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Prime Minister Manmohan Singh often speaks in double entendre, perhaps to avoid taking a stand on sensitive issues such as mining, be it of coal or iron ore. His statement to a group of iron-ore producers from Goa that "while environmental concerns should be sincerely addressed, all should remember poverty is the greater polluter" bears that out. The words, however, don't help the Goa mining sector to emerge from the crisis, in which it sank in September 2012 for an alleged violation of ideal work practices.
Vedanta group Chairman Anil Agarwal said the decommissioning of mines, on which the "survival of a third of Goa's population" depends, was having a catastrophic impact on the local economy. The court-ordered ban has inflicted a loss of Rs 25,000 crore on the exchequer, besides denying the country export revenues of $6 billion. With the lifeline to its economy choked, the state is left with no alternative but to plead with the Centre for a big relief package, including enhanced central financial assistance and a moratorium on repayment of borrowings.
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Mineral deposits occur in remote parts of the country where mining provides the locals, mostly tribals, an escape from poverty. But with mines shutting in Goa and Karnataka and scaled-down mining in Odisha and Jharkhand denying thousands of their only source of livelihood, they are an easy target for recruitment by extremist groups. In areas where mines are at a standstill, Maoist activity is on the rise. Restrictions and export disincentives have left ports with berths for ore with considerable idle capacity. The MMTC-owned ore terminal at Ennore Port, commissioned in 2010 at $80 million, never had any cargo. Exasperated by this and the likelihood of no change in the situation till at least 2015, MMTC has wisely decided to spend $16 million to convert it into a coal berth.
Policy deficiencies and unending controversies relating to the allocation of coal blocks have led to rising coal imports to fuel power plants, more than half of India's electricity is produced by coal, and make coke for steelmakers. In 2013-14, imports would exceed a year ago's 135 million tonnes (mt). Hopefully, the changeover of the Ennore terminal from an ore to a coal one would allow MMTC to make up for lost time. As all ports with terminals dedicated to ore have been hit, with exports likely to fall to 14 mt this year from a record 117 mt in 2009-10, the railways, too, has seen its revenue plummet on this, particular dry cargo handling. Large fleets of trucks commissioned to move ore from mines to ports are either idle or used infrequently. Banks do not know how and when they will be able to recover dues from truck owners.
Primary steelmakers are relentless in their campaign to snuff out whatever ore finds its way into the world market. The recent levy of five per cent export duty on pellets, in breach of official assurances, shows the steel sector is winning. But steelmakers will not escape the heat generated by a steep fall in ore production due to court- and state-directed mining restrictions and the fall in exports. Those based in Karnataka are complaining about merchant miners forming a cartel to rig up e-auction prices of ore, undoubtedly a case of retribution. The ore mining impasse is inflicting much pain on the economy. But breaking the impasse should not amount to condoning groups indulging in illegal mining. The Mines & Minerals Development & Regulation (MMDR) Act has provided state governments powers to recover any mineral mined from any land without lawful authority, or, if the mined mineral has been disposed, the value of it, with all taxes for the period of unlawful land occupation. To eliminate the scope for illegal mining, states are adequately empowered to make rules deterring transportation and storage without rightful authority.
The mines ministry has taken pains to point to the Odisha government that in its attempt to paint all miners with the same brush of illegality, the state is making the mistake of overlooking the clearly defined distinction between unlawful mining that draws penalties under Section 21(5) of the MMDR Act and violations of laws relating to the protection of environment and forests. In a communication to the Odisha government, the ministry said, "The interpretation that land granted under a mining lease can be held to be occupied without lawful authority on the grounds of violation of provisions of any other law of the land is not appropriate and such an interpretation may not stand in the court of law." Mining uncertainties have led to the state's ore production falling from 76 mt in 2010-11 to 64.3 mt last year. This year production could be lower.
