intend to map all our sites and develop

a risk assessment for water.

In order to promote the management of biodiversity, we have made a review across all the company

operations to identify which operations (mines/smelters/refineries) are operating within

close proximity of protected IUCN red list areas, important bird areas and key biodiversity

hotspots. We have mapped all our sites using the IBAT mapping tool

https://www.ibatforbusiness.org/. This process has led to the risk assessment which is being used to

set priorities for the development of Biodiversity Action Plans.

A total of 47 sites were identified as a result of the biodiversity review. The sites were

classified into High, Medium and Low priority as per the following criteria:

High Priority - Protected area falling within 1 KM radius of operation / mine.

Medium Priority – Protected area falling within 1-10 KM radius of operation / mine.

Low Priority – Protected area falling outside 10 KM radius of operation / mine.

Of the 47 sites we have reviewed using the tool; we have defined seven sites as of a higher risk and

requiring further priority investigation because they are situated within one kilometre of an area of

high biodiversity value. A further fourteen sites are categorised as a medium risk as they are

situated between two and ten kilometres of a high biodiversity area and the remaining 26 sites are

of lower risk being more than 10km away from a key area.

As biodiversity is a specialized discipline, we plan to review the risk assessment process

including conducting pilot studies to validate the identified risks through the IBAT tool. We

plan to have a full suite of appropriate Biodiversity Action Plans (BAP) in place at all our sites

by 2015.

Our Biodiversity Action Plan is in place and we have completed terms of reference for

initiating BAPS for the three KCM sites which have been approved by the Zambia

Environment Management Agency.

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Appendix 10– Black Mountain Mine BAP

Appendix 11 – Expression of Interest KCM BAP

Appendix 12 – Zambia Environment Management Agency TOR Approval


Recommendation 2.5.23 Register of Social and Labour Incidents 2.5.23 Maintain a register of major social and labour incidents at their plants and report to VRL Target:

April 2011

All group companies have developed a reporting process and database of incidents beginning 1st

April 2011 or earlier in the case of Lanjigarh. A monthly report is supplied to Vedanta Resources,

where a full register is kept. The complete register is circulated back to all companies within the

group for awareness, learning and risk management purposes. We now consider this a fully

implemented part of our business management system.


Recommendation 2.5.12 Environmental Communication 2.5.12 Communicate environmental monitoring regimes at plants and regularly report to stakeholders, including local communities, on their environmental performance, benchmarking this against international standards (e.g. IFC Guidelines) and reporting in their 2012 Sustainability Report. Target November 2011

Following our Stakeholder Engagement Technical Standard, we are producing Stakeholder

Engagement plans.

Within these plans, we have developed meeting schedules and registers to maintain the records that

we already had in place and we are developing our Environmental and Social Performance Report.

We will have completed our SEPs for Lanjigarh and Balco Coal Block by December 2012.

This work will be now be completed by December 2012 when we expect this recommendation to be closed.

Recommendation 2.5.17 New project planning and development Standard Community Consultation Processes within new project development 2.5.17 Develop a standardised approach to community consultation for new developments which responds to IFC guidance and communicate this to all stakeholders via its web site. Target November 2011

All our new projects will follow the New Project Development and Site Closure Process as part of the

Sustainability Framework. This is supported by our Stakeholder Engagement Technical Standard

which adheres to the IFC performance Standards and guidance notes. This requirement has been

included in the training courses given to operations, project and sustainability specialists.


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Recommendation 2.5.20 Vulnerable Social Groups 2.5.20 Adopt a specific policy in relation to engagement with and assistance to social groups that may be vulnerable to change and communicate this to all stakeholders on its web site. Target November 2011

As part of the Stakeholder Framework we have adopted a Human Rights policy to support the

statements in our Code of Conduct. The “Conducting ESIAs to International Standards” technical

standard requires human rights considerations to be taken into account for all new projects. Further

our Security Technical standard required us to manage our security forces in line with IFC and ICMM

guidelines.

This requirement has been included in the training courses given to operations, project and

sustainability specialists. Further, based on the results of the IFC mapping project that we used to

ensure the Sustainability Framework meets international standards and the recommendation of

Scott Wilson during their last visit, we are developing an additional technical standard / guidance

note for Vulnerable Social Groups to provide more detailed support to our group companies in this

area.

This work will be now be completed by December 2012 when we expect this recommendation to be closed.

Recommendation 2.5.22 Cultural Heritage 2.5.22 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. Target

November 2011

Our New Project Development Process is a key part of the Sustainability Framework and as such it

must be considered in all new projects. Included in this process and specifically in the Conducting

ESIA to International Standards and Cultural Heritage Technical Standards are the Vedanta

Requirements for Cultural Heritage which all companies and projects follow.


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Section 3 Lanjigarh Progress At Lanjigarh the team takes all matters of Sustainability very seriously and a Sustainability Officer has

been appointed to increase focus in this area. The organisation chart for this position is shown

below.

A focussed effort to complete the improvement program at the VAL refinery in Lanjigarh has been

undertaken and the results to date are described below. These include a systematic gap analysis of

Health and Safety and, Environment and Social management against the Vedanta Sustainability

Framework and IFC and ICMM standards, the implementation of a grievance cell that operates a

weekly surgery managed by the VAL Lanjigarh community relations team, improvements to the

filtration system and air monitoring together with a housekeeping drive and a review and update of

the disaster management plan in line with UNEP recommendations.

Recommendation 3.3.20 Environmental and Social Management 3.2.20 Undertake a systematic gap analysis of the EMS against the Industry Best Practice criteria and update it accordingly. Target: April 2011 A gap analysis study with reference to Indian law, IFC Performance Standards, ICMM guidelines,

OECD guidelines and the UNGC has been completed by ERM India. Within this report 126 items were

checked which has led to two overarching actions to be completed. These are:

i) the creation of an Environmental and Social Management Plan to summarise all the work we

have completed to develop the VAL-Lanjigarh sustainability management system including

guidelines for contractor camps, development of organisational capacity, procurement of

local content, waste management and resource efficiency. The goal is to create a world class

management programme.

ii) The creation of a Stakeholder Engagement Plan to include all the work we have completed

on our grievance mechanism, engagement with all stakeholders and the continued

development of an integrated development plan for the area.

This integrated ESMP shall be build upon the existing management systems and plans. As part of the

integrated ESMP, additional plans that we are developing include:

a. Detailing the Environment Management Plan,

b. Developing new Resettlement Action Plan for new land acquisition,

c. Updating the traffic Management Plan,

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d. Influx Management Plan,

e. Biodiversity Management Plan,

f. Tribal Development Plan,

g. Stakeholder Engagement and Disclosure Plan.

The integrated ESMP will be aligned to the Vedanta’s Sustainability Framework, which is aligned to

the IFC Standards.

A total of 12 recommendations were identified by ERM. While most of the recommendations (10)

are likely to be completed by July, 2012, the integrated ESMP and the Tribal Development Plan (TDP)

are likely to be completed by Sep, 2012. A status update of the various recommendations is attached

for reference.

This work will be now completed before December 2012 when we expect this recommendation to

be closed.

Appendix 13 - Lanjigarh-ESAP-(as-per-ERM-Feb-12-Rpt)-Status Update -30-June-12

Recommendation 4.5.8 Grievance Mechanism 4.5.8 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. Target: May 2011

The public grievance system has been implemented in Lanjigarh by the Rehabilitation & Peripheral

Development Advisory Committee (RPDAC). In addition, we have implemented our own public

grievance and open communication mechanism. Every Friday, the vice president of human resources

holds an open forum to hear issues and complaints & take-up the issues with concerned parties.

A total of 634 people were seen between April 2011 and January 2012. In case of issues related to

the government, such as; a local community requesting a special relief package over and above the

package previously announced by the government and agreed during the public consultation before

the plant was built, then the matter is referred to the Government of Orissa for direction and

Vedanta facilitated meeting with the person and the government representatives. In the cases of

requested for employment we were able to help some people but not all. All other issues have been

resolved amicably.

Between January and June the following 34 cases were registered of which 15 have been closed. All

34 cases related to requests for employment.


Total Number of Cases 34

Cases Open 15

Cases Closed 19

Grievance Analysis Summary for the period January 2012 to June 2012

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Recommendation 3.3.3 Housekeeping

This item was closed by Scott Wilson (Review of Progress Report – July 2011)

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 Expansion Project currently remains ‘on hold’ and there is no certainty when the court order

might be lifted. The company has 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).

As and when the project is approved we shall implement the action of a supplementary report.

Recommendation 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).

Alumina refineries are classed as potentially hazardous plants and are therefore obliged to have a

Disaster Management Plan (DMP) that deals with any significant risks including those associated

with ‘off-site’ facilities like red mud and ash ponds. This year we have completed a number of drills

related to rescue of injured persons.

EMERGENCY MOCK DRILL 2012 (YTD – July, 2012)

Sl No Date Area Scenario

1 10/03/2012, 12.10 P.M Power plant Rescue of unconscious person

while working at height.

2 24/04/2012,4.15 P.M DG Hall,

Power plant

Rescue of unconscious persons during fire (Due to Electrical

short circuit) in HFO

3 16/06/2012 , 8.28 P.M HFO Rescue of unconscious persons during fire (Due to FO)in HFO

4 16/06/2012 , 7.20 P.M Executive

hostel, VAL Township

Rescue of unconscious persons during fire (Due to Electrical short circuit) inside hostel

room.


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Recommendation 3.3.32 Retrenchment Planning 3.2.32 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. Target: November 2011

There is a robust and well established legal framework and retrenchment can only be made after

obtaining approvals from the government (except termination on account of disciplinary/integrity

issues). The procedure and standing orders that have been set up by the government and are jointly

signed by VAL & the Government of Orissa’s director of factories have been and will be followed.

We are pleased to report that no retrenchment has happened during the financial year 2011-12 and

2012-13 (YTD), nor have any complaints/ grievances been registered with the Grievance Redressal

Cell of the Organization since beginning of its operations in April 2011 relating to the matter.

Although VAL-Lanjigarh has formulated Retrenchment Policy (dated Dec, 2011), the unit regularly

engages with the local community to minimise the retrenchment of local employees. The fact that

no grievances have been registered concerning retrenchment indicates that the employee-base and

their dependant family members in general and the local population feel that there is no threat to

their livelihood on account of losing their employment status with the organization.


Recommendation 3.3.48 Contractor accommodation 3.3.48 Undertake a gap analysis for contractors’ labour accommodation against IFC/EBRD guidance and any serious deficiencies addressed. 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. Target: November 2011

The labour camps in Lanjigarh were built by contractors on private land and it is not possible for us

to remove or dismantle these camps at present. However, our CSR team regularly visit the camps to

ensure that proper hygiene & sanitation conditions are maintained. We continue to organize health

camps through our mobile health units. We are developing a camp checklist for the CSR specialists to

use on their visits and this will be used to maintain standards if the camps are used in future. We

have also developed a VAL standard operating practice for the minimum requirements of contractor

facilities in line with IFC guidelines. This will be used when the expansion project begins.


Recommendation 4.5.5 Dust reduction plus health monitoring 4.5.5 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. Target:

November 2011

Scott Wilson commented that this is item can be closed as all Alumina and Coal is now moved by rail.

In the last six months we have increased the number of trains of bauxite delivered directly into the

plant from one to one and a half leaving one and a half to be transhipped at the nearest railway

station and to complete its journey by road. We expect to complete the transition to rail by the end

of the year. In the meantime, we will continue to use trucks with tarpaulin covers and with water

sprinkling to minimize any dust.

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Recommendation 4.6.8 Additional livelihood programmes 4.6.8 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. Target: November 2011

We are continuing to work with the LPADF and others in the region to help support people in the

villages near to our refinery.


Recommendation 4.6.12 Integrated Community Development 4.6.12 Work together with local government to develop and publicise an integrated rural development strategy for the area. Target: April 2012

We are continuing to work with the LPADF and others in the region to help support people in the

villages near to our refinery.


Recommendation 3.3.63 Contractor and Community Health and Safety 3.3.63 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. Target: November 2011

Vedanta is committed to providing a safe working environment for all our employees and contractors and for surrounding communities. A gap analysis has been completed as a part of Recommendation 3.2.20 Environment and Social Management and actions arising are included in the action plan associated with this analysis in 3.2.20 above This work will be now be completed by December 2012 when we expect this recommendation to be closed.