MAC: Mines and Communities

Mines of Conflict

Published by MAC on 2005-11-15

Mines of Conflict

in Bhubaneswar

November 2005

The Orissa government has handed over to private companies virtually all the iron ore mines, which are in some of the most underdeveloped districts of the State, leading to protests by tribal people and environmental activists.

IRON ore deposits could well be Orissa's passport to a bright future. With the upswing in the global demand for steel, which is obtained after the reddish-grey ore is put through a blast furnace, Orissa is the toast of the country and perhaps the world.

There is an unprecedented flow of capital into the State. From global giants such as South Korea's Pohang Steel Company (POSCO) to obscure ones such as Bhushan Steel, steel-makers are making a beeline to Bhubaneswar to sign memoranda of understanding (MoU) to set up plants. Their eyes are set on the huge deposits of iron ore in the predominantly tribal regions of the mineral-rich State. Besides iron ore (32.9 per cent of the country's reserves), Orissa has bauxite (59.95 per cent), chromite (98.4 per cent), coal (24.8 per cent) and manganese (67.6 per cent).

While the State government hopes to cash in on the demand for the ore, for the tribal people the mining spells doom. Haunted by the spectre of losing their home and hearth to the steel plants, they are up in arms against the industrialisation wave. Tribal people from Kalinganagar in Jajpur district to Kashipur in Rayagada fear that the new industries would lead to the poisoning of their water and air. Those leading the agitation against the mine-hunters argue that the ongoing industrialisation in the State would only create an army of homeless persons and add to the millions of tribal people displaced by development projects in the country.

According to a paper on tribal people prepared by the National Advisory Council (NAC), more than nine million tribal people have been displaced by development projects in the country over the last 50 years and only 60 per cent of them have benefited from any sort of rehabilitation. "The kind of capital-intensive industrialisation that is being pursued in Orissa will not help solve the unemployment problem. Rather it will harm the environment and affect the livelihoods of a large number of people, especially tribal people who depend on the forest and other natural resources to eke out a living," said Sudhir Patnaik, a social scientist.

Former Union Tribal Affairs Minister Jual Oram, who is the president of the Orissa unit of the Bharatiya Janata Party (BJP), says that displacement will affect the socio-economic conditions of the people and this is a major issue. "When a project comes up in any locality it affects not only the tribal people, but also the community as a whole," says Oram. He has been vehemently opposing the12-million-tonne POSCO steel project near Paradip. Thousands of people who were displaced by the Rourkela Steel Plant, the Hirakud dam, the Rengali dam, and many other medium and small projects have not been compensated till date, he says.

But, for the steel-makers and the governments at the Centre and in the State, the issues of displacement and environmental pollution do not seem to be matters of concern. With the global demand for steel growing, the Union Cabinet recently unveiled a new steel policy that seeks to shore up the per annum steel production from 30 million tonnes to 100 million tonnes by 2020. But going by the current rush for iron ore in Orissa, the country may achieve the target well before the deadline, notwithstanding the losses to the tribal people's livelihood and to the environment.

At present, the only steel plant in the State is at Rourkela in Sundargarh district. Run by Steel Authority of India Limited (SAIL), it produces barely 1.6 million tonnes of steel per annum. In the last two years, the Biju Janata Dal-BJP alliance government signed 43 MoUs with private companies for the setting up of as many greenfield steel plants.

These projects, when fully commissioned, will produce a whopping 58.4 million tonnes of steel per annum. The State government's Steel and Mines Department estimates the investment in these steel plants to the tune of Rs.1,37,157.85 crores. Ten more companies are said to be in the queue to sign MoUs for setting up steel plants in the State.

The ruling alliance, which, in its election manifesto last year, promised to make Orissa the No.1 State in the country, is now working overtime to quicken the pace of industrialisation. But in the process, Chief Minister Naveen Patnaik and his colleagues seem to forget that they would be handing over all the iron ore mines to private companies at one go. The areas that would witness mining of iron ore and the setting up of new steel plants and captive power plants are Keonjhar, Sundargarh, Jajpur, Dhenkanal and Angul districts, which are some of the most underdeveloped districts in the State.

Rampant mining of iron ore is already going on in Keonjhar and Sundargarh by mining and steel-making companies, whereas the government has failed to provide basic health care to the people in these areas. Most of the primary health centres in these areas have no doctors. "The people living in this iron-ore-rich belt also suffer from ailments on account of the pollution caused by the sponge iron units and the mining activity," said Sudhanshu Panda, president of the Keonjhar Suraksha Parishad, which has organised protests against the mining in the Malangtoli hills.

Many schools in these regions manage without the required number of teachers and the majority of the interior villages have no roads and electricity. The less said about the condition of the main roads the better. Trucks and tipper-lorries carrying iron ore keep damaging the roads and it takes about four hours to cover a distance of 40 km.

But why are heavy vehicles queuing up in the iron ore belt when the State has just one operational steel plant? It would take another couple of years before any of the proposed steel plants need the ore. The 70 pollution-causing sponge iron units currently consume about a few hundred tonnes a day, which is a fraction of the thousands of tonnes of ore extracted every day. A few large steel-makers dispatch ore to other States where they have their plants, while the rest is exported.

According to the State Steel and Mines Department, 15.68 million tonnes of iron ore from the State was exported through Paradip, Haldia and Visakhapatnam ports during 2004-05 by 55 companies, including Tata Iron and Steel Company (Tisco), Jindal Steel and Mines Ltd. (JSPL), and Essar Steel. Orissa's iron ore reserves are estimated at 5,428 million tonnes. Of this, 3,133 million tonnes is in mines leased out to private companies and 766 million tonnes has been given to government-run agencies. That leaves the State government with reserves of only 1,529 million tonnes.

However, State Steel and Mines Minister Padmanabha Behera does not foresee any shortage of iron ore for the proposed steel plants. Many companies like Tisco and JSPL own mines, while others would be granted mining leases to meet their ore requirement, he said. Of the 43 companies that signed the MoUs, 17 have started construction of steel plants and around 10 of them are nearing completion. Ironically, the State government does not have a mining policy despite the fact that it is about to pass on almost all its iron ore reserves to private companies. "We are now operating as per the Centre's mineral policy as formulating a policy of our own has not been possible so far," Behera said.

AS the rush for iron ore hots up in the northern Orissa districts, the queue for bauxite is getting longer in the southern belt. Four big alumina refineries have been planned, to be set up by Anil Agarwal-owned Vedanta Alumina, the Indo-Canadian joint venture project Utkal Alumina, Aditya Alumina and a joint venture of L&T and the Gulf-based Dubai Aluminium Ltd, in Kalahandi, Rayagada and Koraput districts. Construction of two of them has started - at Lanjigarh in Kalahandi and Kashipur in Rayagada - despite strident opposition from tribal people and other organisations.

In spite of the large-scale displacement of tribal people and Dalits, Orissa does not have a comprehensive resettlement and rehabilitation policy. The State Revenue Department assigned the job to the United Nations Development Programme (UNDP) with financial help from the United Kingdom's Department for International Development (DFID). The UNDP prepared the draft policy after holding detailed consultations with the various stakeholders, including industry groups, non-governmental organisations and different departments of the State government. The draft was submitted to the State government in July. However, the industry lobby and a section of bureaucrats are said to be against it.

As the proponents of industrialisation ride roughshod over the voices of protest, it is the environment that is in danger. Sundargarh and Keonjhar have some of the best forests with abundant wildlife which include elephants, tigers and leopards.

The Niyamgiri hills of Kalahandi, home to a variety of medicinal plants and wild orchids, are also facing the threat of mining. Many plant species are endangered and listed in the Red Data Book of the International Union for Conservation of Nature (IUCN). "Indiscriminate mining would have a drastic impact on forests and natural water sources, besides driving away wildlife from the region on account of the blasting and drilling for ore extraction," says Biswajit Mohanty, an environmentalist.

Mining-related deforestation has led to a shrinkage of elephant corridors and an increase in man-elephant conflicts in Keonjhar. The district has seen 61 elephant deaths in the past three years. Almost all these mine areas are forested and are major perennial sources of water. It is apprehended that open-cast mining would lead to the disappearance of the streams and pollute the major drinking water sources for the tribal people. The Niyamgiri hills, with a huge bauxite deposit, has 32 known perennial springs which feed the Vamsadhara and Nagabali rivers.

But with the State intent on counting its immediate financial gains, the protests by desperate tribal people are not likely to be heard in the corridors of power.

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