Mining companies brazenly operate illegally, with central and state governments being too willing to leave the field open to them.
By Vishwas Kumar
For years, central and state governments, led by the Congress and its allies or BJP and its partners, did little to curb illegal mining. The judiciary and executive gave conflicting signals or took decisions that curbed the symptoms but not the malaise. In the chaos, the demand for a CBI probe by the MB Shah Commission became muted. Although PIL activist and member of the Aam Admi Party, Prashant Bhushan, filed a case in Supreme Court this January, there was little movement.
The fact is that the Congress and BJP, their coalition partners, and even the unallied political parties have vested interests that make them shy away from a CBI investigation. For example, the BJP’s Odisha unit put the state’s chief minister, Naveen Patnaik, in the dock for abetting illegal mining. It latched on to the Shah Commission recommendation for a CBI probe. Later, its demand became muted, as Narendra Modi’s blueprint is to accelerate infrastructure projects, including in the mining sector.
Says the BJP Odisha state president, KV Singh Deo: “We have repeatedly demanded a CBI probe but the state has been reluctant. We have written to the governor, requesting him to order the same.” But when quizzed why he didn’t up the ante after his party came to power at the center, Deo’s reply was that “the matter is in the court and sub-judice.”
Although the Congress set up the Shah Commission, it had little interest in pursuing the latter’s recommendations. The reason: one of the culprits behind illegal mining was none other than A Raja, the main accused in the 2G scam, who was the environment minister (independent charge) between May 2004 and May 2007. Obviously, political parties like Odisha’s BJD would wish to have the investigations under its jurisdiction—state’s chief vigilance office—rather than by center’s CBI.
The judiciary imposed a ban on mining in several states and regions and, later, removed some of them. In April 2014, the Supreme Court lifted the ban on iron ore mining in Goa, but capped annual production at 20 million tons a year. The apex court imposed other conditions, which included that the state will not give mining leases to companies that were given extension after 2007 despite the completion of the 20-year renewal periods. It upheld the earlier decisions by the center and Goa government.
The business community reacted against the bans. It said the judicial and other curbs impacted growth. In his budget speech, Arun Jaitley agreed: “It is my government’s intention to encourage investment in mining sector…. The current impasse in mining sector… will be resolved expeditiously. Changes, if necessary, in the MMDR (mining) Act would be introduced to facilitate this.”
Meanwhile, illegal mining continues. The Shah Commission pegged losses from it at around `100,000 crore in two states, Odisha and Goa. According to the report, the reasons that facilitated illegal mining, apart from the “China factor”—prices of iron ore shot up 20 times in 2008-11 due to demand in China—included “lack of effective enforcement”, and “absence on the part of the concerned officers to effectively curb the menace of illegal mining”. It added that there was a nexus between mining mafias, and central and state governments. There were “systemic failures” too.
So, what is the modus operandi of the illegal miners? How do the ministers and bureaucrats abet their activities? How is it that India reached a state where, as Shah Commission noted, “there is enormous and large-scale multi-state illegal mining… having several pernicious evil effects on the national economy, good governance, public function-aries, bureaucracy, public order, and law and order”? How did these activities encourage corruption, mafia and money power?
One of the routes to “legally” continue illegal mining was through temporary working permissions (TWPs). In July 2005, environment minister Raja passed an order that several mining projects, which had expanded their operations without the requisite “green” clearances, could be granted TWPs and a two-year grace period to get them. This proved to be a loophole in the existing policy, which stated that miners had to get the environment clearances before expanding their capacities.
As international prices of iron ore zoomed between 2008 and 2011, thanks to huge demand from China, Indian exporters earned “super normal profits” of 100 percent and above. Miners went ahead with expansion even after the two-year grace period. The Shah Commission found that of the 192 mining leases in Odisha, 94 did not possess the required environment clearances. Of the latter, 55 leases had not got them for almost a decade. The commission estimated illegal mining of over 50 million (5 crore) tons of iron and over 42,000 tons of manganese, which resulted in a loss of Rs. 60,000 crore.
In November 1994, just after it announced the new environment policy, the ministry issued guidelines to the chief secretaries of the states and union territories, which stated that if mining projects were located in forest areas, or forest area was diverted for non-forest uses, they required two separate clearances under the Forests Conservation Act (FCA) and Environment Protection Act. The rules added that a project “would be deemed to be cleared only after clearance(s) from both angles”.
Later, in May 1998, TN Seshan, the environment secretary, who went on to become the chief election commissioner, asked NK Panda, chief secretary, Odisha, to investigate miners, who had violated FCA requirements, “so as to fix the responsibility on the persons responsible and that such violations are not continuing any further.” However, as the Shah Commission noted: “In Odisha, no such directions were followed for years together in almost all the leases and hence, large-scale illegalities have been committed by non-compliance of the provisions of existing statutes.”
For instance, between 2004 and 2012, mining lessee BK Mohanty, power of attorney holder Deepak Gupta, and directors of Deepak Steel and Power carried out “illegal mining” in Barbil’s Uliburu forest in Odisha in
connivance with local authorities. During this period, the company extracted over 40 lakh tons of iron ore and 610 tons of manganese ore, estimated at Rs. 2,000 crore.
There were other ways in which the state and central agencies encouraged illegal mining. These included the practises of “deemed extensions” and “deemed refusals”. The former allowed miners to continue mining after the end of their lease periods. The deemed extension clause was meant to deal with contingencies; it kicked in only if there were genuine administrative delays in lease renewals. However, the exception was turned into a rule. The miners wished to avoid a complex process to seek fresh clearances and no-objection certificates. In collusion with the state and local authorities, they operated on deemed extension basis for years and decades.
The Shah Commission found that of the 341 operational mines in Odisha, 215 worked under deemed extension clauses. The leases had expired more than two decades ago in the case of 15 mines, 15-20 years ago in the case of 17, 10-15 years ago in 38, 5-10 years ago in 69 mines, and less than 5 years ago in the remaining ones. “After examination of about 375 mining leases in States of Odisha, Goa and Jharkhand, it is observed that in very few mines, leases have been renewed after the 1994 policy…,” stated the commission’s report.
Like the deemed extension clause, state governments misused the deemed refusal one. Yet again, the latter was for contingencies; the state could give TWPs to miners in case their clearances from the environment and mining ministries were delayed for no fault of the operators. Worse, the two ministries condoned “illegal mining extractions” under the deemed refusal clause by waiving off criminal prose-cutions, recoveries and seizures against the illegal miners.
The Indian Bureau of Mines, a department under the mining ministry, allowed modifications in the original mining plans in the case of 85 leases of iron and manganese ores. Of these, the plans were changed several times for 30 companies. In 53 cases, the mining plans were modified with retrospective effect. “This would mean that without a prior approval, the lessee increased the production of iron ore for some purpose, may be, export and that has been tried to be legalized by IBM,” said the commission.
Essel Mining and Industries’ annual production was changed retrospectively from 2004–05, although it did not have an environment clearance. “It would be in the right context to state here that the excess production has been post–facto rectified by the Controller (IBM)…. This post-facto approval is also an illegal ratification of the illegalities committed by lessee…. Such types of retrospective approvals have aggravated the illegal mining which was rampant during that period,” stated the commission.
In his budget speech, Jaitley asserted that apart from encouraging mining, the government will “promote sustainable mining practices… without sacrificing environmental concerns”. If the finance minister has to achieve these twin objectives—find a balance between development and environment—he does not need to change the existing laws. His government has to only follow them stringently.