The mining ban in Karnataka, transport bottlenecks in Orissa, and a rising pendency of applications awaiting action from various state governments have not augured well for the Indian mining sector. Although the reopening of a few mines in Karnataka could bring some reprieve, issues related to the regulation, taxation and fiscal policy are bound to further stress miners
Over a year after the Supreme Court (SC) imposed a complete ban on all mining operations in Karnataka, on environmental grounds, mining is set to partially resume in the state after the SC-appointed Central Empowered Committee (CEC) accepted the reclamation and rehabilitation plans for some of the mining companies. The SC, in its order on April 20 this year, had allowed mining to partially resume in the state. About 20 mines, which fall under category ‘A’ (where no illegalities were found by the CEC), were accordingly approved. In the next six months, it is expected that around 50 mines in Karnataka with an annual output capacity of 15 million tonnes (MT) could restart operations.
In FY2011-12, the mining sector witnessed a negative growth of 0.9% as against a 5% growth a year before. “Worldwide, production is rising, but in India we seem to be moving in the opposite direction,” says H. C. Daga, Senior Vice President, Federation of Indian Mineral Industries (FIMI). In fact, overall production during the current fiscal year is likely to fall to 140 MT from 169 MT recorded in FY2010-11. In April this year, when the mining sector registered a growth of -3.1%, India’s industrial output grew by 0.1%.
While steel mills continue to import iron ore (imports stood at 3 lakh MT in FY2011-12), exports, which stood at 96.93 MT in FY2010-11, fell to 60 MT in FY2011-12. Lower exports have in turn prompted miners to slash overall production as domestic steel makers lack the technology to utilise iron ore fines or inferior grades. “Iron ore exports will likely fall to no more than 40 MT this year from about 60 MT last year,” says R. K. Sharma, Secretary General, FIMI.
The mess in the mining sector, which prompted the apex court to take some harsh measures, can largely be attributed to the ease with which unbridled corruption was allowed to flourish. The complete absence of oversight and connivance at every level invited such wrath of the SC that it has now taken a serious toll on the entire industry. “The CEC survey team has found that 18 mines had not carried out any violations. SC closed all mines, good or bad,” says Sharma of FIMI, adding, “You can’t brush everyone with the same broom.” Former Karnataka Lokayukta Justice (Retd.) Santosh Hegde, who had recommended the Karnataka ban to the SC, believes that it is a price the industry and its stakeholders have paid for the crimes of a few greedy mining firms, which flouted every rule in the book to make a quick buck at the expense of genuine people. “The state government should change the mining policy to ensure the natural resources are not exploited for profit trading and exports but mined for value-addition by manufacturers through transparent bidding process,” he says. The ban on mining in Karnataka came after a report prepared by Hegde recommended an immediate halt on private mining. The SC was later told that mining was being done in a reckless and irresponsible manner with the prime objective of over-exploitation of iron ore for purely short term private gains.
“Illegality is a matter of governance. If the government wants, nothing illegal can take place. It’s just not possible. At every stage, there is a government machinery involved. Ultimately genuine mine owner gives way to mafia,” argues Sharma, pinning the blame of Karnataka’s mining mess on the governance machinery. A case in point, according to him, is the Bharatiya Janata Party (BJP) leader Janardhan Reddy, who was recently reported to have offered crores in bribe to a judge for bail. “Till the political bosses and bureaucrats join hands, nothing illegal can take place. We have all regulations you can think of, but what good is a regulation that cannot be implemented,” says Sharm
Over a year after the Supreme Court (SC) imposed a complete ban on all mining operations in Karnataka, on environmental grounds, mining is set to partially resume in the state after the SC-appointed Central Empowered Committee (CEC) accepted the reclamation and rehabilitation plans for some of the mining companies. The SC, in its order on April 20 this year, had allowed mining to partially resume in the state. About 20 mines, which fall under category ‘A’ (where no illegalities were found by the CEC), were accordingly approved. In the next six months, it is expected that around 50 mines in Karnataka with an annual output capacity of 15 million tonnes (MT) could restart operations.
In FY2011-12, the mining sector witnessed a negative growth of 0.9% as against a 5% growth a year before. “Worldwide, production is rising, but in India we seem to be moving in the opposite direction,” says H. C. Daga, Senior Vice President, Federation of Indian Mineral Industries (FIMI). In fact, overall production during the current fiscal year is likely to fall to 140 MT from 169 MT recorded in FY2010-11. In April this year, when the mining sector registered a growth of -3.1%, India’s industrial output grew by 0.1%.
While steel mills continue to import iron ore (imports stood at 3 lakh MT in FY2011-12), exports, which stood at 96.93 MT in FY2010-11, fell to 60 MT in FY2011-12. Lower exports have in turn prompted miners to slash overall production as domestic steel makers lack the technology to utilise iron ore fines or inferior grades. “Iron ore exports will likely fall to no more than 40 MT this year from about 60 MT last year,” says R. K. Sharma, Secretary General, FIMI.
The mess in the mining sector, which prompted the apex court to take some harsh measures, can largely be attributed to the ease with which unbridled corruption was allowed to flourish. The complete absence of oversight and connivance at every level invited such wrath of the SC that it has now taken a serious toll on the entire industry. “The CEC survey team has found that 18 mines had not carried out any violations. SC closed all mines, good or bad,” says Sharma of FIMI, adding, “You can’t brush everyone with the same broom.” Former Karnataka Lokayukta Justice (Retd.) Santosh Hegde, who had recommended the Karnataka ban to the SC, believes that it is a price the industry and its stakeholders have paid for the crimes of a few greedy mining firms, which flouted every rule in the book to make a quick buck at the expense of genuine people. “The state government should change the mining policy to ensure the natural resources are not exploited for profit trading and exports but mined for value-addition by manufacturers through transparent bidding process,” he says. The ban on mining in Karnataka came after a report prepared by Hegde recommended an immediate halt on private mining. The SC was later told that mining was being done in a reckless and irresponsible manner with the prime objective of over-exploitation of iron ore for purely short term private gains.
“Illegality is a matter of governance. If the government wants, nothing illegal can take place. It’s just not possible. At every stage, there is a government machinery involved. Ultimately genuine mine owner gives way to mafia,” argues Sharma, pinning the blame of Karnataka’s mining mess on the governance machinery. A case in point, according to him, is the Bharatiya Janata Party (BJP) leader Janardhan Reddy, who was recently reported to have offered crores in bribe to a judge for bail. “Till the political bosses and bureaucrats join hands, nothing illegal can take place. We have all regulations you can think of, but what good is a regulation that cannot be implemented,” says Sharm
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