MAC: Mines and Communities

South Asia update

Published by MAC on 2007-05-12

South Asia update

12th May 2007

Although it seems that certain aspects of the interim Bangladesh government's national coal policy may now be improved upon - noably a reduction in exports and increase in royalties - the question of "how to mine" remains. Global Coal Management (formerly Asia Energy), the UK company behind the widley-condemned Phulbari coal project, maintains that open-pit extraction is the only viable method. But many Bangladeshis vehemently disagree (and six of them laid down their lives while expressing such dissent last year.)

In a lucid comparison of the socio-environmental impacts of underground and open-pit mining, Professor Badrul Islam of Dhaka University's Department of Geology concludes that both technologies pose potentially insuperable problems - especially if coal extraction is to be conducted at the pace currently proposed.

Another lengthy examination of mining's impacts - this time of iron ore in the Indian state of Goa - graphically demonstrates how regulations are consistenlty flouted, not just by "illegal" operators but also major companies, like Jindal.

Draft coal policy incorporates new formulas for export, royalty rate: Differences remain over mining method

Staff Correspondent, NewAge

12th May 2007

New formulas for reduced export of coal and higher royalty rates have been incorporated in the draft coal policy but disagreement among energy experts and officials continues over the mining method.

The energy division committee on review of the draft coal policy, headed by Wahidunnabi Chowdhury, an additional secretary, has agreed to the new export formula recommended by noted energy expert, Professor Nurul Islam of Bangladesh University of Engineering Technology.

The committee, however, is still reluctant to accept Professor Islam's recommendation that open-pit mining method should be banned for any company until the government itself tries an open-pit mining project by engaging foreign contractors to assess its viability in the country in the next 10 years.

'The committee is reviewing the recommendations on the draft of the policy and is likely to finalise the draft soon,' said a high official of the division.

As per the new export formula recommended by Professor Islam, any local or foreign company, engaged in mining at a coalfield, will only be allowed to export equal amount of coal the mine-mouth power plant will consume.

As per the draft policy, any company that will be allowed to mine has to set up a power plant at the mine mouth.

The previous formula for export suggested that a company could be allowed to export double the volume of coal that would be consumed in the country for the first 10 years after the policy comes into effect. It also suggested allowing the company to export the same amount of coal that would be consumed in the country annually 10 years after the policy comes into effect.

According to the previous formula, the proposed ratio of domestic consumption and export was 1:2 in the first 10 years and 1:1 after 10 years.

'The basic difference between the previous and new formula is that a company will only be allowed to export coal based on the consumption by mine-mouth power plant whereas earlier it was based on the company's total domestic sale of coal including the consumption of mine-mouth plant,' said a source in the division.

The committee also changed the formula on royalties on coal export by fixing the non-variable royalty rate at 10 per cent, which was 6 per cent earlier. The variable portion of the formula, however, remains same with the base price of coal at $25 per tonnes.

As per the new formula the government would get a 30 per cent royalty based on the current coal price of $75 per tonne in international market.

According to the formula, the royalty will increase by one per cent for an increase of coal price by $2.5 in international market.

An estimate of demand for coal for power production and other purposes was also included in the draft policy as per the recommendations of Professor Islam. The country will need around 449 million tonnes of coal only to produce power till 2025 whereas the total demand will be around 650 million tonnes by then.

The policy also included recommendations on formulating separate laws on resettlement of the people to be displaced from the coalmine area, management of soil of different layers, acid mine drainage materials and setting up of offices of the Department of Environment near the coalmine sites.

Sources in the division said representatives from the division went to Professor Islam several times in last one for clarification of some of his recommendations he had made as per the request of the prime minister's office during the previous BNP-led government.

They said that in talks with some committee members he had also made some additional recommendations including a ban on open-pit mining by any local and foreign companies for at least 10 years to assess the method's viability in the country.

When contacted, Professor Islam told New Age on Friday that he thought the open-pit method was not viable in Bangladesh because of high density of population and environmental problems.

He, however, said that the proposed coal authority of the government, Coal Bangla, should undertake a project for open-pit mining and the government should provide the fund for the project.

The Coal Bangla will observe the trends of water extraction and re-injection of water and environmental impacts of open-pit mining. 'If it is found that open-pit is viable, only then the government can invite foreign companies to mine with that method,' he observed.

'It will take time as there is no law relating to resettlement of people. The DoE has no institutional strength to monitor such huge projects. The supervising authority-the Bureau of Mineral Development-has to be strengthened and above all the proposed Coal Bangla will have to be set up,' Islam said.

Energy officials, however, said that in the policy they had already recommended, the state-owned companies would get preference in mining coal and if the government could provide funds the companies would take up a project on open-pit mining.

'But, we also have to consider whether the government could provide such huge funds to be required for operating an open-pit mine,' said an official.

The committee members, however, said that there should be no bar on any mining method in the policy. Nor should it recommend any particular mining method. An expert committee will decide on the mining method taking into account the geological, social and other aspects, they viewed.

The committee is also working on provisions for fixing power price for a mine-mouth plant after energy adviser Tapan Chowdhury last week wanted such provisions in the policy.

The price of power generated by a coal-based plant will be much higher than that of gas-based plants.

Constraints of coal mining

Badrul Imam, The Daily Star, Bangladesh

5th May 2007

The recent death of a British mining expert inside the Barapukuria coal mine has rekindled the question of safely in the mine. On the morning of April 26, Albert Davies, a mine ventilation expert died inside the roadway tunnel at a depth of 450 meters while he was on a routine check-up of the ventilation system along with his colleague, Nicholas Woodburn. Apparently, the two experts were at a place where the temperature and humidity were very high. While Albert, aged 62, who could not stand the suffocating environment for long, collapsed to the ground and died, the 24 year old Nick, also suffering from suffocation, could somehow reach the point to call the rescue workers.

Most of the energy experts believe that there is no option for Bangladesh other than mining its coal for power generation, because the future power demand cannot be met from gas-based power plants as the gas reserve is too limited to run for long. This seems to be well understood by the policy makers, who are contemplating using coal-based plants for future power generation. At present, the only coal-based power plant (250MW) in the country is in operation near Barapukuria coal mine, which feeds the plant. Since the accidental closure of one production face of Barapukuria coal mine about a year ago, production rate is about 1500 tons per day instead of 3300 tons a day (or 1 million ton a year) originally planned from two faces.

The Barapukuria underground coal mine in Dinajpur district has now gone through a period of 8 years of construction and one year of production. During this period, three labourers and one expert died underground by accident. Although, the fatality rate is insignificant compared to some ill-fated mines around the world, there have been several major accidents which severely affected the infrastructure and economy of the project.

On the other hand, a plan to establish an open-pit mine in nearby Phulbari was aborted last year in the wake of mass protest by the local people. Five persons were shot dead by the law enforcing agency. Since then, coal mining has been hotly debated in many forums around the country. Although there is merit in these debates, scientific judgment must play a role in such deliberations.

Which mining method would be appropriate has to be judged from the view-point of environment, safety, and economics. The following points highlight the issues that matter most while considering mining prospects and problems in Bangladesh.

1) What makes coal mining in Bangladesh much more difficult compared to its counterpart across the border in West Bengal in India is the presence of a thick (about 100 meter), loose, water-bearing sandy layer (aquifer) above the coal deposit.

a) In the case of Barapukuria underground mine, this water-bearing layer poses problems of shaft sinking as well as water flooding. In 1997, the mine was totally flooded with water from this layer, for which mine construction work was suspended for a year.

b) In case of an open-pit mine this water layer will fill the mine pit if the water is not continuously pumped out throughout the period of mining. Such long-term pumping will lower the groundwater table in the surrounding land mass and habitat, and desertification may set in.

2) a) In the Barapukuria underground mine high heat flow in certain areas (southern part) raised the temperature in the tunnels very high. In addition, high rate of water discharge from quarried coal in the above situation makes the environment excessively humid. This gives a perfect recipe for heat stroke and suffocation, most likely faced by the two British experts, one of whom died on April 26. The working condition in such hot and humid environment is often inhumane.

A second problem in Barapukuria is poisonous CO gas emission due to spontaneous combustion. A production face (1110) had to be closed and sealed, with million dollar worth of equipment trapped inside, due to the CO gas emission in September 2005. A little amount of CO gas can kill a person; however the above incident, luckily, did not cause any death.

Roof fall is another problem in Barapukuria, by which the death of three persons was reported on three occasions during mine construction. A fourth aspect of all underground mines is the risk of methane gas explosion, which may kill a good number of people at a time. However, laboratory analysis rated Barapukuria coal as low to medium risk in this respect.

b) In case of an open pit mine the above factors are non- issues, but during monsoon, torrential rain may cause large scale land slide related to pit slope instability. This, along with water logging problem would render coal mining almost impossible. Pit slope will be particularly vulnerable to landslide in the loose water bearing sand layer which has slippery clay interbeds.

3) a) In the Barapukuria underground coal mining area small scale subsidence has been noticed in the surface which has affected a few village houses (wall cracking) and crop fields. The social impact of such events are contained by compensation to the affected people.

b) In case of an open-pit mine eviction, resettlement of a very large number of people is essential. The amount of loss of cultivable land is very high as well. The population density in Bangladesh is about 1000 per compared to 350 in India, or less than 10 in Australia where large scale open-pit mines operate. This is probably the most important point raised by the opponents of open-pit mine in Bangladesh.

4)a) In underground Barapukuria mine, expected recovery of coal is 20%. All of it is planned to be used in the country.

b) In case of open-pit mine, recovery is expected to be as high as 95%. A major part of it is expected to be exported by the foreign company which would run the mine; Bangladesh presently is not capable of running an open-pit mine.

Conclusion: The above point to the constraints of coal mining in Bangladesh, irrespective of the mining method adopted -- underground or open-pit. The lesson is that one cannot be too aggressive in mining coal in Bangladesh because of the difficult geological setting, environmental effects and large scale social (resettlement) problems. One has to be cautious and conservative, rather slow and steady in extracting coal from under this soil. The national coal policy which is about to be announced shortly is reportedly contemplating to produce coal at a rate 20 million tons a year within 10 years, and 40 million tons per year within 20 years. This requires more than one large scale open-pit mine. Such a plan may definitely be referred to as aggressive.

The policy makers must consider the inherent ground level problems -- geologic, environmental and social -- before contemplating such aggressive coal policy.

Dr Badrul Imam is Professor, Geology Department, Dhaka University.

Dark side of mining

Frontline, Volume 24 - Issue 9

5-18 May 2007

Hundreds of hectares of forests have been lost to mining over the years in a situation where encroachments are impossible to monitor. The most common illegality is to continue mining long after the lease has ended.

As the shadows lengthen on Keonjhar's main street, the tube-lit sign above Hotel Arjun flickers to life, illuminating both the entrance to the hotel and the cigarette seller next to it. A traffic policeman walks up to the crossing right outside the hotel and assumes his position at what is the most significant crossing in town.

Fifteen kilometres down the road, the ground shivers as a queue of trucks, over a kilometre long, shudders to life. Engine after engine revs up as several hundred trucks begin the next stage of their 325-km journey from the iron-rich Keonjhar district in north Orissa to Paradip port on the east coast. This has been the practice ever since the District Magistrate issued orders prohibiting truck movement between 8 a.m. and 8 p.m. Further up, the highway narrows into the first of many bottlenecks, and branches off, capillary-like, into un-metalled paths that lead into the heart of the district's iron ore mines.

Across the Baitarani river, in Joda, Barbil, Deojhar and Thakurani, the low mountains are illuminated by high-powered halogens, as work continues at a relentless pace in the mines - visible as raw, red gashes on the otherwise thickly forested mountainside.

The source of an estimated 35 per cent of India's total reserves of haematite, Orissa produced more than 46 million tonnes of iron ore in 2004-05, of which three quarters came from Keonjhar. Almost all of it was, and still is, carted away in nearly 30,000 trucks from the 119 mines that dot the district.

The trucks move north from Joda, to the Jharkhand border where they supply ore to Jharkhand's rapidly expanding steel industry, and northwest to Haldia port. But the majority move south through Keonjhar town towards Cuttack and cut through to Paradip port, from where the ore is shipped in containers to one of the few countries that have a bigger appetite for steel than India - China.

Initially seen as the engine of an independent India - the first "swadeshi" steel mill was completed in 1920 by the Tata Iron and Steel Company at Jamshedpur in present-day Jharkhand just across the border with Orissa - it was cast into the shadows by the shining "new economy" of the 1990s.

A five-year rally in international prices has seen the iron and steel sector make a strong return on the business pages of newspapers. Prime Minister Manmohan Singh pointed out in his keynote address at the India Steel Summit 2007: "In the last five years, the production and consumption of steel has grown at rates exceeding 9 per cent per annum. The pace of growth has further accelerated in the current year to over 10 per cent."

The recently formulated national steel policy has set the production target for 2020 at 110 million tonnes of steel, and a doubling of the present capacity from around 40 million tonnes to 80 million tonnes by 2012.

A buoyant national economy and a booming construction sector are expected to add to the optimism in the steel sector, and nowhere is this felt more than in the office of Padmanabha Behera, Orissa's Minister of Steel and Mines and Planning and Coordination. "We have signed 45 MoUs [Memoranda of Understanding] till date," he told this correspondent, "and production has already started in 23."

The Minister foresees a resurgent Orissa, propelled forward by his party's mantra of "progress through industrialisation". Behera believes that Orissa's future lies in using its vast mineral wealth to generate employment and, of course, create wealth. However, not everyone in the State shares this vision.

Privilege and corruption

To understand Orissa's trucks is to understand how privilege and corruption operate along dense, intricate networks where the legal and the illegal often overlap, making it impossible to make a concrete accusation.

After all, what is an illegal mine? How can it be identified? "It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided," states the preamble to the Mines and Minerals (Development and Regulation) Act, one of a raft of laws and bylaws passed to govern the mining sector.

First enacted in 1957, and amended almost every four years up to 1999, the MMDR Act serves as the central axis on which mining law is framed. The Act classifies minerals into "minor" and "major" lists, lays down procedures for the granting of reconnaissance permits, prospecting licences and mining leases, and classifies violations and encroachments. While States have complete control over all minor minerals such as clay, gravel, sand and building stones, major minerals such as iron ore come under the purview of the Central government. For such minerals, Central permission is required prior to the granting of licence.

Apart from the MMDR Act, mining is subject to The Mines Act of 1952, the National Mineral Policy (amended in 1994), and a slew of laws concerning land acquisition and environmental assessment.

Acquiring a mining lease for a major mineral like iron ore or coal for a particular area is relatively easy now. The process has been simplified over the last 10 years, a development that has coincided with the liberalisation of the mining sector. Mining leases are granted on a `first-come, first-serve' basis, and the foreign direct investment (FDI) policy of 1999 allows for "up to 100 per cent foreign direct investment" in the mining and processing of minerals other than diamond, precious stones and atomic minerals. Thus, mining occupies a unique governmental space that is simultaneously highly legislated yet remarkably free of constraints for mine operators.

Under the laws governing mining, mines could be declared "illegal" on a number of grounds, the most obvious being that of mining in an area without applying for a lease. However, the pressure of rapid industrialisation has forced State governments to curb such practices.

Illegal mines

"No illegal mining is possible without political patronage," says a senior officer in the Directorate of Mines, "and local politicians have realised that the land occupied by illegal miners can just as easily be handed over to giant corporations for similar favours." This is not to say that outright capture of areas for mining has stopped entirely in the iron belt. The most common examples of illegal mining occur on the boundary of legality, where the violator can claim a degree of innocence on the basis of ignorance of the law.

The most common form of illegality is to continue mining long after the lease has expired. A document obtained from the Directorate of Mines under the Right to Information Act provides a complete list of mining leases in Keonjhar. According to the Directorate's own figures, dated December 31, 2005, as many as 52 out of 119 mines, or more than 40 per cent of all mines in Keonjhar district covering 52 per cent of leased area, operate illegally on expired licences. Of these 52 mines, 10 belong to the Orissa Mining Corporation (OMC), a government-owned enterprise, and operate on 7,051 hectares (1 hectare = 2.47 acres) or a fifth of the total area under mining in the district.

Many in the industry argue that the issue of expired licences is not an indication of corruption per se as the government has been dragging its feet for years over their renewal. The failure to renew leases, particularly those held by a State-owned corporation, seems inexplicable until one unpacks the terms of the mining lease.

As pointed out by Ritwick Dutta in a compilation titled "Undermining India", the renewal of mining leases in forested areas has been the subject of much litigation since the enactment of the Forest Conservation Act of 1980. Given that most mines, including those in Keonjhar, fall within the purview of this Act, the key question was whether the renewal of a mining lease required fresh permission of the Central government. The Supreme Court, in successive judgments, particularly in State of Tamil Nadu vs Hind Stones in 1981 and Samatha vs State of Andhra Pradesh in 1997, has ruled that the renewal of a mining lease is actually the grant of a fresh lease. Thus, a good reason for mining companies and associated State officials to go slow on the renewal of leases could be that, theoretically, the company shall have to reapply at the time of renewal and would be subject to monitoring by the Central Pollution Control Board, the Ministry of Environment and Forests and a host of other agencies. Forest Act and mining

The Forest Conservation Act mandates that the Central government shall after careful examination of the proposal denotify forest land earmarked for mining and the mining company shall be subject to a series of restrictions to minimise the ecological footprint of the mine. It is also a useful tool to ensure that the mining companies stay within the areas allotted to them. Of course, the Forest Act, like any other Act, is only as good as its implementation.

Another document from the Directorate of Mines lists 40 mines in Keonjhar that are operating without clearance from the Forest Department; the OMC, once more, is one of the worst violators. District Forest Officer P.N. Karat says that as of February 2006 all such cases have been dealt with.

However, this assessment is impossible to verify independently. In the absence of firm leases, many companies have been granted temporary licences, most of which are issued without guidelines or monitoring.

The absence of adequate monitoring is probably the most disturbing feature of the industry in Orissa. The highly technical language adopted by both the mining companies and the state effectively silences any local articulation of opposition by people directly affected by the projects.

Thus, people's testimonies of a change in the colour of groundwater, an increase in the cases of asthma and respiratory conditions and a drop in the fertility of their fields are discounted in favour of Suspended Particulate Matter (SPM) readings collected by the State Pollution Control Board (SPCB) and the findings of groundwater studies conducted by the State Groundwater Board that pollution is present but is within the mandated safety limit.

Barbil, to cite just one example, is a small town in the heart of the mining belt where it is difficult to breathe freely even during the day when the trucks do not run. But a study obtained from the SPCB states that the SPM readings in Barbil are "only" 456 micrograms per cubic metre against a reference value of 500 micrograms per cubic metre for mining areas, and so is acceptable. However, the Central Pollution Control Board reference value for "residential and rural areas" - which villages outside the mines are - is 200 micrograms per cubic metre and for a reserve forest, which could be classified as a "sensitive area" under the SPCB guidelines, it is 100 micrograms per cubic metre. Thus, the same arbitrarily fixed "standards" used to declare mining areas "pollution free" can just as easily be used to declare them unfit for human habitation.

Similarly, the only way to verify if a mining area corresponds to the area mentioned in the mining lease is to either refer to detailed contour maps in the possession of the government (and hence unavailable to the general public) or physically plot the coordinates of the mine using a global positioning system (GPS), which no one in Orissa has access to. Such opacity on the part of all privilege-holders in the system makes its impossible to level definite accusations against any party. But, as in all camouflaged sites, in Orissa, too, the veil slips occasionally to offer a glimpse of the arrogance of mining corporations vis-à-vis the law.

Road to nowhere

The road to Deojhar, as with most roads to hell, is paved with the best of intentions. Ostensibly built to connect Deojhar village to the highway under the Pradhan Mantri Gram Sadak Yojana Scheme, it has turned out to be a useful way to connect the mines to the national highway.

Few villagers use this road; there are too many trucks. Of late, the trucks plying on the Deojhar-NH 215 route have had to contend with more than just crater-size potholes - a fleet of bright orange earthmovers engaged in digging deep trenches along the road. These vehicles have been employed by the Jindal company, a consortium of companies with interests primarily in iron, steel and power, to supply water to their 2,000-hectare iron ore mine in the hills above Deojhar village.

"Jindal is laying a nine-kilometre pipeline to draw water from the Baitarani river," says Arjun Saraswat, deputy general manager of Sarda Mines Private Ltd., the company that possesses the lease for the Jindal land. "This water will be made available through the soon-to-be-completed Kanpur dam project." At the time of this article going to print, the digging was almost complete and pipes two feet (0.61 metre) in diameter had been laid along a stretch of 4.5 km.

But has Jindal acquired the necessary permissions for this pipeline? "The Jindal company's demand for water has been approved `in principle'," says Harish Behera, Engineer-in-Chief (Water Resources) for Orissa. "But the technical parameters are to be worked out. No permission has been granted for any pipeline and, as of now, no project work has begun." Behera is responsible for the allocation of water resources for the entire State, but seems to be unaware that the pipeline work has not only begun but is nearing completion. When confronted with photographs on the project work taken by this correspondent, he said "the matter is currently under litigation".

What sort of litigation? For answers, one is directed to C.V. Prasad, Chief Engineer, Project Planning and Formulation, of the Orissa Water Department (Irrigation). Prasad is more forthcoming. "Jindal has been allotted 1,500 cubic metres of water an hour, drawn in a phased manner, from the Baitarani river project, but the project is still awaiting technical clearance. As of now, the construction is in violation of the law," he says. Prasad adds that his office has written to the company several times asking it to stop construction, most recently on January 16. "We were under the impression that construction had stopped."

Granting a project approval "in principle" is no indication of its merits or demerits; those are only evaluated in the technical approval stage when a detailed project report (DPR) is submitted. "In principle" approval only indicates that the company may go ahead and prepare a DPR. If Jindal's pipeline does not pass muster the company will be forced to remove it. In going ahead with the project, it believes, perhaps, that government approval is a foregone conclusion or that such approval is of little importance.

The Baitarani pipeline also begs another question. At present, where is Jindal drawing its water from? Deputy general manager Arjun Saraswat admits that Jindal is currently drawing water from borewells in their area, but is unwilling to quantify the volume of water drawn every day. "It is only used for domestic purposes," he says. However, officials at the SPCB office in Keonjhar reveal that Jindal uses a 10-kilolitre truck to carry out water sprinkling three times a day in the mining area, that is, 30,000 litres of water a day just for sprinkling.

Apart from this, the scale of the mining operation, with most of the permanent workers living in the mining area, suggests a reasonably high rate of water consumption even for domestic purposes. Even Jindal probably does not know how much water it uses because none of its tubewells is metered. However, one group of people has a fair idea.

Deojhar's sorrow

Down the road from the mines, the residents of Deojhar have seen their streams dry up, the water table fall and the soil lose its fertility in the six years since Jindal began operations. "The very basis of village life has fallen apart since the project began," says Sridhar Nayak, a leader in Deojhar. The crops have died, there is no place to graze cattle, people cannot collect firewood in the project area and the handpumps yield foul, yellowish water. Nayak says the inevitable dust that any project breeds has severely affected the health of the residents, particularly the young, among whom the number of cases of lung congestion has increased.

When the project first began, protests were quelled by a combination of cajoling and coercion. A significant police presence was backed by promises of jobs, economic regeneration, security and "progress". Needless to say, none of it has materialised except, of course, the police, who regularly show up in impressive numbers to threaten `errant' residents.

The promise of prosperity - schools, hospitals, jobs - is usually the classic argument used to justify the well-documented horrors of mining.

Minerals are a country's natural wealth, a gift from Mother Nature, a precious resource crucial to a nation's progress. The booming international market for metals has also cast mines and minerals as earners of valuable foreign exchange. It is hard to unpack the cold, hard logic of capital and corporations without sounding like a hopeless rural idealist. However, the people of Orissa are now asking who the beneficiaries of the mining sector really are. What if mining did not benefit the people it affected the worst?

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