Vedanta Resources plc

30 June 2013

Vedanta Resources plc Fifth 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 resource company operating 48 operating sites on four continents. This is the fifth progress report against the recommendations made by Scott Wilson in their report dated 17th November 2010. It will be made publically available at http://www.vedantaresources.com/sustainability/scottwilson.html

At the Group level, having modified the governance structure in 2011, the board-appointed Sustainability Committee continues to meet quarterly to lead the implementation of the Sustainability Framework while the EXCO Sub Committee on Sustainability continued its focus on safety improvements at its monthly meetings. During FY 12-13, the Sustainability Committee has met four times and covered a wide range of topics including health, safety and environmental management and performance, stakeholder engagement, human rights and child labour, and the development and implementation of the Vedanta Sustainability Framework. The Vedanta Sustainability Assurance Process (VSAP) and results have also been reviewed by the Board-appointed Audit Committee.

Over the same period, with the issue of the Technical Standard on Indigenous Peoples / Vulnerable Tribal Groups, we have completed the process of development of the Vedanta Sustainability Framework (VSF), consisting of Group Level Policies, supported by a comprehensive suite of Management and Technical Standards. Work continues on developing the supporting Guidance Notes and 12 of the planned 35 Guidance Notes had been issued by the end of June 2013.

We have mapped the performance of our operating units across the Group including new projects. Each unit’s performance is tracked using the Vedanta Sustainability Assurance Programme (VSAP). The results have been reviewed by the Sustainability Committee and the EXCO Sustainability Sub-Committee and changes are tracked through Corrective and Preventive Action (CAPA) plans . In this way, a systematic programme of continuous improvement has been created and compliance with the requirements of the Group sustainability policies and standards is assured.

At the Group level, we continue to work with international consultants on all our new projects in order to complete ESIAs to international standards and within our existing operations, the CEOs are leading programmes to remove gaps identified in the assurance process. Progress is underway in preparation for the final audit, scheduled during July/September 2013.

At the plant level, at Vedanta Aluminium Limited (VAL), Lanjigarh the Environmental and Social Management Plan has been completed. It contains sub-plans on environmental management, resettlement for new land acquisition, traffic management, influx management, biodiversity management, tribal development, stakeholder engagement and disclosure.

In the March 2013 progress report, reporting on our Fourth Progress Report, Scott Wilson reported that 27 of

the 29 recommendations were closed or suitable for closure. The remaining two recommendations are the

Final Audit and a recommendation relevant only to the Lanjigarh expansion project which is on hold. We

believe that the Company is actively demonstrating application of its Sustainability Framework and so is

fulfilling its obligations to undertake the Final Audit in the coming months.

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Table of Contents

Executive Summary __________________________________________________________ 1

Table of Contents ___________________________________________________________ 2

Background ________________________________________________________________ 5

Section 1 Corporate Level Progress __________________________________________ 8

Recommendation 2.5.7 Sustainability Committee _________________________________________ 8

Recommendation 2.5.8 Chief Sustainability Officer ________________________________________ 8

Recommendation 2.5.4 Value Statement ________________________________________________ 8

Recommendation 2.5.2 Code of Conduct ________________________________________________ 9

Recommendation 2.5.6 Policies _______________________________________________________ 9

Appendix 1 – Guidance Note GN00 - Indigenous Peoples / Vulnerable Tribal Groups ______________________ 11

Appendix 2 – Guidance Note GN 02 - Hazardous Materials Management _______________________________ 11

Appendix 3 – Revised Guidance Note GN 4 - Biodiversity Management _________________________________ 11

Appendix 4 – Guidance Note GN 07 - Risk Assessment ______________________________________________ 11

Appendix 5 - Guidance Note GN 12 - Human Rights _________________________________________________ 11

Appendix 6 - Guidance Note GN 14 - Waste Management ___________________________________________ 11

Appendix 7 - Guidance Note GN 21 - Work at Height ________________________________________________ 11

Appendix 8 - Guidance Note GN 23 - Fleet Management ____________________________________________ 11

Appendix 9 – Vedanta - IFC Mapping Exercise _____________________________________________________ 11

Appendix 10 Lanjigarh Management System Aligned to VSF __________________________________________ 11

Appendix 11 Sterlite Management System Aligned to VSF ___________________________________________ 11

Appendix 12 KCM Management System Aligned to VSF _____________________________________________ 11

Appendix 13 BALCO Management System Aligned to VSF ____________________________________________ 11

Appendix 14 SZ Management System Aligned to VSF _______________________________________________ 11

Appendix 15 VAL-J Management System Aligned to VSF _____________________________________________ 11

Appendix 16 Sesa Goa PID-Met Coke Management System Aligned to VSF ______________________________ 11

Appendix 17 Lisheen Management System Aligned to VSF ___________________________________________ 11

Appendix 18 CMT Management System Aligned to VSF _____________________________________________ 11

Appendix 19 HZL Management System Aligned to VSF ______________________________________________ 11

Appendix 20 BMM Management System Aligned to VSF _____________________________________________ 11

Recommendation 2.5.3 Stakeholder Engagement ________________________________________ 12

Appendix 21 Samples of request for information received on Sustainability email id in Q4 (FY 2012-13) ______ 13

Recommendation 2.5.13 Reporting ___________________________________________________ 13

Appendix 22 Vedanta Sustainable Development Report 2012-13 _____________________________________ 14

Appendix 23 Vedanta in house journal of Hindustan Zinc Limited _____________________________________ 14

Recommendation 2.5.8 Sustainability Committee Oversight _______________________________ 14

Appendix 24 MOM of Sustainable Committee Meetings held during FY 12-13 ___________________________ 15

Appendix 25 CAPA of Sterlite, Tuticorin __________________________________________________________ 15

Appendix 26 CAPA of VAL-Lanjigarh _____________________________________________________________ 15

Appendix 27 CAPA of KCM _____________________________________________________________________ 15

Recommendation 2.5.9 Professional Competency Review _________________________________ 16

Recommendation 2.5.16 Human Rights Policy ___________________________________________ 17

Appendix 28 VAL-Lanjigarh Human Rights Training _________________________________________________ 17

Appendix 29 KCM Human Rights Training _________________________________________________________ 17

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Appendix 30 Sterlite Copper Human Rights Training ________________________________________________ 17

Appendix 31 BALCO Human Rights Training _______________________________________________________ 17

Appendix 32 HZL Human Rights Training _________________________________________________________ 17

Appendix 33 BMM Human Rights Training ________________________________________________________ 17

Appendix 34 Scorpion Zinc Human Rights Training _________________________________________________ 17

Appendix 35 Sesa Goa Human Rights Training _____________________________________________________ 17

Appendix 36 VAL-Jharsguda Human Rights Training ________________________________________________ 17

Recommendation 2.5.24 External Audit _____________________________________________ 17

See Appendix 24 MOM of Sustainable Committee Meetings held during FY 12-13 ________________________ 18

Appendix 37 VAL-Lanjigarh Supplier and Contractor Management _____________________________________ 19

Appendix 38 KCM Supplier and Contractor Management ____________________________________________ 19

Appendix 39 Sterlite Copper Supplier and Contractor Management ___________________________________ 19

Appendix 40 BALCO Supplier and Contractor Management __________________________________________ 19

Appendix 41 HZL Supplier and Contractor Management _____________________________________________ 19

Section 2 Company Level Progress _________________________________________ 20

Recommendation 2.5.15 International Standard Best Practice ______________________________ 20

Appendix 42 BALCO Coal Block ESIA Final Report - Executive Summary _________________________________ 20

Appendix 43 Sesa Goa Liberia Phase I Project, Draft ESIA Report - Executive Summary ____________________ 20

Recommendation 2.5.11 Land Management ____________________________________________ 21

Appendix 44 IBAT Maps and Reports of VAL-Lanjigarh, Sterlite Tuticorin and KCM ________________________ 22

Recommendation 2.5.23 Register of Social and Labour Incidents ____________________________ 23

Appendix 45 – The Vedanta Group Incident Register ________________________________________________ 23

Recommendation 2.5.12 Environmental Communication __________________________________ 23

See Appendix 48 for Stakeholder Engagement Plan – VAL-Lanjigarh ___________________________________ 24

Appendix 46 – Stakeholder Engagement Plan Sterlite Tuticorin _______________________________________ 24

Appendix 47 – Stakeholder Engagement Plan KCM _________________________________________________ 24

Recommendation 2.5.17 New Project Planning and Development ___________________________ 24

Recommendation 2.5.20 Vulnerable Social Groups _______________________________________ 24

See Appendix 1 – Guidance Note GN00 - Indigenous Peoples / Vulnerable Tribal Groups___________________ 25

Recommendation 2.5.22 Cultural Heritage _____________________________________________ 25

Section 3 Lanjigarh Progress ______________________________________________ 26

Recommendation 3.3.20 Environmental and Social Management ______________________________ 26

Appendix 48 – Environment and Social Action Plan ESMP- VAL-Lanjigarh _______________________________ 29

Appendix 49 – R&R Plan 3 Villages-VAL-Lanjigarh __________________________________________________ 29

Appendix 50 – July 2010 Audit Report-Land & Resettlement Section-VAL-Lanjigarh _______________________ 29

See Appendix 48 for Tribal Development Plan-VAL-Lanjigarh _________________________________________ 29

See Appendix 48 for Stakeholder Engagement Plan-VAL-Lanjigarh _____________________________________ 29

Appendix 51 – Technical Improvement-Report-VAL-Lanjigarh ________________________________________ 29

Recommendation 4.5.8 Grievance Mechanism __________________________________________ 29

Recommendation 3.3.3 Housekeeping _________________________________________________ 30

Recommendation 3.4.3 Proposed expansion ____________________________________________ 31

Recommendation 3.3.79 Disaster management plan _____________________________________ 31

Appendix 52 – Mock Drill conducted during April 2012 and May 2013 at VAL-Lanjigarh ____________________ 31

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Recommendation 3.3.32 Retrenchment Planning ________________________________________ 31

Recommendation 3.3.48 Contractor accommodation _____________________________________ 32

Appendix 53 – Contractor Accomodation Document of VAL-Lanjigarh __________________________________ 32

Recommendation 4.5.5 Dust reduction plus health monitoring _____________________________ 32

Recommendation 4.6.8 Additional livelihood programmes ________________________________ 32

Recommendation 4.6.12 Integrated Community Development _____________________________ 33

Recommendation 3.3.63 Contractor and Community Health and Safety ___________________ 33

Closed

Suitable for closure by URS Scott Wilson during final audit in July/Sep 2013 Pending the approval of the expansion of the refinery at Lanjigarh

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

copper, zinc, lead, silver 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, Ireland and Sri Lanka.

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

program of fully integrating a new Sustainability Framework of policies and standards, aligned to the IFC

Performance Standards and ICMM Principles, consistent with a multinational resource company operating 48

facilities across four continents. Of these major operating metal and mining sites, 40 are certified to ISO 9001,

ISO14001 and OHSAS 18001 and Sesa Goa is also approved to the SA8000 standard while VAL-Lanjigarh is also

certified to ISO 50001. Sesa Goa, Hindustan Zinc, Sterlite Industries and Cairn India are listed on major stock

exchanges. Group subsidiary companies also have their own Boards of Directors.

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

published on 17th November 2010. It contains supporting documentation.

In 2011, we developed a sustainability model which along with the supporting framework of policies and

standards provides us with a robust overarching strategy to drive our future growth. It is based on our

fundamental belief that a business cannot be sustainable in a planet and society that fails, and that we can

mine and process metals in a sustainable way by undertaking a range of activities which have the dual

purpose of strengthening our business and positively influencing the world around us.

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The Vedanta Sustainability Model is designed to enhance the Responsible Stewardship of all the assets we

manage including their effect on the health and safety of our people and the environment. It goes a lot

further by requiring us to develop Strong Relationships with all our, be they shareholders, lenders,

employees, neighbours, members of our industry, the governments where we operate or civil society. 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 in the eyes of 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 five technical and

management standards and processes which support our sustainability model and which will lead to a

consistency of process and to superior performance.

Following our fourth half yearly progress report, Scott Wilson visited our Lanjigarh site and the Group

Sustainability team in Delhi, where they reported the following:

“As per previous reviews, Vedanta submitted their Fourth Progress Report, which was used as a basis for

discussion during our site visits to the Lanjigarh Alumina Refinery and to the Sustainability Office in Delhi. It

was confirmed that arrangements for governance and centralised day-to-day management of sustainability

issues generally remain in place and are functioning well. However, we note that the Chief Sustainability

Officer is leaving Vedanta’s employment and an early appointment of a suitable replacement will be needed to

maintain programme momentum. The continued lack of a social development expert in the central

Sustainability Team is also of potential concern, although this may be partly offset by the imminent arrival of a

Group CSR manager.

The range of policies, management and technical standards that form the new Sustainability Framework is

now complete with the issue of the Technical Standard on Indigenous Peoples / Vulnerable Tribal Groups and

work continues on developing the supporting Guidance Notes. An extensive training programme has been

rolled out across the Group to support the implementation of the Sustainability Framework, which is also

subject to a combination of self-assessment / internal audit and an assurance process and extensive action

plans to drive consistent and correct application.”

It may be noted that there was a seamless and smooth transition in appointing a new Chief Sustainability

Officer (CSO) which underpins the management's focus and commitment to further build on the momentum

to drive the sustainability agenda. The incumbent CSO left at the end of March 2013 and the replacement

came onboard effective 1 April 2013. His replacement, Mr Mark Eadie, has over 26 years of experience at

companies around the world at various organisations including Shell, ERM and JP Morgan and has extensive

experience in the area of sustainable development in the resource sector across geographies. Mark brings

with him specific long-term Community Relations and Social Assessment experience and is currently

shouldering the responsibility for driving Social/Community Relations aspects. However, the company

understands importance of this role and a Community Relation expert will be joining the Corporate

Sustainability team in July 2013.

In response to the recommendations of the last Scott Wilson progress report (March 2013), we have issued

Guidance Notes on Human Rights (GN 12), Indigenous Peoples/Vulnerable Tribal Groups (GN 00), and have

specifically revised Biodiversity Guidance Note (GN04) focussing on critical habitats. We have also issued the

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Guidance Note on Risk Assessment (GN 07), Fleet Management (GN 23), Work at Height (GN 23), Waste

Management (GN 14) and Hazardous Materials Management (GN 02).

During January to June 2013, we have conducted eight assurance visits as part of the Vedanta Sustainability

Assurance Programme, to review the self assessment scores and audit the company’s sustainability

performance. These visits were conducted at Scorpion Zinc (Namibia), Black Mountain Mine (South Africa),

Konkola Copper Mines (Nchanga Smelter and Mines, Konkola Mines and Nkana Smelter, all in Zambia) and

Hindustan Zinc Limited (Dariba – Zinc and Lead smelter, several mines).

All the subsidiary companies in the Group have now not only developed an implementation plan for the

Vedanta Sustainability Framework but actually conducting that implementation and are also encompassing

the Sustainability Assurance Programme.

In the March 2013 progress report, Scott Wilson reported that nine of the eleven corporate level

recommendations were confirmed as closed, one was considered suitable for closure and one was considered

on-track for closure in June 2013. At the company level, of the seven recommendations, three were

confirmed as closed and the remaining four were considered suitable for closure. At Lanjigarh, ten of the

eleven recommendations were confirmed as closed, and the one related to expansion remains on hold.

During the last twelve months, we consider that excellent progress has been made on each of the recommendations at each level. We believe that the Company is demonstrating sufficient application of its Sustainability Framework and thus fulfiling its obligations to undertake the Final Audit scheduled for July -September, 2013. The following three sections describe in details our progress at the Corporate and Company levels and at and

Lanjigarh.

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Section 1 Corporate Level Progress

During the period between January’12 and June 2013, we have continued to make progress on our

programme to implement the Vedanta Sustainability Framework.

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 board appointed HSE

Committee into the Sustainability Committee at their meeting on 17th March 2011 with suitable changes in

its mandate. During FY 12-13, the Sustainability Committee has met four times. This provides us with

appropriate governance structure in line with the global practices

We noted the comments of Scott Wilson made in the last progress report (March 2013), i.e., “It was

confirmed that there were no other changes to the Sustainability departmental structure or its responsibilities.

The team comprises Heads of: Safety and Crisis Preparation; Environment and Conservation; Sustainability

Data, Reporting and Analysis; Sustainability Assurance; a Sustainability Manager and administrative support.

However, we note that the position of the CR and Human Rights Head is still vacant and that, from a broader

perspective, there is no specific resource within the Sustainability Team to deal effectively with social issues,

particularly in regard to development projects. “

We would like to submit that the new CSO brings with him the Community Relations and Social Assessment

experience and is currently shouldering the responsibility for driving Social/Community Relations aspects.

However, the company understands the importance of this role and a highly experienced Head of Community

Relations is joining the Corporate Sustainability team in July 2013.

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 CEO. The incumbent CSO left at the end of March 2013 and the

replacement came on-board effective 1 April, 2013. The new CSO, Mr Mark Eadie, has over 26 years of

experience at companies around the world at various organisations including Shell, ERM and JP Morgan and

has extensive experience in the area of sustainable development in the resource sector across geographies.

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

Recommendation 2.5.4 Value Statement

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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)

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

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With the issue of the Indigenous Peoples /Vulnerable Tribal Groups Standard in March 2013 and additional

Guidance Notes, the Vedanta Sustainability Framework is substantially complete. Iif required, additional

Guidance Notes may be issued in the future and the Policies, Standards and Management Processes will be

reviewed regularly. As per the recommendations of last Scott Wilson progress report (March 2013), we have

issued Guidance Note on Human Rights (GN 12), Indigenous Peoples/Vulnerable Tribal Groups (GN 00),

revised the Biodiversity Guidance Note (GN4) focussing on critical habitats. In addition, we have also issued

the Guidance Note on Risk Assessment (GN 07), Fleet Management (GN 23), Work at Height (GN 23), Waste

Management (GN 14) and Hazardous Materials Management (GN 02). The issued GNs are attached as

appendices.

We are also attaching the IFC Mapping exercise done by ERM to confirm whether the elements of the

Vedanta Sustainability Framework (Policies, Management Standards, Technical Standards and Guidance

Documents) meet the IFC and ICMM standards.

ERM reported 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 Performance Standards and

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ICMM Principles are met by the Vedanta Policies, Management Standards and Technical Standards (the

Vedanta Framework) as set out in the mapping document attached. Additional Guidance Notes are currently

being developed and released to support the implementation of the Vedanta Framework elements.”

Appendix 1 Guidance Note GN 00 – Indigenous Peoples / Vulnerable Tribal Groups

Appendix 2 Guidance Note GN 02 – Hazardous Materials Management

Appendix 3 Revised Guidance Note GN 04 - Biodiversity Management

Appendix 4 Guidance Note GN 07 - Risk Assessment

Appendix 5 Guidance Note GN 12 – Human Rights

Appendix 6 Guidance Note GN 14 --- Waste Management

Appendix 7 Guidance Note GN 21 – Work at Height

Appendix 8 Guidance Note GN 23 – Fleet Management

Appendix 9 Vedanta - IFC Mapping Exercise

We noted the comments of Scott Wilson made in the last progress report (March 2013), that “Vedanta focus

should be placed upon implementation, including refresher training in new or amended procedures to ensure

understanding of Group requirements at Company and Site Levels in order to be considered fully on track for

the final close-out in June 2013”. Accordingly, we have placed strong focus on the implementation. The

management system at all our units is now aligned to Vedanta Sustainability Framework (VSF) requirements.

Attached are the Document Change requests of units demonstrating commitment to aligning the

management system to VSF. The next audit of the management system by an accreditation agency will be

carried out against the VSF requirements.

Appendix 10 Lanjigarh Management System Aligned to VSF

Appendix 11 Sterlite Management System Aligned to VSF

Appendix 12 KCM Management Systems Aligned to VSF

Appendix 13 BALCO Management System Aligned to VSF

Appendix 14 SZ Management System Aligned to VSF

Appendix 15 VAL-J Management System Aligned to VSF

Appendix 16 Sesa Goa PID-Met Coke Management System Aligned to VSF

Appendix 17 Lisheen Management System Aligned to VSF

Appendix 18 CMT Management System Aligned to VSF

Appendix 19 HZL Management System Aligned to VSF

Appendix 20 BMM Management System Aligned to VSF

Sustainability Framework training is being conducted across the Group, at all units. Details of this training are

presented under Recommendation 2.5.9 – Professional Competency Review.

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With respect to the Technical Standard on Indigenous Peoples/Vulnerable Tribal Groups well as the release of

the Guidance Note, we plan to organise training for key relevant employees in the Second Quarter 2013. We

plan to submit the details of the training conducted during August 2013.

We believe this item is suitable for closure by Scott Wilson during the Final Audit.

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 Vedanta Sustainability Framework is the Group’s Social Policy and the supporting

Technical Standards, which provide structure to the way we plan and manage our stakeholder engagement.

These standards require all operations to identify stakeholders and determine engagement plans, including

recording and responding to stakeholder enquiries and grievances. Our stakeholder engagement Technical

Standard is aligned with international best practice and equips our subsidiaries with a consistent approach to

the way they engage.

At Corporate level, as part of our continual engagement with those interested in our business, we are

committed to effectively responding to stakeholder feedback. Effort is made by the business to ensure that

multiple channels are used to maintain contact, for example, a dedicated email address –

sustainability@vedanta.co.in – is available and displayed in the Contacts section of our website, and this is

complemented by an online feedback form in the Sustainable Development section of our website

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

This centralised system (email address of sustainability@vedanta.co.in via the corporate website) for

providing timely reply to all stakeholders is fully functional.

An analysis of enquires received shows that 455 emails have been received between 1st April 2012 and 31st

March 2013 as shown above, only 28 of these emails requested information about the company while 102

were sent with the goal of finding employment.

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In addition to emails received at this address, all matters related to our sustainable development initiatives

received by departments such as the Vedanta Corporate Communications and Investor Relations teams are

forwarded to the Chief Sustainability Officer or to sustainability@vedanta.co.in.

All emails are reviewed and an appropriate response is made. The issues raised are also recorded and

contribute to our continual monitoring and understanding of stakeholders’ interests.

Broader stakeholder engagement

Vedanta and our subsidiary companies have proactive shareholder engagement. In the course of the year, we

have proactively met with stakeholder groups including civil society organisations, media and industry

associations, to increase awareness about the Group, explain our position, listen to the views of others and

answer any queries that they might have. We use numerous channels of communication which include one-

on-one and large format meetings and briefings, and online and print communications. We also invest

considerable resources in creating and publishing in-house journals from most of the operating units to

engage with employees, our wider industry and communities and host governments. Hindustan Zinc Limited ,

BALCO, Konkola Copper Mines (KCM), Sterlite Copper, Lisheen Mines, Scorpion Zinc, and Black Mountain

Mine (BMM) all produce in-house journals.

We also recognise the growing value of online and social media in engaging with various stakeholders. We

have an active presence on various social media (YouTube, Facebook, Twitter, Flicker, Pinterest, blogs) to

increase awareness about our business and activities, share latest news and respond to any queries or

comments that are posted. We were pleased to be ranked 6th among FTSE 100 companies in a study

conducted by Sociability, UK and Public Relations Consultants Association, UK. This independent study

benchmarks corporate social media engagement using social media networks including YouTube, Twitter and

Facebook. Vedanta has also been ranked number one among all FTSE 100 companies on use of YouTube to

engage with its stakeholders.

Appendix 21 Samples of request for information received on sustainability email id in Q4 (FY 2012-13).

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

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

The group has been always keen to report its Sustainability and Environmental and Social performance to its

stakeholders. We are satisfied that we have been able to release our Vedanta Sustainable Development

Report 2012-13 report. This is our fifth Sustainable Development Report and coincides with the publication of

our Annual Report. Combined, these two documents provide an overview of our approach and our

achievements in 2012-13, outlining our actions over the past year to achieve our mission to be a world-class

diversified natural resource company.

In this year’s Sustainable Development Report, we have used the Global Reporting Initiative (GRI) G3.1

guidelines and the GRI G3.1 Supplement on Metal and Mining Industries and Oil & Gas. In addition, the report

aligns with and responds to the 10 Principles of the United Nations Global Compact and Millennium

Development Goals. We report to the highest A+ GRI application level. The detailed GRI G3.1 Content Index

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(including the Mining and Metal and the Oil & Gas Supplement) reference sheet and data sheet is available at

www.sustainability.vedantaresources.com.

All Vedanta Group subsidiary companies have been reported as though they were 100% wholly-owned as we

recognise the level of control and sphere of influence the Group has over these operations. For the first time,

the report includes data from Cairn India, which was acquired in the third quarter of the 2011-12 financial

year.

The Vedanta Sustainability Committee has appointed Det Norske Veritas AS (DNV) as the assurance provider

to independently assess the Sustainable Development Report, and site assessment have been made to

BALCO, Hindustan Zinc Ltd, KCM, VAL Lanjigarh, Sterlite (Silvassa), Sterlite Energy Ltd (SEL) and Cairn India’s

corporate office.

In DNV’s opinion, “based on the scope of this assurance engagement the Report provides a fair representation

of the Company’s sustainability performance. The Report, along with the referenced information in the website

and annual report along with the commitments with timelines to report the partially reported core indicators,

generally meets the requirements for GRI application level A+.”

DNV has evaluated the Report’s adherence to the principles like Materiality, Completeness, Neutrality,

Reliability, Responsiveness and Stakeholder inclusiveness on a scale of ‘Good’, ‘Acceptable’ and ‘Needs

Improvement’. We are happy to report that DNV expressed that there is an improvement in the Stakeholder

Inclusiveness aspect and the company has been allocated “Acceptable” rating for all above mention six

principles highlighting the progress we have made on our reporting aspect.

It is worth mentioning here that apart from the Sustainable Development Report company has been

participation and releasing other external reports and programmes like the Carbon Disclosure Project on a

regular basis.

As mentioned in Section 2.5.3, we also invest considerable resources publishing in-house journals from most

of the operating units to engage with employees, our wider industry and communities and host governments.

Appendix 22 Vedanta Sustainable Development Report 2012-13

Appendix 23 Vedanta in house journal of Hindustan Zinc Limited (Zinc News)

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

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 The Vedanta Board is responsible for all aspects of sustainability across the Group and acts through the

Sustainability Committee. The Committee is chaired by the Senior Independent Director, Mr Naresh Chandra,

and also comprises Mr MS Mehta, CEO Vedanta, and Mr J Janakaraj, CEO KCM. The Chief Sustainability Officer

acts as the secretary of the Committee and all invited CEOs or their representatives attended the meetings.

The Committee oversees and reviews sustainability performance and the Committee Chairman regularly

updates the Board on its progress.

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This year the Sustainability Committee held four meetings and oversaw the Sustainability Model and

Framework development progress, 2012-13 Sustainable Development Report and Sustainability Assurance

Programme.

The Sustainability Committee reviewed the investigation report and recommendations for each fatality that

occurred in the Group. It also oversaw the following programmes:

Accident reduction and the prevention of harm to employees and contractors

Reduction in water use

Reduction in energy and carbon use

Clean Development Mechanism programmes

Implementation of the Scott Wilson Report recommendations including approval of the formal

submissions to the lenders

Waste management

Action plan on Sustainability Assurance Programme

Human Rights and Child Labour Due Diligence Ratification of Vedanta Sustainable Development

Report 2012-13

Apart from these topics, the Sustainability Committee oversaw the processes and the delivery of Technical

Standards. Other issues and matters dealt with by the Committee included consideration of the Group’s

stakeholder engagement with specific reference to the VAL-Lanjigarh mode of engagement, and project

initiatives with the Dongria Kondh and other tribal groups.

We noted the comments of Scott Wilson made in the last progress report (March, 2013) on the Vedanta

Assurance program, “we shall be looking for significant improvements to the self assessment results for the

next June’s final audit and ......... updated assurance results are provided for analysis ahead of the audit”.

Significant progress has been made to embed sustainable development into our business operations.

Particularly important has been the introduction the Vedanta Sustainability Assurance Programme, or VSAP –

which measures the effectiveness of our Sustainability Framework at the operational level. The VSAP

comprises of the submission of self-assessment scores by the unit, conducting a programme of VSAP audits

by a Corporate team, followed by the submission of a Corrective and Preventive Action Plan (CAPA) arising

from the VSAP audit. Since April 2012, we have completed 18 assurance visits whereas the self assessment

scores have been submitted by all the business units. We are dedicating further resources to ensuring that

the full cycle of auditing all the business units can be completed in 12 months for the next few years rather

than the current 20 months.

Attached are the CAPA of 3 units (VAL-Lanjigarh, Sterlite, Tuticorin and KCM) as examples arising out of the

corporate audits. The CAPA indicates the implementation plan of the unit.

Appendix 24 MOM of Sustainable Committee meetings held during FY 12-13

Appendix 25 CAPA of Sterlite, Tuticorin

Appendix 26 CAPA of VAL-Lanjigarh

Appendix 27 CAPA of KCM

In addition - the Assurance process and the results of the self assessments have been reviewed by the Board

appointed Audit Committee.

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

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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, and Guidance

Notes.

The Group sustainability policies and guidance documentation are made available to all Vedanta employees

through the corporate website, on individual company portals and through awareness training, which is

attended by all levels of the business from the CEO to the ‘shop floor’.

The Board is committed to the ongoing professional development of all of the Directors. On appointment to

the Board, each Director undergoes a comprehensive induction programme which is tailored to their

individual needs but is intended to provide an introduction to the Group’s operations and the challenges and

risks faced. This year, refresher training was provided by the Group Chief Sustainability Officer to Board

members on the Vedanta Sustainability Framework (VSF) and the IFC Performance Standards. Also, as part of

continual improvement, refresher training on VSF was carried out at the operations. During the 2012-13

financial year, 7,300 employees were trained on the Vedanta Sustainability Framework.

We noted the comments of Scott Wilson in the last progress report to strengthen the Corporate

Sustainability team, particularly with regard to the management of community interfaces and social issues

relating to new projects. We consider that the new CSO brings with him substantive operational Community

Relations and Social Assessment experience gained in Madagascar, Oman, China, Cambodia, USA and as an

advisor to companies on these matters in other countries and is currently shouldering the responsibility for

17

driving Social/Community Relations aspects. However, the company understands the importance of this role

and an experienced Head of Community Relation expert joins the Corporate Sustainability team in July 2013.

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

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 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 Board Sustainability Committee in July 2011 and has

been rolled out across the Group as part of the Sustainability Framework roll-out. It is available at the

Vedanta website at http://www.vedantaresources.com/sustainability.

Our commitment to human rights is backed through the practical application of our standards. In order to

deliver this, all Group subsidiary companies provide focused training on the Vedanta Sustainability

Framework, including our human rights policy. Training in our Code of Conduct and SA8000 also includes

components on human rights. During the year, we conducted over 36,000 man-hours of training on the Code

of Conduct. Led by the Sustainability Committee, in 2012-13 we undertook internal reviews related to human

rights and risk assessment. The human rights audit and risk assessment review was commissioned to ensure

that all our subsidiaries have a clear understanding of the areas of possible risk related to human rights. The

objective of the review was to confirm that we are meeting applicable national and international legislation,

guidelines and conventions on human rights with special reference to the UN Universal Declaration of Human

Rights. The assessment confirms that the human rights policy is being implemented by all units. The review

also helps us strengthen our existing systems and deliver focused training for staff.

Appendix 28 VAL-Lanjigarh Human Rights Training

Appendix 29 KCM Human Rights Training

Appendix 30 Sterlite Copper Human Rights Training

Appendix 31 BALCO Human Rights Training

Appendix 32 HZL Human Rights Training

Appendix 33 BMM Human Rights Training

Appendix 34 Scorpion Zinc Human Rights Training

Appendix 35 Sesa Goa Human Rights Training

Appendix 36 VAL-Jharsguda Human Rights Training

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

Recommendation 2.5.24 External Audit

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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 Following the launch of Vedanta’s Sustainability Management and Technical Standards in 2012, we recognised

a need to review the way in which business units were implementing these and measure the pace and depth

of this implementation.

To bring a sense of uniformity and to make the assessment more objective, we launched the Sustainability

Assurance Programme (VSAP) to assess and improve practices across the Group. The VSAP model has 16

modules, which cover environment, health, safety and community elements. Among these are Compliance,

Objectives and Targets, Competency and Training, Waste Management, Management Reviews, Accident

Investigation, Safety, Environment Management and Social and Stakeholder Engagement. The model

components were discussed and reviewed with business CEOs, and pilots were conducted at select

subsidiaries. Feedback from the business units helped us to refine the model, prior to its formal launch. To

support the roll-out of the assurance system, training sessions were conducted with all subsidiary CEOs, COOs

and their respective sustainability teams. VSAP works on the premise of tracking corrective and preventive

actions by the respective subsidiaries and periodic formal audit by the Corporate Sustainability team. In the

reporting year, all subsidiaries have completed a self-assessment against the 16 modules and 13 subsidiaries

have been through the VSAP process, with the remaining nine to be audited before February 2014. The

findings of the assurance audits, including corrective actions, are reviewed by the EXCO Sub- Committee on

Sustainability and the results are reported to EXCO and the Sustainability Committee. Going forward, each

major site will be audited annually under the assurance programme.

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

Attached are the minutes of Sustainability Committee meeting wherein results of Corporate Assurance

program were reviewed.

See Appendix 24 MOM of Sustainable Committee meetings held during FY 12-13.

Final External Audit As recommended by Scott Wilson in their March 2012 report, the Final Scott Wilson Audit will take in the

months after June 2013. The management system at all our units is now aligned to Vedanta Sustainability

Framework (VSF) requirements.

We noted the comments of Scott Wilson made in the last progress report (March, 2013) “Provided that the

Sustainability Framework as a whole is supported by proper implementation and training across all subsidiary

Companies, we consider that the Company is broadly on track to be able to demonstrate sufficient application

of its Sustainability Framework and thus fulfil its obligations” to undertake the external audit in June 2013”

and “In particular, concerted effort needs to be given to its application at Company and Site levels, especially

in regard to the topics of Human Rights, Stakeholder Engagement, Supplier and Contractor Management”.

We have submitted our evidence of implementation of Human Rights elements under the Recommendation

2.5.16 Human Rights Policy and for the Stakeholder Engagement elements under Recommendation 2.5.23

Stakeholder Engagement.

We are providing specific evidence of commitment to specific improvements to the way suppliers and

contractors are managed and included within the Sustainability Framework:

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Appendix 37 VAL-Lanjigarh Supplier and Contractor Management

Appendix 38 KCM Supplier and Contractor Management

Appendix 39 Sterlite Copper Supplier and Contractor Management

Appendix 40 – BALCO Supplier and Contractor Management

Appendix 41 HZL Supplier and Contractor Management

We consider this recommendation to be suitable for closure during the final audit scheduled during

July/September, 2013.

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Section 2 Company Level Progress During April 2012 to June 2013, significant progress was made at the company level as well. New projects are

following the new Management Standard for New Project Development and international consultants have

been appointed to support the completion of the ESIAs for each project. This process is specifically supported

by the implementation of Technical Standards on Production of ESIAs to International Standards, Stakeholder

Engagement, Water, Biodiversity, Cultural Heritage, Grievance Mechanisms and Land and Resettlement.

Furthermore, all subsidiary companies have carried out a formal self-assessment as part of the Sustainability

Assurance Programme, comparing their own policies and management systems with the requirements of the

Vedanta Sustainability Framework. The results are reported to the Vedanta Executive Committee which meets

every month to review the overall performance and a summary of the same is reviewed by the Sustainability

Committee.

In the last progress report, at the company level, Scott Wilson reported that of the seven recommendations,

three were confirmed as closed and the remaining four were considered suitable for closure. Since January

2013, we have made progress and consider these four recommendations to be ready for closure during the

final audit, scheduled during July to September 2013.

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

In order to ensure that risk in new projects is eliminated or mitigated, it is essential to have an appropriate

evaluation at the development stage. Accordingly we carry out appropriate Environmental and Social Impact

Assessments (ESIA) for all new projects in line with local and international standards. The key standard that

dictates new project activities and behaviours is the Management Standard – New Projects Planning

Processes and Site Closure. Requirements under the standard include that any new project complies with our

sustainability programmes and national, regional and local regulatory requirements. In addition, sustainability

must be considered for the full lifecycle of the project, with design decisions taken accordingly. Consultation

and feedback must also be obtained from stakeholders on how sustainability issues associated with the

project are considered, prioritised and implemented. This ensures that effective implementation and due

diligence have been carried out. The Vedanta leadership team recognises that the future of the Company is

dependent upon ensuring the right management systems are in place from the outset.

Conducting an ESIA for all new projects and expansion projects enables the comprehensive assessment of the

environmental, social and health impacts throughout the project lifecycle. Since January 2013, an ESIA study

of the BALCO coal block was completed. We are attaching the Executive Summary of that ESIA same. For the

Sesa Goa Liberia project, the Draft ESIA study for Phase I of the project has been submitted to the

Environmental Protection Agency (EPA) of the Government of Liberia. This Executive Summary is also

attached for reference. For the Black Mountain Gamsberg project in South Africa, the final ESIA and ESMP

have been submitted to the authorities for decision-making. In parallel, the document has been available

publicly. The final ESIA and ESMP are posted on the Zinc International weblink: www.vedanta-

zincinternational.com.

Appendix 42 BALCO Coal Block ESIA Final Report -- Executive Summary

Appendix 43 Sesa Goa Liberia Phase I Project, Draft ESIA Report – Executive Summary

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We consider that ESIA studies for new projects are conducted according to the agreed standards and as the assessment scores are positive and the implementation programme is sufficiently advanced, it is possible to close this item during the final audit.

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

Mining operations can affect local ecology. Our Biodiversity Policy commits the Group to minimise and mitigate biodiversity risks throughout our operations and we strive to avoid adverse impacts on natural habitats. We plan the management of our land use in a manner that allows biodiversity conservation to be integrated throughout the project’s lifecycle, including decommissioning, closure and rehabilitation. In order to promote a best practice management approach to biodiversity, we have reviewed all operations to identify which of our sites are operating within close proximity to protected International Union for Conservation of Nature (IUCN) areas, critical habitats, important bird areas and key biodiversity hot spots. We noted the comments of Scott Wilson made in the last progress report “The specific changes we requested

to the Technical Standard on Biodiversity Management and/or to the Guidance Note(s) during our last review

have been actioned and, although some further refinements were identified this time, we believe that the

programme is sufficiently advanced to permit closure and therefore allow the final audit to proceed as planned

in June.” Accordingly, we have revised our Biodiversity Guidance Note --- the revised Guidance Note focuses

on the necessary steps to address ‘Critical Habitat’ issues.

The Biodiversity Guidance Note presents an overview of biodiversity management process including

biodiversity risk screening process. The Figure below shows the main biodiversity management steps

undertaken for a Vedanta site.

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Stage 1 Biodiversity risk screening is undertaken for each site by the Corporate Sustainability team, using IBAT

(Integrated Biodiversity Assessment Tool). IBAT is a central database of globally-recognised biodiversity

information that is used to map the locations of important biodiversity areas, protected areas, and areas

categorised by IUCN (International Union for Conservation of Nature) as significant for species of plants or

animals. IBAT uses global-level data sets that cannot always take into account the detail of local conditions at

a specific site. However, in general, the IBAT information provides a good indication of where Critical Habitats

are located. Using the IBAT maps, the corporate team can help determine if a site is located in or near an

important biodiversity area, which includes potential Critical Habitat.

Based on the results of the biodiversity risk screening, we will assign one of the following initial biodiversity

risk ratings to each site:

High Risk: The operation/mine is located within a 5km radius of an important biodiversity area or a

potential Critical Habitat.

Medium Risk: The operation/mine is located within a 5-15km radius of an important biodiversity area.

Low Risk: The operation/mine is located outside the 15km radius of any important biodiversity areas.

The results of the biodiversity risk screening undertaken at Company level will be communicated to the

Environmental Manager at the subsidiary company, who is responsible for conducting the subsequent

biodiversity management processes.

As examples, IBAT maps and reports of VAL-Lanjigarh, Sterlite-Tuticorin and KCM are attached as appendices.

Appendix 44 IBAT Maps and Reports of VAL-Lanjigarh, Sterlite Tuticorin and KCM

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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 Management Plans (BMP) in place at all our sites by the 2015-16 financial year.

We believe this item is suitable for closure by Scott Wilson during final audit.

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 2012 or

earlier in the case of Lanjigarh. A monthly report is supplied to Vedanta Resources, where a full register is

kept. We now consider this a fully implemented part of our business management system.

We noted the comments of Scott Wilson made in the last progress report (March, 2013) “We confirm that

this Recommendation remains closed. However, for the final audit, we would like to see an analysis of

recorded incidents from initial launch in April 2011 through to the 1st Quarter of 2013-2014 and if appropriate

Vedanta’s proposals for addressing root causes.”

Please find attached below Vedanta Group Register providing details of the incidents for the FY 2012-13

including an analysis of the root causes and sharing of the lessons learned to prevent re-occurrence of the

incident.

Appendix 45 – The Vedanta Group Incident Register

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

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 the issue of our Stakeholder Engagement Technical Standard, we are producing Stakeholder

Engagement Plans (SEPs).

We noted the comments of Scott Wilson made in the last progress report that “We can confirm that Vedanta

has made further progress since our previous visit and, assuming that momentum continues, we consider that

this Recommendation is suitable for closure now. The final audit in June 2013 will however need to verify that

all Companies have developed/are developing SEPs offering a satisfactory level of detail regarding the nature,

content and modalities of the stakeholder engagement process.”

We have revised our SEPs to address the observation of routine disclosure of information. In addition, we

have also ensured that follow-up of stakeholder engagement occurs and are effectively communicated to

each stakeholder group. Our stakeholder engagement documentation contains more detailed descriptions of

the stakeholder identification, consultation and participation processes.

As examples, attached below are SEPs of VAL-Lanjigarh, Sterlite-Tuticorin and KCM.

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See Appendix 48 for Stakeholder Engagement Plan – VAL-Lanjigarh

Appendix 46– Stakeholder Engagement Plan Sterlite Tuticorin

Appendix 47– Stakeholder Engagement Plan KCM

We believe this item is suitable for closure by Scott Wilson during final audit scheduled during July – September, 2013.

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 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 is aligned with the

IFC Performance Standards and Guidance Notes. This requirement has been included in the training courses

given to operations, project and sustainability specialists.

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

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 Technical Standards Conducting ESIAs to International Standards requires human

rights considerations to be taken into account for all new projects. Furthermore our Technical Standard on

Security Management requires the management of site security staff in line with IFC and ICMM guidelines.

We respect the rights of indigenous peoples and vulnerable tribal groups. In support of this commitment we have developed a Technical Standard on Indigenous Peoples/Vulnerable Tribal Groups which is being implemented across the Group. It provides guidance for staff when establishing new projects with regard to the Group’s duty of care and engagement with these groups. We noted the comments of Scott Wilson made in the last progress report (March, 2013) -- “Following final

issue TS 22 on Indigenous Peoples / Vulnerable Tribal Groups, we consider that this Recommendation is

suitable for close-out now. However, we also consider that Vedanta will have to be able to demonstrate

effective communication and training and satisfactory implementation to achieve a successful conclusion in

the June 2013 audit.”

To ensure better understanding and effective implementation of the Indigenous Peoples/Vulnerable Tribal

Group Technical Standard, we have released a supporting Guidance Note. In addition, we are planning

training on Indigenous Peoples/Vulnerable Tribal Group issues in July, 2013. We plan to submit the details of

the training conducted by first week of August, 2013.

We believe this item is suitable for closure by Scott Wilson during final audit scheduled during July – September, 2013.

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See Appendix 1 –Indigenous Peoples / Vulnerable Tribal Groups Guidance Note

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.

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

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

appointed in 2012 to increase focus in this area. The organisation chart for this position is shown below.

A focussed effort to complete the improvement programme at the Vedanta Aluminium Ltd (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 practices against the Vedanta

Sustainability Framework and IFC and ICMM standards, the implementation of a grievance management team

that operates a weekly surgery managed by the VAL Lanjigarh Community Relations Team, improvements to

the filtration system and air monitoring together with a site hygiene/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 Principles of the UN Global Compact 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 (ESMP) 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.

We noted the comments of Scott Wilson made in the last progress report (March, 2013) --

“a) There is no clear link between the ESMP and the SEP (no reference is made to the SEP in the ESMP). We

recommend that a clear reference and a description of the SEP is provided in the Social Management Plan

section of the ESMP; and

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b) The SEP should be explicitly linked with the other action plans presented in the ESMP, principally the Tribal

Development Plan, the Resettlement Action Plan, and the Grievance Mechanism. In particular, it should

demonstrate how the engagement and consultation process with communities affected by development

and/or resettlement action plans is to be conducted on a continuing basis.

We noted during our site visit that there are significant discrepancies between the information disclosed

during the consultation process initiated by the Company and the perceptions and concerns of those

communities regarding the current status of Project activities, their impacts and of development and/or

resettlement activities to be conducted. This comment stems from the lack of any company communications to

keep the communities informed following the Gram Sabha which took place a year ago”.

We have prepared a comprehensive and integrated ESMP. The revised ESMP addresses how compliance with

international standards will be achieved and provides a detailed set of tasks and actions that need to be

conducted for comprehensive environmental and social management. The ESMP integrates and

appropriately refers to relevant management plans, including the Resettlement Action Plan, the Stakeholder

Engagement Plan and the Tribal Development Plan, all of these are annexed in the report for a ready

reference. The ESMP clearly indicates roles and responsibilities, and defines the organizational structure that

should be in place to implement the ESMP. Considering that the ESMP will be a live document, it will be

formally reviewed and updated at least once a year. Specific indicators for monitoring the ESMP

implementation have been provided for tracking the ESMP implementation process. We have also developed

a more integrated approach between social/resettlement impact assessments and livelihood support

programmes which is commensurate with international standards.

This integrated ESMP is built upon the existing management systems and plans and is attached as Appendix

48. As part of the integrated ESMP, additional plans that we have developed that include the following:

a. Environment Management Plan

The Environmental Management Plan (EMP) is a part of the integrated ESMP. The EMP identifies the

environmental risks and presents the management plans to mitigate these risks. It largely addresses the

following IFC Performance Standards (PS).

PS 3: Resource efficiency and pollution prevention

PS 4: Community health, safety and security

PS 6: Biodiversity and sustainable management of living resources

b. Resettlement Action Plan for new land acquisition

The company has developed a Rehabilitation and Resettlement Action Plan for the displacement of three

villages (Rengopalli, Bandhuguda, and Kothaduar) located around the red mud pond area. The report is

attached for reference as Appendix 49.

The company had earlier conducted a third-party audit of land acquisition and compliance to rehabilitation

and resettlement in July 2010 as a part of the “Assessment Report on Compliance and Stakeholder Concerns”.

The audit was conducted with due regard to the following legal instruments.

i. Land Acquisition act 1984

ii. PESA Act 1996

iii. Orissa Gram Panchayat Act 1964

iv. Orissa Schedule Areas Transfer of Immovable property ( by Scheduled Tribe) Regulation 1956 only for

scheduled areas

v. Schedule II , Orissa Government Land Settlement Act 1962

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vi. Orissa Prevention of Land encroachment Act 1972 (OPELA)

vii. R&R Policy 2003

The July 2010 Audit Report (Land and Resettlement Section) is attached as Appendix 51.

c. Traffic Management Plan

The Traffic Management Plan is part of the integrated ESMP. The Traffic Management Plan includes the

following:

i. Planning and managing both vehicles and pedestrian routes

ii. The elimination of reversing where possible

iii. Safe driving and working practices

iv. Protection of public

v. Adequate lines and vision of sight

vi. Provision of signs and barriers

vii. Adequate parking and off-loading /storage area

d. Influx Management Plan

The Influx Management Plan (IMP) is part of the integrated ESMP. The plan provides guidance and a

framework on the influx issues and the proposed mitigation measures to address the same.

e. Biodiversity Management Plan

The Biodiversity Management Plan is part of the integrated ESMP. The main objectives of plan are:

i. Maintenance of ecological balance through preservation and restoration of ecology where it has been

disturbed due to project development activities,

ii. Conservation and preservation of natural habitats in the project area

iii. Rehabilitation of critical species (endangered, rare and threatened species), if any, with provisions for

in‐situ or ex‐situ conservation of critical or important plant or animal species,

iv. Mitigation and control of project-induced biotic or abiotic pressures or influences that may affect

natural habitats,

v. Habitat enhancement in the project area by using reforestation and soil conservation measures,

vi. Creating awareness of conservation and ensuring personnel participation in the conservation efforts

and minimizing man-animal conflict.

f. Tribal Development Plan

The Tribal Development Plan is part of the integrated ESMP. It encompasses the 32 villages peripheral to the

alumina refinery. The nearby villages cover the Kutia Kondh of the Lanjigarh block and the integrated

development activities planned for the villages so that it creates a visible impact on the lives of the tribal

Kondh. The various initiatives are designed to meet the needs of the community and in partnership wit the

community and the government. The various elements of the Tribal Development Plan are based on the

outcomes of an impact assessment and includes

i. Sustainable livelihood initiatives: farm and non-farm

ii. Community Health

iii. Education

iv. Rehabilitation

v. Sports and culture promoting initiatives

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The monitoring of the intrefaces and the projects is managed by the CSR department through field visits as a

part of their monitoring activity.. The senior management of VAL -Lanjigarh conduct regular reviews to assess

project progress.

g. Stakeholder Engagement and Disclosure Plan

The Stakeholder Engagement Plan (SEP) is part of integrated ESMP and is attached as Appendix 48. The SEP

encompasses the various communities or groups of people who could be impacted by the business. The major

objectives of the plan include: -

i. The identification, analysis and engagement of stakeholders in all stages of the Project lifecycle in a

proactive manner

ii. Categorization of identified stakeholders on the basis of their engagement with the company

iii. Identification of representatives of different categories of stakeholders

iv. Identification of stakeholders who are at a risk of being disproportionately-affected by the operations

of the business with special emphasis on vulnerable communities

v. Devising engagement mechanisms for each stakeholder group

vi. Ensuring that the required systems are in place to report and record any question, complaint,

grievance or incident raised by the stakeholders in general and the local community in particular

h. Sustainable Waste Management Plan and Resource Efficiency and Pollution Prevention

A “Technological Improvement Report” has been prepared and submitted to the Ministry of Environment and

Forest (MoEF). A number of waste management and resource efficiency projects have been started at

Lanjigarh . The report is enclosed as Appendix 52.

Appendix 48 Environment and Social Action Plan ESMP- VAL-Lanjigarh

Appendix 49 – R&R Plan 3 Villages-VAL-Lanjigarh

Appendix 50 – July 2010 Audit Report-Land & Resettlement Section-VAL-Lanjigarh

See Appendix 48 for Tribal Development Plan-VAL-Lanjigarh

See Appendix 48 for– Stakeholder Engagement Plan-VAL-Lanjigarh

Appendix 51 – Technical Improvement-Report-VAL-Lanjigarh

This item was closed by Scott Wilson (review of Progress Report – March 2013).

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.

A total of 862 people registered grievance a between April 2011 and March 2013. 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

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built, then the matter is referred to the Government of Orissa for direction. Vedanta will work to facilitate

meetings of this nature with government officials.

Between April 2011 and March 2013, 850 out of the 862 cases have been closed.

Grievance Analysis Summary for the period April 2011 to 31st March 2013

Total No. of Cases 862

(I) Community relation like infrastructure , livelihood etc. 14

(II) Land related ( One Time Settlement) 458

(III) HR related primarily Employment 390

No. of Cases Closed 850

(I) Community relation like infrastructure , livelihood etc. 8

(II) Land related ( One Time Settlement) 452

(III) HR related primarily Employment 390

No. of Cases open (I+II+III) 12

(I) Community relation like infrastructure , livelihood etc. 6

(II) Land related ( One Time Settlement) 6

(III) HR related primarily Employment 0

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

Recommendation 3.3.3 Housekeeping

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

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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 it is not known when the court order will 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. During April 2012 and May 2013, we undertook seven mock drills related to

rescue of injured persons. Information is attached as Appendix 52.

Appendix 52 Mock Drill conducted during April 2012 and May 2013 at VAL-Lanjigarh.

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

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-

Lanjigarh and the Government of Orissa’s Director of Factories continue to be followed.

We are pleased to report that no retrenchment happened during the last calendar year 2012 and till June

2013, nor have any complaints/ grievances been registered with the Lanjigarh Grievance Redressal Cell since

the commencement of its operations in April 2011 relating to retrenchment. This is in spite of the fact that the

refinery has been closed since December 5th 2012 due to a lack of bauxite supply. In this time of uncertainty,

Vedanta Aluminium Ltd has continued to employ all employees on full pay. A communication exercise has

also taken place to inform the contractors and the local communities about the situation and the lack of

bauxite which we hope will be resolved shortly.

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At our operations in Goa and Karnataka which have been affected by a state-wide mining ban, no

retrenchment of our employees has taken place even though our mines at Karnataka have been closed for two

years and Goa mines have been closed for eight months.

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

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 business has developed a Contractor Accommodation Management protocol as a governance framework

for contractor accommodation. The document includes guidelines for assessment and review of contractor

accommodation, and a checklist for assessing contractor accommodation. Contractor accommodation was

reviewed in February 2013.

The contractor accommodation management document and the review is attached as Appendix 53.

Appendix 53 Contractor Accommodation Document of VAL-Lanjigarh.

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

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

All alumina and coal is moved by rail. The alumina produced is directly loaded (from silos) to the trains. The

coal is received through trains into the plant and within the plant, the movement is through conveyors. The

bauxite is received through trains into the plant and within the plant, the movement is through trucks. The

distance covered by trucks is approximately 1.5 km. All the internal roads are concreted. The trucks contain

tarpaulin covers, water sprinkling is also carried out to minimize dust generation. We plan to eliminate

bauxite movement through trucks, expect to complete the transition by the end of the year.

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

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.

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

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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.

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

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 item was closed by Scott Wilson (review of Progress Report – March 2013).