Wednesday 31 August 2011

Author(s): Chandra Bhushan

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  • While Mr. Hegde has done a

    While Mr. Hegde has done a good job in documenting failures, he has erred in some of his conclusions or made comments more severe than the ground reality due to his examination of the matter from the point of view of an outsider who does not know the inner workings of the trade. Most of his points were well known to those remotely connected to the industry although his access to documents helped him verify and trace details of many transactions.

    Genuine iron ore miners (other than those deliberately violating laws due to their political clout) were subject to huge harassment from all government departments for inspections, permits, etc. even before the rise of Reddy bros. The Reddy bros coming was the height of corruption akin to large-scale daylight dacoity and the system so thoroughly corrupt that it was a choice between closing and surrendering the mines or succumbing to the system. Having put in years of strenous efforts at all levels of Govt from state to centre, that too for years, and maintaining their leases after enduring decades of low prices for iron ore, which mine owner can be really blamed for succumbing to the thoroughly corrupt political, regulatory and bureaucratic system to earn at least a part of their just dues from the recent mining boom? Where would they run for recourse when the entire system was rotten, a fact which they were already well aware of? Repeated protests against newly minted taxes and duties without base (whether legal or illegal) and even exhorbitant hikes of railway freight by the Govt had always failed to bear fruit. Where in the world does a Govt railway by means of a 'dynamic freight system' increase freight from Rs. 250 to Rs. 2000 just because the value of the commodity it is carrying has gone up, thus skimming off the cream of the ore value?

    All the illegal operations in mining happened only because of the total failure of the regulatory system which forced all miners, traders, operators to pay exhorbitant sums and operate illegally by clogging up the legal system to such an extent that no one could operate legally.

    Implementation of the system which actually should have worked, with the necessary monitoring and regulatory departments already existing, would have easily prevented the illegal mining carried out but the political and regulatory will was absent. Even now, it is very easy for the concerned authorities to put in place a system that works, provided those in charge are honest - which has to either come voluntarily from the officials or forced with fear of punishment.

    Another factor is the nest of permits, approvals, clearances, etc. from multiple departments of the central and state govt. and necessity of fulfilment of multiple laws, rules, regulations, conditions, etc. File need to criss-cross hundreds of desks with indefinite time-frame. To negotiate such a labyrinth is inhumanly possible and the miner is bound to slip up somewhere which is immediately taken advantage of by concerned officials. This maze needs to be simplified and clearly defined, with the procedure and time-frame specified for each step.

    A few other points which need to be mentioned is that a large part of the so called 'forest cover' in Bellary was in fact existing only on paper and not on the ground. In India, the anomaly is that area marked as forest land need not actually have forest, it has just been marked as such. Bellary was always largely an arid region with minimal forest to speak of. The degraded forest mentioned was already degraded or never really forest for decades. It was only in Sandur that some forest cover existed.

    Mining by it's very nature needs to remove the surface area including the vegetation, dig pits and cut hills. It is balance between maintaining the existing topography and the economic benefits. Once the decision is taken to mine, it cannot be faulted by saying the earth or hills have been scared. Incidentally in Bellary-Hospet, the deposits are on the hills and mining has to be carried out where the mineral occurs.

    It is beyond the Lokayukta's scope or the court's scope to take a business decision on using the ore for domestic use or export - that should be the economic decision of the seller of the ore. Whether ore is mined for domestic or export use, the impact on the environment is the same. If the reserves will deplete in 30 years with domestic and export use, even if it is reserved for domestic use, the reserves will deplete in 60 years causing the same end-result. The steel lobby (also indicted by the Lokayukta report) has created a false hype by a sustained media campaign that iron ore is a critical resource and needs to be reserved for steel making which builds the nation. In fact, export of iron ore is earning the country sizable foreign exchange. In 5 years, there is projected to be a surplus in world production of iron ore (deposits of which are abundant worldwide and forms 7% or the earth's crust!). If steel is value adding as claimed, steel mills should have no objection in buying ore at export price as they would have sufficient margin of value addition. However, they are making profit only by buying cheap ore by lobbying the Govt. and selling steel at above international prices (as they have shelter of import duty on steel, freight cost and time and effort needed to import steel). Thus they are doing no service to the country as user industries have to pay high prices for steel which they could get cheaper by import if import duty was zero. World wide, steel mills procure their own iron ore and other raw materials at market rates or invest in mines by competing in the market. It is only in India that mills are able to demand raw material at subsidized rates for making steel sold at commercial prices, and the Govt is buying into their propaganda.

    While iron ore mining is blamed for all environmental ills, some factors such as the siltation of the Tungabhadra dam were existing before the increase in mining and no action has been taken by the Govt for years to desilt it. Agriculture though carried out in Bellary was not very large scale as the land was always arid, and not all of it has disappeared since mining started as is being sought to be made out. Thus, an unbiased view needs to be taken while studying the impact of mining, which no doubt has been very significant.

    Why was Bellary always one of the poorest and backward areas of the country with the people suffering, farmers not able to make ends meet and people migrating to other areas in search of employent, if maintaining the environment in the status it was 10-20 years ago is the only concern and being made out to be the panacea of all ills?

    Iron ore mining and export is a legitimate business which need not be curbed but only regulated fairly and on a level playing field with mining for domestic use.

    Thus stoppage of mining and reserving ore for domestic use are not the solutions to the problem, but are just an easy way out - amounting to throwing away the baby with the bathwater. The Lokayukta has failed in this aspect. Implementing a workable, fair and legal system of operation is what is required.

    A holistic view of balancing environment, sustainable development, industry, mining, unlocking the value of mineral reserves, etc. needs to be taken rather than focussing only on one aspect of destruction (or rather preservation or change in) the natural environment.

    Posted by: Anonymous | 5 years ago | Reply
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