MAC: Mines and Communities

Conflicts over mining: the illusory boundary between "legal" and "illegal"

Published by MAC on 2010-02-07
Source: India Together (2010-01-17)

It's widely believed that "illegal" mining is only undertaken by small groups of entrepreneurs or artisanal operators. If, and when, the state cracks down on their operations, the culprits are removed (sometimes with considerable violence, as in Brazil and Indonesia) to be replaced by registered and "more responsible" companies.

But the reality is often more complex, and the offenders more numerous and difficult to identify.

In the recent past, major corporations, such as Anglo American and Rio Tinto, have not been above collaborating with smallscale miners, using them as a point of entry into untapped deposits.

More benignly, some others (Barrick-Placer in Venezuela, Benguet in the Philippines) have allowed smallscale miners to occupy their diggings, pending takeover of the worked areas. Even where government and company severely frown on such tie-ups, they may turn an unseeing eye on illegal operations in return for payoffs. (This is something alleged in the case of Freeport-McMoran's massive Grasberg mine in West Papua).

Additionally, there are many instances where established mining companies have gone beyond the bounds of their official leases, or extracted considerably more ore than their contracts permit, but still escaped censure or removal. Take Mexico, Panama, Ecuador and Canada, for instance, where companies have exceeded their remits, or continued operating in defiance of official "stop work" orders.

Few regions of the world evince more rampant such violations than southern and eastern India. Here the illegalities go right from the local level to high political office, via a skein of big and small mining outfits, middlemen, subcontractors and traders. Over the past year, this has become a major concern of NGOs and politicians in Orissa.

Last month, India's Ministry of Environment and Forests revealed that, during the past thirty years, more than 100,000 hectares of forest land, supposedly protected by the country's 1980 Forest Conservation Act, has been surrendered to mining.

Much of this so-called "dereservation" of forestry was justified on grounds that the forest cover had already been denuded. But, in the case of Karnataka at least, this is a spurious justification, according to a report by the state's own investigatory body, Lokayukta.

We might well ask what prospect  there is, of drawing a firm line between "illegal" and "legal" mining, when administrations themselves conflate the two?

[Comment by Nostromo Research, 6 February 2010]

Lokayukta slams mining in Karnataka's forests

India Together

17 January 2010

On 7 January 2010, the Ministry of Environment and Forests (MoEF) proudly gave the people of India a gift for the new decade. In a press release issued that day, the MoEF declared that since the enactment of the Forest Conservation Act(FCA) in 1980, a total of 1309 cases have been approved for forest diversion under various categories of mining. This amounts to 100,871 hectares of forests lost.

The FCA details the process that any party seeking to 'deviate' forest land to any other ruse (which includes mining) must follow to obtain permission from the MoEF before construction or extraction can be initiated. So with this system, in the last thirty years of 'permitting' forest land to be converted to other uses, India has officially lost original and virgin forest land in huge numbers, with mining being one of the industries contributing to this loss.

What is interesting to note is that of the total extent of land lost to mining, 10,598 hectares (a little more than 10 per cent) is from a single state -Karnataka. Given this scale of forest loss, questions have been continuously raised over the years about the legality of this transformation, eventually drawing the attention of the state's Lokayukta.

Lokayukta on forest land encroachments

The Karnataka Lokayukta was established by law in 1984 specifically for investigating allegations or grievances in respect of administrative actions. In 2007, the Government of Karnataka, while recognising the problem of rampant illegal mining in the state in light of huge increase in iron and steel prices, sought the intervention of the Lokayukta.

There were a range of issues that the Lokayukta was to investigate for the period 2000-2006, and another set of issues arising after 2006. One of the specific issues for investigation was the large-scale illegal mining and transportation of ore from forest areas.

The Lokayukta (from Supreme Court judge Santosh Hegde) and his team carried outfield visits in the districts of Bellary, Hospet and Tumkur and observed a vast range of blatant irregularities. They brought with them stories of conniving politicians, corrupt bureaucrats and the shrewd mining lobby all operating in tandem. Their 356-page (excluding the annexures) report submitted in December 2008 highlighted several instances where mining activity was taking place beyond the leased area. This could also include trespassing into forest areas or illegal dumping in complete violations of the parameters set out by the Indian Bureau of Mines.

The Lokayukta relied on several inputs, and a key one was a very critical report by Dr. UV Singh, Conservator of Forests. This report examined various instances of encroachments by mine owners, and documented a range of reasons for these. This included the fact that the mine owners had gotten different lease sketches approved under different laws, as a result of which it was getting difficult to determine what the actual leased area for mining was. Encroachments into adjoining forest lands were common, as also the construction of untarred or kachcha roads into the forest areas.

Mine owners also indulged in indiscriminate dumping of mine waste into the adjoining forest areas as if natural spaces were their rightful dustbins.

There are details of at least 99 instances of encroachments - to the tune of 1114.8 hectares - listed in the U V Singh report. The Government of Karnataka has filed Forest Offence Cases (FOC) against roughly a third of the violators, but most of these don't name the mining companies or persons who can be held accountable.

Raising contracts

The Lokayukta report points to a most creative mechanism developed by mine owners, which works as follows. A mining lease is granted to a project proponent, who is required to pay royalty to the Government (this is far below the actual value of the mineral in the open market, usually). The lessee would claim all expertise, availability of funds, machinery etc. that are required to carry out mining. But in practice, as the Lokayukta discovered, the lessees would not carry out the mining themselves; instead they "entered into commercial transactions with middlemen who do not have any experience in mining, thus leading to unscientific mining."

Such 'raising contracts', wherein another party carries out the mining on behalf of the original mine lease-holder, have no basis or background in Indian law. It is little more than the transfer of mining leases without the approval of the requisite authorities.

The same practice also extends to the transportation of the ore. According to the Lokayukta report, "the Department officials have closed their eyes and are ignoring totally the illegal activities. Such a system from the outside looks as if the lesseehimself is doing the mining operation, but the facts are otherwise. This is one of the serious concerns which have to be stopped forthwith".

Suppression of facts

In 1998, the Director of Mines and Geology submitted a report to the Government of Karnataka wherein it was proposed that 9803 sq.km. of forest land can be dereserved as forest, since these were either denuded or didn't have thick tree cover. This would enable the use of such dereserved land for purposes other than forest use, without attracting the provisions of the FCA.

Following the presentation of the report, clarifications were sought and a revised report was submitted on 29 November 2000. A day later, at a meeting of officials from the Centre, State, and the Indian Bureau of Mines, it was decided by the Minister for Mines and Geology to dereserve six blocks (namely 13, 14, 15, 17, 16 and 18A) in Bellary andHassan districts to permit the mining of titaniferrous iron and china clay.

In his instructions for de-reservation of blocks of 13, 14, 15, and 17, the minister explained that there was no substantial forest cover in these areas. The draft cabinet note on the order had claimed that "the de-reservation is proposed mostly in respect of non-forest areas and forest areas which have lost vegetative cover". But this was disputed in a subsequent report by R L Gaikwad, Retired Deputy Director of Mines and Geology -over 3783 sq.km. of the dereserved lands were official forest lands. The Lokayukta report too agreed with Gaikwad's view, noting that factual information had been suppressed while issuing the original order for dereservation.

The Department of Forest, Ecology and Environment also gave its view to exclude forest land from dereservation. Despite this, the Mines and Geology department placed the same blocks before the cabinet for approval, and got them dereserved.

The political dimension

The Lokayukta report is quite detailed in documenting how corruption continues in Karnataka's mines. The report also specifically named the then Congress Chief Minister of Karnataka, several prominent persons including Managing Directors of state owned Mysore Minerals Ltd, Directors of Department of Geology and Mines and many others. It clearly states that the Government of Karnataka has failed to take any effective measures either to stop the illegal mining or initiate effective action against the officials.

The political context must be noted here. Among the various companies whose activities were questioned in the Singh report is Obulapuram Mining Company, operating mostly in adjoining Andhra Pradesh. This company is owned by politicians with deep ties to the state governments in both Karnataka and Andhra Pradesh. Its Managing Director, Janardhan Reddy is a cabinet minister in Karnataka government, and is also a business partner of Jagan Mohan Reddy, son of the recently-deceased Chief Minister of Andhra Pradesh, Y S Rajashekar Reddy.

There has been widespread comment in both states that the reluctance of their respective governments to act against the mining industry is due to its political influence. A recent move by the 'Reddy brothers' to replace the Karnataka Chief Minister was only barely thwarted, and on the other side of the border, a similar moveto have Jagan Reddy installed as the Chief Minister of Andhra Pradesh also failed.

Nonetheless, there is continuing speculation that both state governments may still bedestabilised by MLAs allied to mining interests.

In the Supreme Court

If governments are treading cautiously, there has been action on other fronts. Samaj Parivartan Samudaya, an NGO based in Dharwad, Karnataka filed a case in the Supreme Court of India, before the three-judge bench that is hearing matters related to the T N Godavarman Thirumalpad v/s Union of India case, (the 'forest' case, as it is known -see www.forestcaseindia.org). The NGO's writ petition seeks intervention that includes stoppage of all illegal mining in the state, action against the violators and also against the practice of raising contracts. It also asks for a detailed survey in the borderareas of the Andhra Pradesh and Karnataka from where several illegalities have been reported in the Lokayukta report.

The petition was heard by the Supreme Court on 4 January 2009, on the first day after it eopened following the winter break. The petition was accepted and notices issued to various parties. What has begun is one long haul in the court rooms of the apex judicial body. There is clearly much need for reform - leases are not auctioned; royalty payments to governments are meagre; encroachments in non-lease areas is common; ... the list goes on. The stakes are clearly quite high. One sweeping judgement could alter the complexion of the mining industry totally, even at this late hour.

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