Karnataka lost Rs 3,000 crore due to illegal mining: CAG

Performance audit report unveils mining irregularities in the state

By Soundaram Ramanathan
Published: Thursday 10 January 2013

Karnataka has incurred a revenue loss of Rs 2,976.26 crore between 2005 and 2011 due to illegal extraction and transportation of minerals. The Comptroller Auditor General (CAG) of India's office has highlighted this in the performance audit report of the mining sector. The report was tabled in the winter session of Karnataka’s Legislative Assembly last month.

Ilegal mining in Karnataka has been in dissussion since the Lokayaukta’s report in July 2011 on illegal mining operations in Bellary. The issue was then taken up by the Supreme Court, which banned mining in Bellary for three months and directed the CBI and the Central Empowered Committee (CEC) to investigate the matter. The colossal plunder of public wealth had also prompted the CAG to conduct a performance audit of the mining sector in Karnataka. During the audit, special emphasis was given to iron ore mining and stone quarrying. Of the 31 mining districts, only eight were audited. Chitardurga, Bellary, Hospet, Sandur and Tumkur districts were audited for iron ore mining while Bengaluru Rural, Ramanagar and Chamarajanagara districts were audited for stone quarries. CAG did not take into account the activities of public sector undertakings involved in mining during the audit.

The report says that the state has lost revenue because of officials’ negligence. The audit has found discrepancy in the data maintained by the state and Indian Bureau of Mines. Besides, there is no centralised database system in place to process mine lease applications. The report rebukes the officials for adopting incorrect mineral prices, levying less royalty, not insisting on lease deed registration from mining companies and devaluation of stamp duty. It also points out that mining in the state is going on without proper clearances. Companies extract excess minerals and transport them without transport permit, it says.

Mining without clearances

Mining companies have extracted 1,791,766 tonnes of iron ore, worth Rs 163.28 crore, during the period without necessary environmental clearances. Of the 73 companies checked, the audit has found that 20 companies are mining without consent from the Karnataka State Pollution Control Board. Of the 120 granite quarry leases inspected, 104 did not have proper mining plans. Mining plans are essential for granite quarry as per the granite conservation and development rules of 1999 and any violation can lead to suspension of mining activities. However, deputy directors of the state mining department who monitor the quarries informed CAG that they will issue notices to the lessees. The CAG audit report has also found that violating the Environmental Impact Assessment Notification of 2006, most mining companies dump overburden, or waste generated by mining, outside the mine lease area, especially in forests, which causes severe degradation of surroundings.

Excess extraction of minerals

The CAG audit report also points at the extravagant revision of mines’ production capacity by the Indian Bureau of Mines. This has resulted in excessive extraction of minerals, it points out. The production of iron ore in the Bellary region alone has ranged between 33.26 to 49.81 million tonnes in the last four years. This is when a study by the National Environmental Engineering Research Institute, carried out in Bellary-Hospet region in April 2004, recommended 16 million tonnes of iron ore mining in the area, the report states. The Central Empowered Committee (CEC) appointed by the Supreme court last year to check illegal mining had also permitted to mine only 25 million tonnes of iron ore per annum.

Illegal transport of minerals

The audit found discrepancy in the quantity of iron ore permitted for transport by the state mines department and forest department. A differential quantity of 3.75 million tonnes of iron ore valued Rs 296.02 crore has been permitted by the forest department for transport. Several vehicles were found transporting minerals despite expired permits. The state failed to take any action even after being informed by RTOs about seizure of lorries plying with extra load of ores.

Environment takes a back seat

During the audit, CAG found open space dumping of copper tailings at Chitradurga by Hutti mines. The copper tailings were lying in the open for nearly 15 years without any treatment. When the issue was brought to the notice of the pollution control board officials, they said the mines were not inspected as they were not in operation. In December 2011, they inspected the mining area and found that the tailings had contaminated the groundwater in the area. Shri Ragava, environment engineer of Hutti Mines, however, says “There is not going to be a lot of hazardous materials in the waste because we do not mix chemicals during mining operation. In fact, there are some agricultural research which says tailings can be used as fertilisers in fields as it has micro nutrients in it.”

Mining activities have also resulted in increased air pollution in the area which has led to respiratory illness, particularly TB, says the report. Dust deposit on plants and dumping of mine waste on agricultural areas has also impacted the crop yield. A huge flow of mine ore carrying truck traffic interrupting the day to day activities of the common people have been accounted in the report. The report has suggested usage of rails more for transport of ore rather than roads.

Speaking with Down To Earth, Shobha, chief accounts officer in the Directorate of Mines and Geology at Karnataka, says the mining department is not happy with the audit report. However, she adds, “We will impose five times the royalty as penalty on those found guilty. To check illegal mining, we are introducing more computerisation and have started building a central database system. Currently, we have information about 4,500 lease holders. We are also introducing a technology to track mineral ore trucks.” Shobha adds that the state mines department no more handles environmental issues like afforestation, and has entrusted it on the Indian Council of Forest Research and Education, Dehradun.

S R Hiremath of non-profit Samaj Parivartan Samudaya hails the report, saying it quantifies the impact of mining on health and livelihood of people. Hiremath had filed a petition in the Supreme Court against illegal iron ore mining in Bellary. However, he adds, it seems less likely that the state government and other authorities will accept the report’s recommendations seriously.


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