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LIFE may soon return to the dusty 19th century
palace grounds of the Raja of Sandur in the Ramandurga hills near
Hospet in Karnataka. A well-known private company is likely to buy the
property and possibly restore the old buildings for offices. It will
do this not for the site's historical worth, but for the value of what
juts out of the ground around it: a thick vein of high-quality iron
ore.
"Wherever you stretch your eyes, you see
ore," says B. Chidamber, a retired engineer from the Karnataka
Department of Mines and Geology (DMG). "It's all ore. No dust at
all. Just blast it, load it."
For a region in the grip of a mining boom, history
pales in importance before the future represented in its geological
wealth. The Ramandurga hills, which form the northern tip of a
13,000-acre (5,200-hectare) triangle of land in Bellary district, is
estimated to contain more than 1.2 billion tonnes of iron ore, the key
ingredient in making steel. A sudden rise in the global price of
Indian iron ore from $17 a tonne in 2000-01 to $55 a tonne in 2005-06
has transformed the area from an almost forgotten backwater into a
mining juggernaut responsible for nearly 20 per cent of the country's
iron ore production. Once known for its sandalwood forests and
abundant wildlife, the area now trembles day and night with the
blasting of ore-laden hillsides and the rumble of lorries transporting
rock from the mines to ports around India. According to informed
sources in the Karnataka DMG, the region produced Rs.3,600 crores
worth of iron ore in 2005. But frenzied and uncontrolled mining has
had serious consequences, from the destruction of roads and illegal
exploitation of forestlands to widespread pollution, rampant
corruption, and exploitation of child labour. Its alarming impact has
led labour organisers, environmentalists, political leaders and
non-governmental organisation activists to demand that it be
curtailed, or even stopped.
India opened its immense iron ore reserves to
private exploitation in 1999. The voracious demand from steel-hungry
China providing a seemingly endless market, India has quickly risen to
become the world's third largest exporter of iron ore, behind
Australia and Brazil. The iron-ore rush in Bellary has brought little
to one of Karnataka's poorest districts. "This is public
property, the wealth of the nation, but the mine owners can get it for
themselves by paying a bribe to get a lease," says Father Jose
Pazheparambil, regional director of the NGO Don Bosco-Centre for
Social Action in Hospet. "Meanwhile, not a rupee, not even a
paisa, is spent for the development of the area."
Illegal
mining
As many as 64 iron ore mines operate in the Bellary
mining triangle, according to the Karnataka DMG. Large mines such as
those run by the state-owned National Mineral Development Corporation
(NMDC) in Donimalai are exceptions. Private mining companies control
almost 80 per cent of the land under lease for iron ore operations,
with an average lease size of 200 hectares. The smallest of these
private mines - four- and five-acre operations run by private
landowners outside Hospet - do not even figure on the DMG's lease
list, because they are unregulated.
Estimated to number 12,000, these "float
ore" mines - so called because workers dig by hand for small
quantities of iron ore that "float" near the surface - are
said to be the region's biggest thieves of iron ore. Small farmers
ruined by years of drought have cashed in on the boom by mining their
agricultural farms themselves or contracting them out at Rs.25,000 to
Rs.30,000 an acre (Rs.62,500 to Rs.75,000 a hectare). The float ore
mines are the targets of the anti-mining lobby as they are responsible
for some of the most egregious violations of labour and environmental
laws, including child labour and failure to manage waste or soil
erosion. Practically none has mining permits or pays taxes.
The legal status of these mines is unclear.
According to Arvind Shrivastava, Bellary's Deputy Commissioner,
"the procedural requirements [for acquiring mining permits] are
too much for small landholders". Further, the 1999 mining policy
exempts mines under 25 hectares from public review.
Some observers see the opposition to float-ore
mining as a red herring, designed to draw attention away from the
graver sins of larger mining operations. "Some people here don't
want small mines. If there's only one big mine in an area, then that
owner becomes a big man, while the little people become poorer and
poorer," says H.G. Rangan Goud, a Hospet native whose family has
run a medium-sized mine in the area since 1949.
Less publicised illegalities are of even greater
concern. One of these is the overloading of lorries that transport ore
to ports and steel factories. According Shrivastava, roughly 7,500 of
these massive vehicles rumble along Bellary's roads at any given time,
most of them carrying far more than the 15-tonne load allowed by law.
Years of such traffic has turned the area's unpaved roads into
crenellated strips of dirt so broken that Bellary's wealthier
residents - mostly mine owners - are purchasing helicopters to bypass
them. For the region's other residents, and visitors to the nearby
ruins of Hampi, mine traffic has become a miserable inconvenience.
"It was just lorry after lorry after lorry," Mark Walking, a
Swiss tourist, said of his 300-kilometre journey by car from Goa to
Hampi. "We were told the trip would take six and a half hours,
but instead it took ten."
Opposition politicians and the local media in
Bellary accuse mine owners of encroaching on thousands of acres of
forest land outside the limits of their own mines. Thirty mines were
closed in late March for violating caps on iron ore production, just a
fraction of the mines that engage in the practice, according to
Gangaram Baderiya, Karnataka Commissioner of Mines. In a letter to
Chief Minister H.D. Kumaraswamy recently, Minister of Forests C.
Chennigappa, accused MSPL, one of the largest mining companies in
Hospet, of illegally mining 157 acres beyond its lease, according to
press reports. He alleged that illegal mining as a whole had cost the
state Rs.25,000 crores in lost revenues.
Top officials of the Karnataka DMG disagree over
whether encroachment even exists. Baderiya identifies it as one of
biggest problems facing the department, though he declines to estimate
the extent. K.N. Rajanna, Additional Director for Minerals, disagrees.
"Illegal mining occurs only on private land," he says.
"We've not noticed any encroachment [on forest land]."
Rejecting the allegations against his company,
Rahul Baldota, Executive Director of MSPL, says, "Ninety-nine per
cent [of us] are doing legal mining. Maybe a handful are doing some
illegal stuff, but the rest is politics."
HIDDEN
COSTS
The damage to both people and the environment is
perhaps the most troubling of the mining boom's side effects. A
government-commissioned investigation by the National Environmental
Engineering Institute (NEERI) in 2003 found that the levels of heavy
metals in the water and dust-related particulate matter in the air
exceeded national health standards. It also discovered significant
loss of forests. According to the report, the region's wildlife, which
once included robust populations of sloth bears, leopards, monitor
lizards and white storks - all threatened or endangered species -
"is observed to be very poor".
B.T. Venkatesh, a lawyer and a native of Hospet,
recalls his childhood hunting foxes and deer in Sandur's famous
sandalwood forests. "No more," he says. "You used to be
able to walk amongst fruit trees. Gone. All because of the
mines."
The most pervasive environmental threat comes from
mining dust, a suffocating rust-coloured cloud of debris that coats
everything in and around the mining triangle. According to the NEERI
report, this dust is responsible for "public health problems,
reduction of agricultural productivity and has its impact on
wildlife". Dr. B. Manjunath, a local physician, says the dust has
produced a "significant rise" in bronchitis and other
respiratory infections and is also responsible for a staggering
incidence of eye problems, chiefly conjunctivitis. "If you live
in Hopset and travel by bicycle or motorbike, you will get it,"
he says. Dust also contributes to the appalling labour conditions
endured by tens of thousands of informal workers, many of them
children.
According to some government and steel industry
representatives, the export of unprocessed iron ore has resulted in
the starvation of India's domestic steel industry. They argue that if
exported as fully finished steel products, these exports would enhance
domestic revenue and employment. India is China's second largest
supplier of iron ore and exported 68.5 million tonnes to that country
in 2005-06. Many of those shipments contained the famous high-quality
ore (65%+ Fe content) from Bellary. As the country looks to increase
annual domestic steel production from the current 38 million tonnes to
100 million tonnes by 2020, many worry that the best iron ore will
have already been spent.
Unscrupulous
trade
With the cost of production at Rs.100 a tonne, the
region's mine owners made a total profit estimated at Rs.3,100 crores
last year. Yet government royalties have remained shockingly low,
rising from Rs.24 to just Rs.27 a tonne in October 2004, well after
the China boom had begun. According to the DMG, Karnataka collected
Rs.80 crores in royalties in 2004-05, less than 2 per cent of what the
ore was worth in the market.
Meanwhile, windfall profits have transformed
Hospet's economy. According to V.G. Khanolkar, Assistant General
Manager of the State Bank of India's Hospet branch, the tiny branch
has seen a staggering 2,000 per cent increase in withdrawals since the
boom started, from Rs.3 crores every six months to nearly Rs.40 crores
a week. Real estate prices have gone up by 400 per cent in the past
three years. The region's wealthy have developed a reputation for
being the first in India to purchase the latest luxury cars. According
to local press reports, Bellary will soon have Asia's highest per
capita concentration of private helicopters.
Anti-mining activists often speak of a "mining
mafia" comprising mine owners, politicians and law enforcement
officials, united in a desire to keeping the profits flowing. While
they have so far failed to tie politicians to mining, they insist that
such a collusion best explains why, for example, so many officials in
the government continue to deny the existence of encroachment, and why
environmental and labour regulations have gone largely un-enforced.
State level-officials this writer spoke to say the
boom simply took them by surprise. The Deputy Commissioner points to
low staff and funding levels in the various department offices and to
China's purchases of huge quantities of iron ore fines - coin-sized
particles of iron ore previously regarded as waste - which has speeded
up the mining process.
Uncertain
Future
The excesses of the region's mining boom are
ultimately the result of the government's push for liberalisation of
the sector. Iron ore exploitation was opened to the private sector,
with oversight handed to State governments, in a series of decisions
at the national level in the 1990s. Karnataka's new mining policy,
published in 2000, trumpets export-oriented development and promotes
steps to "smoothen the prevailing office procedures" for the
granting of mine leases.
Both the State and Central governments have
announced strategies to rein in the iron ore frenzy. The Central
government is likely to release a new national mining policy that is
expected to curb exports of high-quality ores. The Karnataka
Commissioner of Mines said that he had asked the Central government to
replace the current fixed-rate royalty system with one that would take
market prices into account. Investigation teams are in the process of
being formed, he said, to detect mining violations in Bellary.
Violators will face "stringent consequences", including
cancellation of leases and criminal prosecution, according to him.
Anti-mining activists are sceptical of these
assurances. If anything, mining seems poised to expand further.
Negotiations to set the long-term price for iron ore with China - a
move expected to cement exports in place - are reportedly nearing
conclusion. Meanwhile, according to the Karnataka DMG, 10,000 more
hectares have been recently opened to mining to meet a backlog of at
least 5,000 lease applications. An Australian bid for mining is likely
to be approved by the Central government soon, opening the sector to
foreign companies as well.
Few in the official establishment talk about the
NMDC. It owns the largest mining operation in Bellary-Hospet, is
India's largest exporter of iron ore, and has helped local
steel-makers by selling them high-quality iron ore at below-market
rates. It is also the only mining company in the region that observes
environmental and labour laws. "They don't use child labour and
they obey the environmental rules, because they have to," says
Dr. Bhagyalakshmi, Hospet representative of Mines, Minerals &
People, a national mining watchdog NGO.
Back at the Raja of Sandur's old palace, Chidamber,
the retired engineer, does not bother to wonder what will happen if
India goes back to mining on the state-run model. He is resigned to
the forces of the market. When this writer asked if he would not be
sad to see the historic site dug up, he looked around at the buildings
and shrugged. "Ore is worth more, no?" |