No cap on iron mining in Odisha

Centre rejects Shah Commission recommendation, says it would upset industry

By Anupam Chakravartty
Published: Friday 31 January 2014


THE Centre has rejected a key recommendation of Justice M B Shah Commission to cap iron ore production in Odisha. The commission was set up by the Union Ministry of Mines (MoM) in 2010 to look into illegal mining of iron ore and manganese in the country.

In its first report on Odisha, submitted to the Centre in October 2013, the commission said the state is incurring losses to the tune of Rs 59,203 crore because of rampant illegal extraction, sale and export of iron ore. It recommended capping iron ore production between 50 and 55 million tonnes per annum (MTPA) immediately. Production can be increased at 7.5 per cent a year or equivalent to the growth of steel and sponge iron industries subsequently. Government data shows as of December 2013, the state was producing 40.05 million tonnes of iron ore. The report stated at current mining rate, iron ore in Odisha would last only 30 years. The capping is necessary so that future generations would not have to import iron ore.

MoM rejected the recommendation at a Cabinet meeting on January 2. “Fixing a cap on production of iron ore, solely on the basis of reserves and resources identified at this point of time, will not be in the interest of industry,” the ministry said in the Cabinet note. The note states that since reserves and resources of iron ore have not been static, with modern methods of identifying resources, they are likely to be augmented further. The Cabinet meeting referred the report to a committee of secretaries to finalise future course of action.

Following the submission of Shah Commission’s report, the Odisha government informed MoM that it has already limited iron ore production from Joda and Koira to 40 MTPA and 12 MTPA. The commission had found that 92 mining leases were operating in the areas without environmenal clearance. But the limits set by Odisha are questionable. Going by its own data, in 2011-2012, Joda produced 29.9 MTPA iron ore and Koira 0.83 MTPA. This output, which includes production from the 92 mines without environmental clearances, is much below the caps fixed by the government.

Gross violations

The Shah Commission had found that at least 70 top companies, including Steel Authority of India Limited, Tata Steel, Odhisa Mining Corporation and Essel Steel of Aditya Birla Group, were involved in extraction of iron ore worth Rs 45,453 crore and manganese worth Rs 3,089 crore from the state just by violating environment laws. Of the 192 mining leases, 176 were within dense forests and 94 were operating without environment clearances. Just as in Goa, more than 90 mining leases were operating under “deemed extensions”. The scam has been going on since 1994-95 in connivance with politicians, bureaucrats and railway officials, stated the Shah Commission and called for a CBI inquiry into illegal mining in Odisha. But the state government has rejected the recommendation.

The Shah Commission indicted the Indian Bureau of Mines for approving mining schemes to increase production of iron ore to 154.263 million tonnes by “ignoring the fundamentals of Mineral Conservation and Development Rule (MCDR), 1988”. According to MCDR, any modification to mining plan should be made in the interest of safe and scientific mining, conservation of minerals and environment. The commission also pointed that although most mines are located in tribal-dominated areas, communities have remained a deprived lot.

It came down heavily on mining companies that encroach on forests, and suggested 15 days of imprisonment for violators under the Forest Conservation Act or withdrawal of mining lease. The Union Ministry of Environment and Forests in its action taken report on the commission’s investigation ignores the recommendation to withdraw mining lease and says it would levy penalties on companies as per polluter pays principle and the net present value of forests.

Meanwhile, activist groups have filed a petition before the Supreme Court asking the government to extend the tenure of the commission so that it could visit other mineral-rich states, such as Chhattisgarh. On October 16 last year, the Centre had refused to extend the tenure of the commission on the pretext that it took too long to table investigation reports. But the Cabinet took more than four months to bring the commission’s report on Odisha for discussion.

Memorandum of Action Taken on the Justice M B Shah Commission Of Inquiry on illegal mining in the state of Odisha

Odisha Minerals (Prevention of Theft, Smuggling and Illegal Mining and Regulation of Possession, Storage, Trading and Transportation) Amendment Rules, 2013

Review of export of iron ore policy: Standing Committee on Coal and Steel (2012-13)

Status paper on mining leases in Orissa

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