India’s economic development needs, among other things, opening up of new iron ore mines and building of greenfield steel plants. But this is proving to be a daunting task for domestic and foreign investors. Even a group such as Tata Steel with exemplary record of discharging corporate social responsibility for over a century was periodically stymied in the past in giving shape to the proposed 6-million-tonnes steel project at Kalinganagar in Orissa.
Disheartened he may be with the time lost in executing the Orissa programme, but Tata Steel managing director H M Nerukar believes that the challenge of the time is to win the confidence of the people inhabiting in and around the project area through dialogue and building of goodwill. The harsh Indian reality is, the areas where new mines are sought to be opened have remained beyond the pale of development and the local population, mostly tribals cannot be blamed if they look at investors with suspicion. The same is also the case with the places identified for land acquisition for building steel mills.
Red terror visiting all the iron ore rich states is a cause of concern for Nerukar since apart from Orissa, Tata Steel has signed MoUs with Jharkhand and Chattisgarh governments for building steel plants and also getting access to ore and coal deposits. He admits extremist violence will remain a concern at least in the short-term. Anyone with some knowledge of the terrain over which the extremists have virtually a free run will agree with Nerukar that provision of drinking water, shelter, education for the children and economic opportunities will help in bringing back the people into the mainstream. In this endeavour, public-private partnership will be essential.
Nerukar says patience is the name of the game. As the country is targeting a sustainable double digit GDP growth rate, the demand for steel will be growing at anything between 12 and 15 per cent a year. However, onerous the challenge may be, unless new steel capacity is created at rapid pace, India will end up as an importer of large quantities of steel while it remains a significant exporter of iron ore. That will be a sad day for the country.
But is Tata Steel finally able to take its Orissa plan forward? Nerukar says the company has moved 806 families from the steel project site to rehabilitation colonies. But, 20 per cent of the families there are yet to be shifted. Significantly, building of the rail and road transport corridor at the Kalinganagar plant site has begun and the company has renegotiated the “2010 start-up contracts for 2013-14 start-up of the plant.” Setting an example for the other domestic and foreign investors, Tata Steel is “conducting skill development training programme at Kalinganagar” for the local people and members of the displaced families to make them job worthy.
Now that Tata Steel has fulfilled its commitment under the MoU signed with the state government, Orissa will now have to redeem the promise to give mining lease for iron ore to the company. A word that is now doing the rounds is that at the insistence of the mines ministry a clause to the effect that the lessee, if it is a company, to a new mine will have offer free shares equal to 26 per cent of capital to the people in the project area is to be inserted in the draft mines and minerals (development and regulation) Act. In case an individual gets a new mining lease he will have consider 26 per cent of net profit as annuity for distribution among the locals. In fact, the steel minister is also championing the annuity concept.
It will be interesting to see how the steel companies seeking linkages to mines react to this move of the mines ministry for which there is concurrence of the steel ministry. Allotment of free equity may not be the best way to empower the tribal population in the remote mines areas. If the goal is comprehensive human development in those centres, then the government and corporates will have to work hand in hand to develop skills for the disinherited so that they are able to earn a living with their honour intact. At the same time, responsibility will automatically befall on mine developers to reach basic amenities such as water and shelter in their command areas.
As the harrowing experience of a private sector non-ferrous metals group in trying to open a bauxite mine in Orissa shows, the success of a mining venture will also depend on respecting the local custom and also allaying the tribal fear of environmental damage, particularly pollution of rivers and streams.
Fortunately, Tata Steel, which has a major presence in Orissa through mining operation encompassing iron ore, coal and chromite and is now building an all season port at Dhamra has much to show for itself as a good corporate citizen.
