Press Note: Bellary case file

Will it help sound mining or mining companies?

May 17, 2013

The Bellary case -and perhaps now the Goa case- is setting a precedent for mining regulations in the country.  In April this year the Supreme Court lifted its ban on many iron ore mines in Bellary with certain conditions. The court also prescribed a method for assessing illegality of mines and suggested ways to to restore the ecology of the region devastated by unscientific mining on a large scale.

It is developing a mining penal code for the country, and will define how the offenders are judged, how serious their crime is, and how they should be penalised. It is setting the framework for future environmental management, including the limits on how much mineral extraction is “sustainable”. 

In addition, the judgements set the framework for how local people will “benefit” from mining. Therefore, in many ways these decisions are overarching and are essential as the current regulatory system has been decimated.

The question that needs to be discussed is whether the judgements go far enough in deciding the sustainable framework for mining in the country. Or, indeed, if these are in the right direction.

Mining Penal Code

The Central Empowered Committee (CEC) of the Supreme Court has classified mining into three categories¡ A, B and C taking encroachment as the basis of the nature of offence committed. To judge the quantum of offence, CEC has taken the ratio of the lease area of each mine to respective encroachment. 

Category A: No major encroachment outside the lease area. This does not mean this category is “clean” on other accounts. The mine operations are allowed after the reclamation and rehabilitation (R&R) plan is started. 

Category B: Encroachment up to 10 per cent of the mine lease area for mining pit and dumping of waste in area up to 15 per cent of the lease area. They have to complete R&R and pay some fines before resuming operations.

Category C: Encroachment more than 10 per cent of the lease area and dumping of waste in area, which is more than 15 per cent of the lease area. Their lease will be cancelled and then auctioned for captive use. 

DTE Story

 

Chaos in the iron age
Bellary district of Karnataka and Goa portray India’s very own gold rush. Today,

The bottom line, after all the rigmarole and more than two years of judicial scrutiny, is that all mines, big and small, big offenders or small offenders, will continue in some form or another. The problem with this manner of categorising penalties is threefold. One, that CEC has defined the “nature” of offence in a very limited manner, which does not take into account the environmental fallout or the cumulative impact of the mines in the region. In this way, when mining reopens first A, then B and then C it could well be business as usual. The best that is being offered is that there will be an R&R plan, which will take into account “afforestation, check dams, stablisation of waste dumps, soil conservation, rainwater harvesting and use of modern mining technologies”. There is nothing to suggest that these methods will add up to sustainable mining, even if a cap is put on the total mining that will be allowed.

Two, this rulebook could well end up incentivising large mines to commit large offence. The simple fact is that the Bellary formula will work against small mines, as it is based on quantifying the extent of violation as a percentage of the mine lease area. This will end up “legalising” non-compliance of large mines. Mines with large lease areas, for instance of 1,000 hectares, could have encroached 100 ha and still be in legal B category.

Three, the issue of illegal iron ore extraction and sales has been ignored by CEC in defining illegality. In 2012, the Supreme Court directed CEC to assess within three months the actual quantity of illegal iron ore that was sold, so that companies could be fined. But this has not happened. So mines have opened and many more will open soon, and all the talk of recovering ill-gotten funds may well be brushed under the carpet. Small wonder the mining barons are once again in power in Bellary.

C for captive 

Allowing C category mines in the future once they are auctioned for captive use presumes illegal mining will thus remain in check. But the fact is captive mines discount natural resource, allow transfer pricing and promote poor mining practices, as is evident from cases across the country. Worse, it will distort the market by creating certain companies who will have access to cheap iron ore through captive mines, while others will have to buy ore from the market at higher costs. It is also clear that companies with cheap raw material are not driven to innovate or to be frugal and efficient in their use. 

For instance, the recent rating of Indian steel companies done by Delhi non-profit Centre for Science and Environment found that the three top-rated companies did not have captive mines for iron ore¡ªtheir cost of raw material was high and they invested in efficiency, which in turn brought down emissions. Companies with captive mines¡ªTata Steel, Jamshedpur; Jindal Steel and Power Limited, Raigarh; and SAIL, Rourkela were rated low in environmental performance.

Unscientific cap

The Dehradun-based Indian Council of Forestry Research and Education (ICFRE) has recommended in its environmental impact assessment (EIA) done at the behest of the Supreme Court that there should be a “cap” on the quantum of iron ore mined in the Bellary region. The Supreme Court has endorsed the recommended “cap” of 30 million tonnes per annum (MTPA) 25 MTPA in Bellary and 5 MTPA in neighbouring Chitradurga and Tumkur districts. The “cap” is not based on environmental or socio-economic factors. Instead, the ICFRE report mentions that it is suggesting this limit “since the annual iron ore requirement of Karnataka is around 30 MTPA and majority of its demand is met from Bellary”. 

This sets a bad precedence for environmental governance and has huge implications for inter-state matters. The limit is unscientific and is not based on cumulative impact assessment, taking into account the carrying capacity of this eco-sensitive forested region. It would also signal that states should “mine” for their own captive consumption mine and only mine.

SPV for community 

The Supreme Court has directed that a special purpose vehicle (SPV)¡ªthe Karnataka Mineral Rich Region Development Corporation be set up under the chairmanship of the state chief secretary. The SPV will collect the fines, penalties, money raised from the auction of C category mines and 10 per cent of the sale price of all iron ore sold from Bellary, and will implement projects for socio-economic development and mining infrastructure. In other words, a parallel government is being proposed to the district administration. It is not clear how this recommendation is in consonance with what is being discussed currently in Parliament. The Mines and Minerals (Development and Regulation) Bill, 2011, presently with Parliament, includes provisions for benefit sharing and local area development. Will the SPV model be in contravention of the Bill or will it set a precedent?

No accountability

There are four key departments that can be held most accountable for the extent of illegal mining in Bellary (and Goa). One, the forest department as it turned a blind eye to the takeover of its land. Two, the state mining department, which gave leases and clearances with total indifference. Three, Nagpur-based Indian Bureau of Mines, which gave permissions to increase mining from 20 MTPA to 80 MTPA without any care or scrutiny for impacts. And four, the Ministry of Environment and Forests (MoEF), which gave environmental and forest clearances to anyone and everyone without any assessment. 

The fact is government officers who “connived”, “consented” or simply did nothing to stop the rot have not been held accountable. The worst part is that today these departments¡ªrepresented in the Supreme Court monitoring committee have become all-powerful and are back in the business to decide the fate of Bellary without any institutional reform.

The Bellary model does not provide the design of an effective institutional framework for environmentally sound and regulated mining in the country. The model, instead, once again depends on committees of the court to oversee management, which is at best a short-term solution. In this way, the Bellary case does not mean the end of illegal mining or a new dawn for sustainable mining in the country.

Chandra Bhushan
Deputy Director General
Centre for Science and Environment
Email: chandra@cseindia.org
Twitter: Chandra Bhushan@Bh_Chandra

For the entire Down to Earth story please visit http://www.downtoearth.org.in/content/chaos-iron-age

For further details, please get in touch with Souparno Banerjee at 9910864339/ or Papia Samajdar at 9811906977