Mine owners, loosen purse strings

New mining bill proposes sharing 26 per cent profits with affected people

By Ruhi Kandhari
Published: Tuesday 31 August 2010

Mine owners, loosen purse strings

imageAbill to regulate the mining sector is likely to be introduced in Parliament in this session.

The Mines and Minerals (Development and Regulation) Bill of 2010 stipulates that companies share 26 per cent profits from mining with project affected people besides paying for community development as part of corporate social responsibility (CSR).

The Union ministry of mines hopes this would prevent protests that have marred several mining projects. The ministry has calculated 26 per cent profit sharing could on average amount to an annual earning of `2.25 lakh for a person having traditional or occupational rights in project area. The ministry estimates spending of 3 per cent turnover on CSR would mean a yearly gain of another `2.26 lakh to each person by way of community development.

The bill has also tried to make the mining sector more investment friendly through measures like auctioning mining leases through open bids, allowing prospecting over large land parcels and issuing mining licences over such lands within 90 days. It could infuse the Indian mineral industry with investments of US $300 billion, according to one estimate. Union mines minister B K Handique had said the proposed law would help increase the "contribution of the mineral sector from the 2.3 per cent now to 5 per cent of the GDP".

Curbs on illegal mining

A major aim of the proposed legislation is to curb illegal mining. Data released by the ministry estimates there are 2,496 illegal mines engaged in extracting major minerals and 28,055 extracting minor minerals. The Indian Bureau of Mines and the state pollution control boards, the agencies that monitor mining activities, do not have the means to ensure mine owners follow mining plans and environmental norms. For instance, the bureau's South Zone has just six officials to check illegal mining in all southern states.

To strengthen the bureau and the pollution boards, the bill proposes a cess on the sale and export of minerals. The cess would enable the bureau and state agencies to monitor implementation of mining plans, commission surveys and studies and prevent illegal mining.

The cess would fund a national mining tribunal that would check the government decisions independently. It would also fund panchayats and gram sabhas and their development plans. The Federation of Indian Mineral Industries (FIMI), with an affiliation of 400 mineral and metal mining firms, wants the profit-sharing clause dropped.

The federation's letter to the ministry of mines on July 17 said, "Experience shows the availability of money often leads to bad habits like drinking, specially in tribal areas, and leads to a violent behaviour with family members." The proposed legislation is more restrictive than the existing mining act, said R K Sharma, FIMI's spokesperson.

Environmentalists said the proposed law would increase mining; the estimated investment of US $300 billion is about six times the investment on mining since 1947, according to the Indian Institute of Mines, an organisation of metallurgical engineers. R Sridhar of the non-profit, Mines, Minerals and People, said the proposed law would increase mining exponentially. He traced the proposed bill to the Forest Conservation Act of 1980 that increased mining in forestland. As many as 317 mining leases were granted in forestland. This number increased to 881 leases between 1998 and 2005, the activist said.

Speedy clearances ring alarm

Environmentalists also expressed concern over the proposal to grant expeditious clearances through "seamless transition" wherein miners won't have to submit an application each time they want to undertake surveys, carry out exploratory drilling or obtain mining leases. "Speeding up mining processes will entail huge environmental costs," said Chandra Bhushan of the Delhi non-profit, Centre for Science and Environment.

"Seamless transition means if a prospector has found ore deposits, it will be obligatory for the government to give mining lease even if the deposits are in ecologically sensitive zone," Bhushan pointed out.

The social impact of the proposed legislation is of equal concern, Bhushan said while pointing out that communities are locked in conflict with governments at more than 200 locations over mining and industrial projects. A ministry official said the government has tried to address concerns of non-profits by proposing a development framework for promoting mining in a sustainable way. All civil society groups would be consulted while preparing the framework, he said. The bill is currently being reviewed by a 10- member group of ministers (GOM).

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