MAC: Mines and Communities

India Update

Published by MAC on 2005-12-30

India Update

Impacts of proposed bauxite mining in the tribal areas of Visakhapatnam, Andhra Pradesh, India

mm&P/mines, minerals & PEOPLE, India

30th December 2005

A one-day Workshop was organized at the Andhra University Development Centre, Visakhapatnam, on 30.12.05 by mines, minerals & PEOPLE (mm&P), a national alliance of mining struggle groups and communities in India, to highlight the impacts of the proposed Bauxite Mining in the tribal area of Visakhapatnam district and to provide an opportunity for affected communities, civil society groups, media, political parties and officials to present their perspectives or protests over the project.

The Workshop was attended by about 100 participants representing more than 33 organizations and mass movements, mainly tribal communities and youth from the district, who voiced their strong opposition to the proposed project.

The Workshop was chaired by Dr.EAS Sarma, former Secretary, Government of India. Dr.Sreedhar Ramamoorthy of mines, minerals & PEOPLE who is also an earth scientist with several years of experience working in the oil and mining sector gave a focus to the Workshop in his presentation on the geological significance of the bauxite hills and how the bauxite ores act as protective caps for the rich landmass and springs that occur below the interface of the laterite-bauxite rocks and how blasting these caps will completely deplete the eco-system.

The presentation also gave an overview of the mineral sector scenario in the country demystifying the government’s blatant falsehoods where he showed how employment rates in the mining sector have actually decreased, the economic non-viability of mining bauxite in terms of excessive energy consumption, the heavy dependence on imports of oil and energy, the manner in which legal frameworks are being diluted and policies are openly being promoted for free trade and private market lobbies in mining and the various ministries like the Ministry of Environment and Forests relaxing all regulatory mechanisms against the interests of communities and the environment.

He concluded saying that the limited mineral resources India has, instead of being preserved for our later domestic use, are being depleted in a very short period, especially in this region of A.P-Orissa, thereby exhausting these non-renewables.

Mr. Demudu, MLA of Chintapalli, expressed his strong opposition to the project and spoke of the injustice, the displacement and the impoverishment that such a project will lead to as is clearly visible in earlier projects like Tandava, Nagarjunasagar and others. He spoke how the present government had opposed this project before they came to power but stated that the tribal representatives in the TAC are strongly opposing the project and willing to stand by the people.

Representatives from the affected communities gave a call for a strong people’s movement to oppose the project. The sarpanch of Yeguvalasa spoke of the intimidation tactics by the authorities and the Jindals, to evict them from their lands. Smt.Nukalamma moved the participants with her emotional speech on how they were taken to Damanjodi by the government but the sight of deprivation of the tribal people living around the NALCO mines in Orissa only strengthened their resolve not to allow the government from taking their lands, their rich coffee plantations and forests which are their life support systems.

Dr. EAS Sarma urged the tribal representatives and leaders to protect their constitutional rights and stand by the people by not giving their consent to such projects and he hoped that the TAC will exercise it’s right to defend the scheduled areas from being given away to such projects. He said that the tribal people would lose their status and legal rights once they are removed from the scheduled area, defeating the very purpose of the Fifth Schedule, the LTR Act and other constitutional safeguards, and therefore called upon all political representatives, tribal groups and NGO’s to stand together in protecting the tribal lands and the tribal people.

Mrs.Bhanumathi from Samata spoke about the costs that communities pay directly and indirectly and how social equity and justice are not considered as important parameters for economic development.

Many other local organizations like A.PGirijana Sangham, Adivasi Mitra, Dhimsa Network, Crynet Collective, Laya, CARE, Action-Aid and political parties like CPI, CPI (M) also participated.

Ashapura plans Rs 2500 crore alumina plant

Himanshu Bhayani / Bhuj

24th December 2005

Ashapura Group is firming up its plans to invest over Rs 2500 crore in its proposed alumina project in Kutch district as 50:50 joint venture with Chinese partner Sichuian Aerostar.

Ashapura is planning to enter into an alumina processing venture. The contract was awarded to the company at Vibrant Gujarat 2003.

It could not go ahead with the project because of a legal tangle with Mann Industries, which challenged the award of the contract.

Ashapura is hopeful of some solution of the legal problem. "We are sure that the matter is to be resolved in a very short span may be in another four to five weeks and based on the legal orders we will initiate the project. We are likely to commence operations of this project in next three years" said Chetan Shah, managing director of the company.

This business venture of Ashapura Group would require equity in two phases.

Phase one would be requiring initial investment of Rs 1,500 crore, which would be procured by internal retrievals and debts.

In the second phase, the company is planning to invest another Rs 1,000 crore for which a board meeting is scheduled this week.

The funds are likely to be raised through issue of GDRs (global depository receipts) too, explained Shah.

The mining and minerals processing unit sees this foray as a natural diversification.

Bauxite has to be processed into alumina, and then used for manufacturing aluminium, explained Tanuj Roy, CEO of the company.

Its Chinese partner has promised to buy out 75 per cent of the production from India. The company would work on value addition projects.

It was presently engaged in manufacturing different types of clays mainly based on bentonite.

"There are two kinds of clays mainly used in processing of edible oil and extracting aromatic products from petro products comprising benzene, toluene and xylene in which bleaching clay and clay catalysts are used, priced at an estimated price of $400 and $1200 respectively," said Roy.

Ashapura Volclay produced both types of clays.

The clay catalyst was used in aromatic separation.

The company was also planning similar manufacturing facilities globally.

"We are planning to set-up similar plants engaged in value addition in Europe, central Asia, Africa, Malaysia and applicable equity patterns for investments there are being studied," said Roy.

Bleaching clay is mainly exported by the company to Europe, Asia and Africa. It was now planning to set up similar plants there.

Cheap ore for Orissa sponge iron makers

The Telegraph (Calcutta)

25th December 2005

Bhubaneswar: Orissa may reduce the prices of iron ore to give a breather to the sponge iron units that are looking down the barrel following a sudden fall in steel prices in the international market.

"During the past one year, sponge iron prices have come down by 35 per cent from Rs 10,500 per tonne to Rs 7,600 per tonne due to a global slowdown in the iron and steel market," said G.S. Agarwal of the Orissa Sponge Iron Manufacturers' Association.

The fall in steel prices in the international market, coupled with rising input prices, has put 79 sponge iron units in Orissa in a sticky situation. To make a tonne of sponge iron, 1.5 tonnes of ore and a huge amount of coal are needed. The plants with a total annual production capacity of 6.9 million tonnes require about 17 million tonnes of ore and 13 million tonnes of coal. These plants appear to be on the verge of closure.

Orissa steel and mines minister Padmanav Behera indicated that the iron ore price would be brought down at the next board meeting of the Orissa Mining Corporation (OMC). The corporation supplies ore to most of the sponge-iron makers in the state.

Behera said the government would not jeopardise a large section of the steel industry as they use sponge iron as a raw material to produce steel.

Currently, the OMC prices for iron ore ranges between Rs 1,260 per tonne (62 per cent iron content) and Rs 2,123 per tonne (65 per cent iron content). "The government will take all steps to protect the industry and its people. The price will certainly come down at the next meeting of OMC," Behera said.

The state has already reduced the price of chrome ore, a raw material for stainless steel, from Rs 5,300 per tonne to Rs 3,200 per tonne, he added.

Sponge iron, a metallic product formed by treating iron ore at temperature just below the fusion point of iron, is the basic input to make steel. It is used as a substitute for scrap for making steel.

Panel pitches for coal mine privatisation / OUR SPECIAL CORRESPONDENT

Daily Telegraph, New Delhi

23th December 2005

A high level inter-ministerial expert committee on integrated energy policy has recommended that Coal Mines (Nationalisation) Act, 1973 should be amended to facilitate private participation in coal mining.

The committee, set up by Prime Minister Manmohan Singh, released its report today. It said, "The coal blocks of Coal India Limited (CIL) which it cannot bring into production by 2016-17, should be made available either directly or through joint ventures to other eligible candidates for development and bringing into production by 2011-12."

At the same time domestic coal production should be stepped up by allotting coal blocks to the central and state public sector units and for captive mines to notified end users, the report added.

It has also sought to increase the number of private players in the downstream petroleum sector to augment the level of competition in the segment.

The panel has in its reports favoured attracting private investment in the power sector with a regulatory mechanism to ensure a level playing field. It recommended that the government policy for the power sector should ensure that all generation and transmission projects started during the Eleventh Plan and beyond should be competitively built on the basis of tariff-based bidding under a prescribed price cap.

The committee emphasised that the liberal captive and group captive regime as foreseen is the Electricity Act 2003 should be realised on the ground.

India's liberal captive regime would not only derive economic benefits from the availability of distributed generation but also set competitive wheeling charges to supply power to group captive consumers and this would pave the way for open access to distribution networks, the report observed.

According to the panel, coal is the country's most important energy source till 2031-32 and possibly beyond. "India will need to take a lead in seeking clean coal technologies and new coal extraction technologies such as in-situ gassification," the report noted.

It added, "The present shortage of coal can be addressed by encouraging imports, which are also needed from a longer-term perspective. Imports also put a competitive pressure on domestic coal industry to be efficient."

The committee has concluded that imported coal was far more cost-competitive to imported gas for power generation especially along the western and the southern coasts of India.

Such a cost advantage is likely to continue.

Sitting pretty on gold and diamonds

Economic Times

24th December 2005

HYDERABAD: About ten multi-national companies have been waiting for the Central Government's permission to take up mining for diamond and gold deposits at 17 places along the course of the Krishna river in Andhra Pradesh for nearly two years, having been caught in bureaucratic tangle.

Based on the recommendations of the Telugu Desam government, the Centre had sanctioned 38 reconnaissance permits to these firms during 2001-2002 to explore gold and diamond deposits.

Subsequently, each firm has reportedly spent crores of rupees for taking up detailed aeromagnetic, geo-physical and surface sampling surveys in 42,500 sq km area. They identified the gold and diamond deposits at Banaganapalli, Pagadarai, Jonnagiri and Yerragudi villages in Kurnool district, Pamidi, Ramagiri, Vajrakarur and Lattavaram villages in Anantapur district, Jaggaiahpet in Krishna district and a few more places in Kadapa, Prakasam, Chittoor, Nellore, Mahboobnagar, Rangareddy and Guntur districts.

Based on the survey, the firms later applied for 42 prospecting licences which are still pending with Delhi. These firms include De Beers, CRA Exploration Ltd, National Mineral Development Corporation, Geo Mysore, BHP Minerals India Ltd and its subsidiary BHP Khanija Anveshana Ltd, Philips Dodge Exploration India Ltd and Anglo American Exploration Ltd.

Geological Survey of India (GSI) and Mineral Exploration Corporation of India (MECI) have also identified Dona and Mantralayam in Kurnool district for exploration for diamonds.

"We are waiting for the Centre's approval so that other clearances from departments like Revenue and Forests can be expedited," officials of the Industries Department told Express.

The State Government would get a royalty of 20 per cent from mining. The estimated gold ore reserves in Andhra Pradesh are around 6.839 million tonnes.

Diamond industry to sparkle

Economic Times

24th December 2005

MUMBAI: For the Rs 6,600-crore Indian diamond industry, '06 will kick off on quite a cheerful note.The supply of fancy pink and other types of solitaires could increase in '06 in India as Rio Tinto, which supplies close to 20% of rough diamonds to India, has decided to get into underground mining.

This move is expected to help sustain the supply of rough diamonds from the diamond mining company, which was otherwise facing the threat of disruption after '08. Supplies could have been snapped after '08 as the reserves in the existing open mine would have been fairly used up.

The Gems and Jewellery Export Promotion Council (GJEPC) had taken up this issue with the Australian government, considering that the fate of some 2,500 people who are involved in diamond cutting and polishing was at stake in India after '08. Bakul Mehta, chairman, GJEPC told ET that the move by Rio Tinto could fuel further growth and investment in the diamond industry.

The new development will ensure a steady supply of Rio Tinto diamonds for at least the next 12-15 years. "This is a particularly good decision for the East Kimberly Area, the Indian cutting and polishing industry and for the fashion jewellery industry," said Leigh Clifford, chief executive, Rio Tinto.

Rio Tinto has decided to foray into underground mining at its wholly owned Argyle diamond mine in Kimberley, Western Australia. According to reports an additional $150m outlay will be made also for open pit mining activity. This will facilitate continuity of production in case the open-pit mining is shut.

According to Rio Tinto sources, average annual production over the life of the underground mine from '08 to '18 is expected to be close to 60% of Argyle's annual production of 34m carats.

Apart from Rio Tinto, India's requirement of rough diamonds is met by Diamond Trading Corporation (DTC). Some of the popular brands in diamond trade like Nakshatra, Sangini, Arisia and Asmi are owned by DTC which is the sales and marketing arm of De Beers group.

The diamond market in India is now estimated to be $1.4bn or Rs 6,600 crore annually and is expected to top Rs 7,500 crore next year. India has emerged as the fastest growing market in terms of consumption. However, in terms of value, US still leads the pack with a 52% market share, followed by Japan. India and the gulf region approximately consume the same quantity of diamonds.

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