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AUG 04 2014

NDA proposes action plan to revive mining

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 04th AUG 2014

Based on the new findings of a high-level panel that indicts afresh the governments of Odisha, Jharkhand and Goa for serious errors of omission and commission, the Union government has proposed a seven-point action plan to resume mining within a legal and transparent framework. The alleged infractions relate to violations of mining, environment and forest laws.

The report indicts two former chief ministers of Goa. In the case of Odisha, the panel has reiterated its recommendation for an investigation by the Central Bureau of Investigation (CBI)-which was previously rejected by the state government. The Justice M.B. Shah Commission, constituted in November 2010 to look into the illegal mining of iron and manganese ores, recently submitted its new findings to the government.

The reports and the action plan are likely to be tabled in the ongoing monsoon session of Parliament by the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA). The latest output of the commission, which has a nation-wide mandate, includes the second report on illegal mining in Odisha, the third report on Goa, and the first report on Jharkhand according to documents reviewed by Mint. "Looking at the importance of mining activity from the point of view of resource availability and employment generation, the government is keen to revive mining.

However, it wants this to be undertaken in a transparent manner and accounting for social and environment conditions," said a top government official familiar with the development who did not want to be identified.

The proposed action plan involves framing transparent rules for approving mining leases, and using technology, strictly enforcing the Mines and Minerals Development and Regulation (MMDR) Act 1957, tracking the transportation of iron ore using global positioning system (GPS) and radio-frequency identification (RFID) so as to avoid pilferage, developing a mining tendering system for e-enabling the concession processes, framing model rules to prevent illegal mining, and processing environment and forest clearances expeditiously. In the second report on Odisha, the commission has pointed to various violations of mining and forestry legislations including "provisions of the Mines and Minerals Development and Regulation Act, 1957, especially regarding deemed extension, and modifications of mining plan and encroachments" and of "continuation of mining without forest clearance/environment clearance". In the first instalment of the report on Odisha, released on 11 February, the commission asked the state government to recover over Rs.59,203 crore from the miners.

"All modes of illegal mining" are being carried out in the state and "it appears that law has been made helpless because of its systematic non-implementation", the commission said. Large mining and steel companies, including Tata Steel Ltd, Steel Authority of India LTd (SAIL), Jindal Steel and Power Ltd (JSPL), were found to have unlawfully mined between 2008 and 2011.

The commission also recommended using the recovered amount for the development of two districts badly affected by illegal mining-Keonjhar and Sundergarh. On 16 May, the Supreme Court ordered the temporary closure of 26 mines in Odisha as they were operational on the basis of an irregular lease renewal. The closed mines accounted for about half of the state's output of more than 70 million tonnes (mt) last fiscal year. Subsequently, some captive mines of Tata Steel and SAIL were given clearances to restart operations, though around 20 mines in the state are still awaiting clearances. The Shah Commission has also come down hard upon the Goa government by stating that the monitoring mechanism for mining between 2008 and 2011 was ineffective.

It has also criticized the role of former chief ministers of Goa Pratapsingh Rane and Digambar Kamat in "condoning prolonged delays in renewing various mining leases". Ravi Uppal, JSPL chief executive and managing director, welcomed the government's decision. Uppal added that the government must take a two-pronged approach in resolving issues that have impacted the mining sector. "The government must resolve short-term issues like resource linkages, forest environment clearances, bank loan disbursements, etc... (and) simultaneously work on mid- to long-term measures," he said.

The clampdown on mining in the aftermath of revelations that highlighted rampant illegal mining across India starved steel companies of raw materials. "With the clampdown by the Supreme Court in Odisha, iron ore availability domestically remains constrained causing pressure on margins and pricing," said Sajjan Jindal, chairman and managing director of JSW Steel Ltd, in his speech at the company's annual general meeting last week.

The commission noted that there was a complete lack of coordination between the state pollution control board, state mining department and state forest department. It also observed that there were several cases of illegal export of iron ore of Goa origin beyond approved limits. To curb illegal mining, the Supreme Court earlier imposed a ban on mining in Goa in September 2012. On 21 April, it lifted the ban on mining iron ore in the state but put an annual cap of 20 mt on the ore mined. Companies are still awaiting mining clearances for production to resume. Prior to the ban, the Goan ore was primarily exported to China as it is of a lower grade and finds no demand in India. S. Sridhar, executive director of the Goa Mineral Ore Exporters' Association said: "About 28 iron ore mines have paid their stamp duty, which means they are ready to start operations as soon as the state's mineral policy is announced.

"The talk is that in the present session of the assembly, the new mining policy will be presented. So if all goes well, mining can start as early as the new season that starts when the monsoon ends. We will definitely try the old markets in China, but first we have to open the shop first and then look for customers, he added. The court had placed a similar ban on mining in Karnataka in 2011 and subsequently lifted it, in 2013 when it allowed the re-auction of 51 so-called C category mines.

In May this year, the court placed a similar ban on 26 mines in Odisha asking the state government to expedite proper lease approvals. In the case of Jharkhand, the Shah Commission has estimated iron ore worth Rs.14,403 crore and manganese ore worth Rs.138 crore was mined illegally between 2008 and 2011. It notes that "18 mining leases did not have environmental clearance and two leases did not have forest clearance".

The report adds that if the mining department and pollution control board of Jharkhand had ensured oversight, such illegalities could have been avoided. Restrictions aimed at curbing illegal mining have shrunk the iron ore industry in India, with production falling to 136 mt in 2013-14 from a peak of 220 mt in 2009-10. Higher export duties have meant that Indian iron ore exports have totally collapsed from 117.37 mt in 2009-10 to 14.42 mt in 2013-14. Prakash Duvvuri, head of research at natural resources portal Oreteam, said: "I don't see the Shah Commission reports (the ones that are now being tabled) having much impact as the government has delayed them for too long and unless there is something in them that is new.

The state governments themselves have to speed up the mining production process and the central government's orders to them might give them a push." Duvvuri added that Goa has to frame a new mining policy; and Karnataka, speed up the auction of C category mines. Odisha has demonstrated its intent to revive the mining sector by issuing express orders to reopen some mines closed in May and May issue more such.

Tags

Goa Jharkhand Odisha Karnataka Steel Authority of India Ltd. JSW Steel Ltd. Goa Jindal Steel and Power Ltd China SAIL Central Bureau of Investigation Mines and Mineral Development and Regulation Bill JSW Steel Prospecting Licence Power India AIL

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