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Cover Story

Bellary case file

Chandra Bhushan

Will it help sound mining or mining companies?

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The Bellary case—and perhaps now the Goa case—is setting a precedent for mining regulations in the country. It will define how the offenders are judged, how serious is their crime and how they should be penalised. In other words, it is developing the mining penal code for the country. It is setting the framework for future environmental management, including the limits on how much mineral extraction is “sustainable”. In addition, the judgements set the framework for how local people will “benefit” from mining. Therefore, in many ways these decisions are overarching and are definitely needed as the current regulatory system has been decimated. The question that needs to be discussed is whether the judgements go far enough in deciding the sustainable framework for mining in the country. Or, indeed, if these are in the right direction.

Mining Penal Code

The Central Empowered Committee (CEC) of the Supreme Court has classified mining into three categories—A, B and C—taking encroachment as the basis of the nature of offence committed. To judge the quantum of offence, CEC has taken the ratio of the lease area of each mine to respective encroachment.

Category A: No major encroachment outside the lease area. This does not mean this category is “clean” on other accounts. The mine operations are allowed after the reclamation and rehabilitation (R&R) plan is started.

Category B: Encroachment up to 10 per cent of the mine lease area for mining pit and dumping of waste in area up to 15 per cent of the lease area. They have to complete R&R and pay some fines before resuming operations.

Category C: Encroachment more than 10 per cent of the lease area and dumping of waste in area, which is more than 15 per cent of the lease area. Their lease will be cancelled and then auctioned for captive use.

The bottom line, after all the rigmarole and more than two years of judicial scrutiny, is that all mines, big and small, big offenders or small offenders, will continue in some form or another. The problem with this manner of categorising penalties is threefold. One, that CEC has defined the “nature” of offence in a very limited manner, which does not take into account the environmental fallout or the cumulative impact of the mines in the region. In this way, when mining reopens—first A, then B and then C—it could well be business as usual. The best that is being offered is that there will be an R&R plan, which will take into account “afforestation, check dams, stablisation of waste dumps, soil conservation, rainwater harvesting and use of modern mining technologies”. There is nothing to suggest that these methods will add up to sustainable mining, even if a cap is put on the total mining that will be allowed.

Two, this rulebook could well end up incentivising large mines to commit large offence. The simple fact is that the Bellary formula will work against small mines, as it is based on quantifying the extent of violation as a percentage of the mine lease area. This will end up “legalising” non-compliance of large mines. Mines with large lease areas, for instance of 1,000 hectares, could have encroached 100 ha and still be in legal B category.

Three, the issue of illegal iron ore extraction and sales has been ignored by CEC in defining illegality. In 2012, the Supreme Court directed CEC to assess within three months the actual quantity of illegal iron ore that was sold, so that companies could be fined. But this has not happened. So mines have opened and many more will open soon, and all the talk of recovering ill-gotten funds may well be brushed under the carpet. Small wonder the mining barons are once again in power in Bellary.

C for captive

Allowing C category mines in the future once they are auctioned for captive use presumes illegal mining will thus remain in check. But the fact is captive mines discount natural resource, allow transfer pricing and promote poor mining practices, as is evident from cases across the country. Worse, it will distort the market by creating certain companies who will have access to cheap iron ore through captive mines, while others will have to buy ore from the market at higher costs. It is also clear that companies with cheap raw material are not driven to innovate or to be frugal and efficient in their use.

For instance, the recent rating of Indian steel companies done by Delhi non-profit Centre for Science and Environment found that the three top-rated companies did not have captive mines for iron ore—their cost of raw material was high and they invested in efficiency, which in turn brought down emissions. Companies with captive mines—Tata Steel, Jamshedpur; Jindal Steel and Power Limited, Raigarh; and SAIL, Rourkela—were rated low in environmental performance.

Unscientific cap

The Dehradun-based Indian Council of Forestry Research and Education (ICFRE) has recommended in its environmental impact assessment (EIA) done at the behest of the Supreme Court that there should be a “cap” on the quantum of iron ore mined in the Bellary region. The Supreme Court has endorsed the recommended “cap” of 30 million tonnes per annum (MTPA)—25 MTPA in Bellary and 5 MTPA in neighbouring Chitradurga and Tumkur districts. The “cap” is not based on environmental or socio-economic factors. Instead, the ICFRE report mentions that it is suggesting this limit “since the annual iron ore requirement of Karnataka is around 30 MTPA and majority of its demand is met from Bellary”.

This sets a bad precedence for environmental governance and has huge implications for inter-state matters. The limit is unscientific and is not based on cumulative impact assessment, taking into account the carrying capacity of this eco-sensitive forested region. It would also signal that states should “mine” for their own captive consumption—mine and only mine.

SPV for community

The Supreme Court has directed that a special purpose vehicle (SPV)—the Karnataka Mineral Rich Region Development Corporation—be set up under the chairmanship of the state chief secretary. The SPV will collect the fines, penalties, money raised from the auction of C category mines and 10 per cent of the sale price of all iron ore sold from Bellary, and will implement projects for socio-economic development and mining infrastructure. In other words, a parallel government is being proposed to the district administration. It is not clear how this recommendation is in consonance with what is being discussed currently in Parliament. The Mines and Minerals (Development and Regulation) Bill, 2011, presently with Parliament, includes provisions for benefit sharing and local area development. Will the SPV model be in contravention of the Bill or will it set a precedent?

No accountability

There are four key departments that can be held most accountable for the extent of illegal mining in Bellary (and Goa). One, the forest department as it turned a blind eye to the takeover of its land. Two, the state mining department, which gave leases and clearances with total indifference. Three, Nagpur-based Indian Bureau of Mines, which gave permissions to increase mining from 20 MTPA to 80 MTPA without any care or scrutiny for impacts. And four, the Ministry of Environment and Forests (MoEF), which gave environmental and forest clearances to anyone and everyone without any assessment.

The fact is government officers who “connived”, “consented” or simply did nothing to stop the rot have not been held accountable. The worst part is that today these departments—represented in the Supreme Court monitoring committee—have become all-powerful and are back in the business to decide the fate of Bellary without any institutional reform.

The Bellary model does not provide the design of an effective institutional framework for environmentally sound and regulated mining in the country. The model, instead, once again depends on committees of the court to oversee management, which is at best a short-term solution. In this way, the Bellary case does not mean the end of illegal mining or a new dawn for sustainable mining in the country.

AddThis

While I appreciate the rigour that has gone into documenting this report, it is not not nearly as hard-hitting as it ought to have been, given that we now have access to both The Shah Commission Reports and the CEC findings, and indeed Goa Foundation's petion before the court, or even better its counter-affidavit that severely demolishes the Parrikar government's somewhat spurious affidavit.

What is also disturbing is CSE's opaqueness on where it actually stands as far as mining of ore goes. I mean how much of proof and evidence do we need to know that mining can NEVER be 'sustainable'...

16 May 2013
Posted by
Hartman de Souza

Agreed; mining can never be sustainable, but then how do you get the metals to make all the things you need in the course of daily life? Right from the safety pins to the utensils you use... where does the metal come from?

18 May 2013
Posted by
Anonymous

In India lakhs of crores worth minerals are mined every year all over the country. Some part is meeting the local needs and other part is meeting legal & illegal export in terms of raw and finished products. If one wants to present the real picture without any bias, start from the area in different states, quality of ore, leased area plus illegal mining area, local use, export (legal & illegal), etc. Then tell to the people who are the real culprits. Instead of that targeting one or two like politicians may not be a good practice. The article goes in this direction only. Against Gali the case was filed by politicians to serve their political game. Iron ore mining was not considered an important issue when the price was low. In Andhra Pradesh the mining of iron ore started even before Gali was born.

Here the major issue is illegal export. Without the tacit support from port management it will not take place. Gali would have not exported illegally if any without the knowledge of Krishnapatnam port authorities. They are the main culprits. But, so much violation took place even Karnataka and Goa why Gali was put behind bars and others are freely moving? See the data presented in the article:

2005-10 -- Karnataka -- production 213.81 mt -- export -- 61.25 mt -- illegal export -- 23.18 mt

2005-10 -- Goa -- production 155.38 mt -- export 194.94 mt -- illegal export 39.56 mt

This clearly indicate our legal system, investigating system and environmental movement system are serving the vested interests with biased mind set.

You wrote Gali destroyed interstate boundary but at the same time you wrote Supreme Court asked survey to identify the boundary. This is not a good.

I wrote an article in Vaartha [12-8-2010] -- "Mineral industry: discussion". In 2006, globally iron ore mining data shows: global 1690 mt; China 520 mt, Australia 270 mt, Brazil 300 mt, India 150 mt. In 2003 around 105.5 mt produced of which 31 mt exported. In our country High grade iron ore is available 1280 mt; MP 630 mt, Orissa 320 mt, Karnataka 220 mt, Bihar 85; medium grade 4200 mt; Bihar 1790, Orissa 1300, MP 485, Karnataka 440, Goa 150 mt -- low to medium grade in AP, Kerala, Maharashtra, Rajasthan. This clearly shows it is not alone Karnataka and Goa there are other states where iron ore mining is carried out. While writing such articles bring out all the culprits.

Dr. S. Jeevananda Reddy

19 May 2013
Posted by
Dr. S. Jeevananda Reddy

How come Andhra is left out of the mining loot story ? It is good for the nation if we learn to keep environmental and political affiliations apart . Also everyone knows of the problems ....it would be great when environmental publications start focusing on the solutions as India has become a net importer of iron ore from a net exporter since mining was banned in some states and that has added to the rising current account deficit every month. In many parts of the world people are involved in sustainable mining. We in India need not re-invent the wheel but only follow those practices. Instead of that we are banning existing mining blocks which have already been devastated environmentally and planning to issue licenses in green field areas that will involve more cutting of forests.

The existing areas under mining are inefficiently mined, only from the surface to keep mining costs to the bare minimum. Why is that happening? Is anyone talking about it. Where are the regulatory norms and the regulators which can be easily put in place, considering the enormous revenue generated from the resources and the technology advances of satellite imagery. Every cubic feet of mining resource extracted can be today monitored at a very reasonable cost by using technology if there is a political will. It is the MOEF that has to educate itself adopting global best practices and then enforce the norms, without political bias that today permits Jindal but not Vedanta to put up bauxite mining projects in India.

21 May 2013
Posted by
Sandip (ecothrust@gmail.com)

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