DNA: Digging up the dirt: Much is wrong with the way mining is done in India: June 11, 2008

In late April this year, Naxalites attacked an iron ore mining camp of the Essar group in Chattisgarh and destroyed over 50 trucks and other heavy equipment. This is not an isolated incident; nor will it be the last. It can be seen as a manifestation of the frustration felt by locals in not getting a share of the wealth extracted by mining companies.

In all my travels across prime mining territory in India, the one common factor encountered — be it in Bihar, Chattisgarh, Jharkhand, Orissa, Andhra Pradesh, Rajasthan or Karnataka — was the acute underdevelopment and impoverishment of the hinterland. As per the Hindi proverb, ‘darkness below the lamp’, the mineral wealth of these places has least benefited the surrounding indigenous communities.

The ministry of mines is purported to have formulated a new National Mining Policy. This is expected to provide a fillip to the mining sector, which currently contributes only 2.8 per cent of the country’s GDP. That figure is expected to go up to 5 per cent, while the total investment likely in the sector is around Rs5,00,000 crore over the next six years. The focus of the policy seems to be on addressing the obstacles faced by the mining companies, such as delays in statutory clearances. This is getting the priorities wrong.

The government should realise that in the last two decades, a groundswell of bitterness, animosity and militancy has spread among the locals — mostly tribals — of mineral-rich areas of the country. There is a sense of outrage at being denied a just share of the wealth derived from exploitation of their regions. Fishing in these troubled waters are local politicians, NGOs and Naxalites. As a result, several major mining projects, particularly in the bauxite-rich Eastern Ghats, have not been able to get off the ground. I will not be surprised if a similar fate befalls iron ore projects in the Chattisgarh-Jharkhand region.

Any mining policy that ignores this problem is akin to an ostrich sticking its head in the sand. Enhancing royalty rates and converting them to ad valorem duties has been mooted, with the hope that the state governments will recycle the increased income to development of the backward mining areas. Unfortunately, history belies this. Mining companies have the reputation of declaring less than what they actually extract. The royalty is swallowed up by the state governments and the dole out to mining regions is paltry. Perhaps legislation should make it mandatory for a state government to spend a major portion of ad valorem royalties for development within the host districts of the mines.

Aside from low level manual tasks, locals are not employed. Even indirect tertiary services such as transport, catering, repair workshops and small retail are usually bagged by the more entrepreneurial immigrants. So locals do not perceive mining projects as a way up the economic ladder and have become indifferent or hostile to them. The common excuse made by mining companies is that the tribals are not skilled in mining tasks. That makes it more important for mining companies to invest in training. The new mining policy should formulate norms for hiring and training locals and provide monetary and management aid to establish tertiary service outlets.

Conservation is as important as extraction in mining. Get-rich-quick attitudes combined with primitive extraction methods such as blasting and handpicking has led to enormous waste in mining marble in Rajasthan and granite in Karnataka. Unscientific small-scale mining has led to manual cherry-picking of rich lumps that has left iron ore mines in Karnataka with large areas of relatively poor ore that should have been simultaneously mined in a scientific manner to yield a reasonable blend. The new policy can lay down standards.

Mining is essentially environmentally destructive. With much of India’s mineral wealth located in forested areas and most of the mining being open-cast, the environmental damage is extreme. The last two decades have seen legislation that seeks to contain this damage by imposing conditions on mining companies, such as compensatory afforestation and regreening of strip-mined areas. But, by and large, these conditions have been observed more in the breach.

The wasteland left behind by those extracting marble in Makrana (Rajasthan), granite in Karnataka, iron ore in Goa, coal in Jharkhand and chromite in Sukinda (Orissa ) is typical of the industry in India. The new National Mining Policy needs to address this issue squarely and put the onus on redressing the destruction solely on mining companies.

The writer is a commentator on public affairs