Illegally Mine

At 1:07 pm on February 11, 2012, the earth shudders, sending tremors through Sugand Chand’s home. A few minutes later, another vibration follows. No, this is not an earthquake warning that the Meteorological Survey of India failed to predict. The jolts were caused by explosions taking place several feet below Chand’s home in Gunawati village in Makrana. The small, dusty town in Rajasthan’s Nagaur district is famous for its marble — even the marble that went into the building of the Taj Mahal is said to have come from here.

The opening of the mine is across the village road, about 100 metres away. Chand’s 1995 election ID card gives his address as ‘above the mine’. The problem, however, is not just about the impact of mining activities on the people living in the vicinity of the mine — it is worse. No mining was supposed to take place at this particular site — Mine Number 214. What’s happening is obviously illegal.

Half an hour earlier, a stocky, grey-bearded man, who was earlier sitting on a rock at the edge of the mine, quietly slipped away upon our arrival. A cave-like view shows that mining has been going on for years underground, and not vertically, as required by the ‘open-cast method’. There is no board indicating mandatory details such as the name of the owner or the area covered under the mining permit. “The mining activity goes on below the houses and far beyond the area seen from the surface,” says the 55-year-old Chand who, like the majority of the locals, has worked most of his life in the mines around Makrana.

Not only have the continuous explosions scarred the psyche of the people living above the mine, there is fear that the earth could cave in. About a couple of kilometres away, excessive drilling has caused the ground beneath a railway track to literally give way. Weirdly enough, the collapsed track of the Parbatsar to Makrana route has become a tourist attraction of sorts. 

Shaken as we were by the explosions, we could see no way to go hundreds of feet below ground and return safely. Dhanna Ram, a local trade union leader, told us that the workers were expected to come out only around 5 in the evening. It was a Saturday and there were no mining department officials to whom we could complain. The chief mining engineer couldn’t be reached on his cellphone. We returned to the same place at about 4.45 p.m. The stocky guy was back but he tried to slip away again. Before rushing away, he said his name was Abdul Gafoor, a marble buyer, and had nothing to do with the mines. 

The crane-operator Kaalu, who was not seen earlier in the day, debunks Gafoor’s claim. “He is ‘Hajisaab’ and he is our supervisor,” Kaalu says. “He pays us our wages.” Kaalu is having the small white stones removed, which workers from deep down fill up. In about 20 minutes, three workers, including Hiralal (32) and Saudhan (22), climb out of the mine. None of them know who the mine owner is. Ten days later, in a telephonic conversation, the chief mining engineer confirms that Mine Number 214 is a ‘bapi mine’, meaning an ancestral mine given to a person by the name of Noor Mohammed during the early 19th century.

Most Makrana mines are akin to farmlands, where the mines are divided into smaller parts and passed on to the next generation, which usually means they go deeper and then sideways. The sanction to mine was removed in May last year over certain legal formalities and this was being disputed in the courts. No mining is currently permitted though it is clearly being carried out. There are also issues of illicit explosives and national security concerns surrounding them, and the involvement of local mafia and their alliance with the police, bureaucrats and politicians.  

The Big Picture

The illegal mining in Makrana may appear to be a tiny speck when compared with the rampant and large-scale depletion of natural resources across the country. Stories of illegal mining regularly surface from different states: Karnataka, Rajasthan, Goa, Madhya Pradesh, Andhra Pradesh, Odisha, Chhattisgarh and Jharkhand come to mind. In reply to a Lok Sabha question, mining minister Dinsha Patel said there were 78,189 cases of illegal mining in 2010-11 alone.

Even this might not be the entire picture and the amounts seized and fines imposed may appear piddling. In July 2011, Justice Santosh Hegde, who headed the Karnataka Lokayukta, said in a report that the estimated loss to the state exchequer due to illegal extraction of iron ore from 2006 to 2010 was ₹16,085 crore. The Justice MB Shah panel — appointed by the Centre in November 2010 — is at present probing the large-scale illegal mining of iron and manganese ore in various states. Considering the Karnataka report, the possible losses nationwide inspire dread. 

It’s not just about revenue. Natural resources and the environment are degraded, too. In a synopsis of his 10,000-page report, Justice Hegde points out how iron ore mining involved flouting of almost all rules and caused considerable environmental degradation. There were irregularities from the word go — from issuing permits to mining without any permits or clearances. Encroachments, mining outside the permitted areas, or mining beyond permitted quantities was the norm (see: Undermining law).

Undermining law

Extracts from Justice Hegde's Lokayukta Report

Minerals were transported without any permits, and even if there were permits, overloading was almost always the case. Even big companies allegedly fudged books and permits, and bribed authorities and cops regularly. Profiteering was the name of the game with the politicos in cahoots. In fact, the modus operandi is almost the same for various minerals across the country. “No illegal mining can happen without the backing of bureaucrats and politicians,” says RK Sharma, secretary-general of the Federation of Indian Mineral Industries (Fimi). “Political parties are sent a cut with the ruling combine getting the most,” says a political insider. 

Under Section 23C of the Mines and Minerals (Development and Regulation) Act, 1957, state governments have to control illegal mining with the Centre advising and coordinating initiatives to help. Little surprise that things are the way they are. “Mining correlates to industrial production and GDP growth, and needs to be done in a healthy and sustainable fashion,” says MP Narayanan, former chairman of Coal India and the Neyveli Lignite Corporation. A Ficci-BCG study says every 1% increase in the growth rate of mining and quarrying results in a 1.2-1.4% rise in the growth of industrial production and, correspondingly, about 0.3% GDP growth.

The Ministry of Mines aims to increase the share of mining and quarrying in the GDP from the current 2.3% to 7-8% over two decades. But to achieve that, solutions need to go beyond just containing illegal mining. The sector needs to be streamlined, regulated and made sustainable. More importantly, the opposition to the idea of mining needs to be removed. Vedanta’s bauxite mining project in the Niyamgiri Hills of Odisha, ArcelorMittal’s plans for mine development and the building of a steel plant in Jharkhand, and Posco’s mining and steel plant in Odisha, are examples of projects hitting roadblocks over people and environment issues. So, the Mines and Minerals (Development and Regulation) Bill, 2011 (or MMDR 2011), introduced in the Lok Sabha last December, is seen as a big effort to streamline the sector.

Mine and yours

However, one of the most unique propositions of the MMDR Bill, which aims to quell the opposition to mining, is also becoming the most controversial. Under Section 43(2), coal companies will have to share 26% of their profits after tax with the project-affected people while other miners will have to shell out an amount equal to the royalty paid to the states. The monies will go to the District Mineral Foundation, an ‘NGO’, which will work for the benefit of persons or families affected by mining-related operations.

The industry’s contention is that the companies were already working for the affected families through their CSR programmes and this provision would be an additional burden. “This can be a huge burden on the industry on a perpetual basis,” says HC Daga, group executive president, Essel Mining & Industries. Section 43(3) also proposes that a mining company should allot at least one share at par for consideration other than cash to each person of a family affected by the mining-related operations of a company, and such shares would be non-transferable. “We completely oppose the proposals,” says Fimi’s Sharma. He says the Indian mining industry is already one of the most taxed in the world and these provisions will only aggravate its condition. 

The idea of sharing 26% profits was inspired by South Africa’s Black Economic Empowerment (BEE) Policy where equity ownership is transferred to the black and coloured people who suffered under the apartheid regime. In the Indian context, the aim was to make the poor, especially the tribals, become stakeholders and benefit from the mining activity. In fact, most of the areas with rich mineral sources are in Naxal-infested districts. The government’s initial idea was to make all mining companies share 26% of their net profits with the project affected people.

However, there was fierce opposition to this proposal and industry bodies lobbied hard against it. “After the announcement of the BEE policy, investment in South Africa’s mining has gone down drastically,” says Sharma. Off the record, companies were willing if profit-sharing was reduced to 10%. Finally, the government decided to restrict the 26% profit sharing to just coal and lignite industries. “Why only coal companies?” asks B Akala, former chairman, Central Coalfields. It is no surprise that 85-90% of India’s coal mining is in the public sector. 

“Both profit sharing and royalty sharing do not work,” says R Sreedhar, convener of Mines, Minerals and People (MM&P), an alliance of mining-affected communities. He points to the second quarter financial reporting (2011-12) of Sesa Goa by way of an example. The company showed a profit of just ₹1 crore as compared to the previous year’s profit of ₹388 crore. It was not because business was poor. In fact, a ban on exports from Karnataka had given them an advantage, he says. However, investments on properties in Liberia pruned its bottomline, technically speaking. “Communities are demanding either 26% of the share of the project or 26% of the mineral mined,” he says. “The latter is very pragmatic.” 

Another concern is whether the mechanism will work at all. Though the District Mineral Foundation is termed as a ‘non-governmental body,’ its composition says otherwise. Section 57 says the Foundation would be managed by a Governing Council consisting of the district magistrate who would be the chairperson. The members would include the District Panchayat or District Council head, all miners in the district, heads of the local offices of the concerned state government departments, at least three representatives nominated from among the affected persons, representatives of the Indian Bureau of Mines, and the district mining officer. The question is: how will this be different from other government departments with pathetic records of delivery? Instead of involving local NGOs, Narayanan suggests evolving a system of creating annuities, to be paid automatically and directly to the people displaced from their land. “Otherwise, the coal and lignite sector will continue to be flogged by the state and central governments,” he says. 

Even if funds are collected, the mechanism for reaching them to the affected people raises doubts. Former Planning Commission member-secretary NC Saxena says the government has collected over ₹25,000 crore through the Compensatory Afforestation Fund, but it remains unspent. In 2009-10, the Rajasthan government earmarked 1% of the total revenue realised by the state from mining to be earmarked for the panchayats affected by mining. With annual revenues of about ₹2,000 crore, approximately ₹20 crore was collected. This amount is lying with the zila parishads and is yet to reach the panchayats. There are numerous instances. So, if a similar fate hits the MMDR proposal too, the lot of the affected will only worsen. Besides, the Bill does not specify the measures needed for skill development of the affected people.   

Legal landmines 

With the Supreme Court flaying the ‘first-come-first-served’ (FCFS) policy in 2G spectrum allocation, the government seems to be doing a rethink on the provisions in the MMDR Bill. The FCFS policy applies when it comes to the exploration of deep-seated minerals such as gold. For minerals that are closer to the earth’s surface, such as iron ore, bauxite or limestone, the MMDR suggests the auction route. “The bidding parameters need to be set first,” says Akala. T Arun Kumar, senior industry analyst with Frost and Sullivan, points out that there are no pre-qualifications for bidders and this could lead to speculative bidders edging out active players.

The speculator’s aim would only be to jack up prices for a quick buck. On the other hand, alternate views emerge, such as preferential rights being given to the original landowner, and government land being auctioned. “The first preference should be to local miners who will add value within the state,” says AK Vaish, additional director, geology, in Rajasthan’s Directorate of Mines and Geology. His contention is that most minerals mined in Rajasthan are sourced to states such as Gujarat and Maharashtra where value addition is many times over. “The states where minerals are abundantly found mostly stay backward,” he says. 

That said, the Bill does help in bringing in scientific mining and zero-wastage of resources by encouraging competitive and technology-driven reconnaissance and prospecting. The ‘United Nations Framework Classification’; or the classification of mineral reserves or resources made by the United Nations Economic Commission for Europe, is the standard mandated. The Bill sets up a National Mining Regulatory Authority (Section 58) to regulate major minerals and a State Mining Regulatory Authority (Section 70) for minor minerals.

Similarly, Mining Tribunals are set up by way of a redressal mechanism for delays and erroneous decisions, adjudication and the like. “There are too many regulations and this will only negatively affect legal mining,” says Fimi’s Sharma. “Illegal mining, as always, will continue to remain out of the purview.” He says the many restrictions in MMDR 2011 will only discourage investors, especially foreign direct investment, from stepping in.

There is also the provision of the Sustainable Development Framework (SDF) for mines with a progressive Mine Closure Plan for five-yearly periods, and consultations and disclosure mechanisms for the Panchayats from the pre-mining stage to post-closure, apart from environmental matters. “But, who will authenticate the SDF?” says MM&P’s Sreedhar. While consulting with the panchayats is a step towards empowering grassroots democracy, local bodies need not evaluate all aspects of ecological damage. Sreedhar calls for building a proper mechanism. 

One important aspect that industry does not really object to, or probably wants to be discreet about, is of the maximum area permitted for a mining lease — 100 sq km or 10,000 hectares. “This is like land for a township,” says Sreedhar. He says, for instance, the land sought by Posco for mining in Orissa was only 2,730 hectares. “Why does the government want to allocate such huge tracts?” he asks. On the other hand, the MMDR Bill also sets a minimum size of land for mining a major ore at 10 hectares, and for a minor ore at 5 hectares. In Rajasthan alone, Vaish says, there are approximately 28,500 mines out of which 90% are on less than 5 hectares of land. The ones in Makrana, for instance, fall under this category. So, MMDR 2011 may do little to address the majority of mines that ravage the environment nationwide.  

Finally, irrespective of how good a law is, its true test lies in its proper implementation. For instance, Rana Sengupta of the Mine Labour Protection Campaign says various departments related to the mining ministry sometimes function in ways such that they are completely clueless about what the other authorities are doing. An example would be how a state’s Mining Department governed by the Mineral Concession Rules, 1960, gives allocation for the mining of a particular mineral; the Ministry of Labour at the Centre, which maintains the records of workers, would have no clue where and whether a particular licence is allotted, renewed or cancelled; the Director-General Mines and Safety (Ministry of Labour) — the sole authority that can cancel mining leases in the case of violation of any safety or technical regulation — may not be aware of a particular mine being allocated because the onus is on the mine owner to inform DGMS, and so on. 

“India has many good Acts, but no real action,” says Akala. It’s not enough to make the MMDR a better piece of legislation — when it is passed, it needs to be effective on the ground.