Millennium Post

Industry suffers, renders lakhs jobless

Over 90 mines in Goa, all exporting iron ore mostly of low quality, are closed for months. The number of closed or under-performing iron ore mines elsewhere in the country is several times more. A large number of berths in some half-a-dozen seaports – large, medium and small – handling ore carriers are lying idle. So are thousands of trucks, earthmovers, dumpers, tipplers and pay-loaders, which are engaged in mining and transportation of ore in normal times, rendering lakhs of people jobless. It is a grotesque story of the total governance failure on the part of both the central and state administration. A bizarre stop-work directive by the Goa government, ostensibly seeking to discipline the corrupt industry, has shut down operations of all its mines. The result: the country is set to lose $10 billion (Rs 56,000 crore) in export revenue, mostly to rival Brazil, and close to $15 billion (Rs 82,000 crore) in domestic steel production as well as in terms of steel import in 2012-2013.

The blanket ban on mining, a key economic activity in Goa, is certainly not the right way to control corruption in this sector. It is like burning down one’s own house to prevent burglars from entering it. The mining ban order needs to be revoked immediately in the national interest. Let there be a separate impartial investigation to nail the culprits in the illegal mining racket and punish them under the law. The unprecedented government action has practically shut down also the giant Mormugao port, under the union surface transport ministry. The port is said be running a monthly deficit of around Rs 15 crore ever since the stoppage of Goa’s iron ore export. In better days, the port used to earn Rs 40 crore a month from handling ore export cargo alone, which accounted for 80 per cent of its cargo volume. Some 700 ships used to call the port to lift the export cargo. In 2010-2011, it handled over 50 million tonnes of cargo. Between April and October this year, the port loaded only 13.4 million tonnes. Since September, no iron ore ships have called at the port. Overall, India’s iron ore export is 72 per cent down this year.

The genesis of independent India’s biggest mining scam starts with a bunch of extremely greedy and corrupt politicians and central and state government officials who colluded with mine owners to encourage illegal mining in states such as Goa, Karnataka, Chhattisgarh, Odisha, Jharkhand and Maharashtra with impunity for years. The massive mining racket was booming right under the nose of those powerful politicians and bureaucrats and would have gone unhindered if the Congress party, the UPA government, the Karnataka governor and Lokayukta did not make it a big issue out of it to unsettle Karnataka’s B S Yediyurappa-led BJP government over illegal iron ore mining in the state with his blessings and in participation of some his ministers. All major iron ore mining states are presently non-Congress ruled. Jharkhand is now under the president’s rule. But, the mining racket thrived in these states under their previous Congress government rule as well. Moreover, mining also comes under the union government.

Now, the Yediyurappa ghost seems to be taking its revenge on the UPA government, which unsettled his ministry, as leading environment NGOs have stepped in to get illegal mining stopped and moved the Supreme Court. The issue seemed to have gone out of the control of the central and state governments as the union government-appointed commission on illegal mining, headed by retired Supreme Court Judge M B Shah, came down heavily on former Goa chief minister Digambar Kamat, who also held the mines portfolio in the Congress-led government, for ignoring complaints about the destruction caused by illegal mining in Goa.

The judicial commission slammed Digambar Kamat for not acting against illegalities in the mining sector despite fully knowing about them. The M B Shah Commission’s first report estimated a whopping Rs 35,000-crore loss to the exchequer from illegal mining in Goa in the past 12 years.

Caught in this political quagmire is one the most important core sectors of the economy – mining and steel and their export – with those corrupt politicians and bureaucrats washing their hands off the decades-old illegal practice, carried out under their tutelage, leaving the blame on businessmen or mine-owners. And, the government and the court, instead of penalising those corrupt politicians, bureaucrats and other law offenders, have gone after the mining activity itself. The recent ban on mining imposed by the Goa government and subsequent suspension of environment clearances (EC) of all the 93 mining leases in Goa by the Union Ministry of Environment and Forests (MoEF) ignored their impact on the national economy. They ignored the fact that iron ore is the principal raw material for steel industry. India is the 4th largest producer of iron ore with huge reserves of over 20 billion tonnes. The country is the 3rd largest iron ore supplier to China. Until 2010-2011, iron ore constituted one of India’s top 10 items of export.

Investment bank Barclays Capital had conservatively forecast that India’s iron ore exports will be around 17.3 million tonnes for the current fiscal, down sharply from 61.8 million tonnes in 2010-2011 and an even sharper from 120 million tonnes in 2009-2010. Goa’s mining gloom has led to global price boom with the average rate exceeding $140 per tonne CFR.

Under CFR, a shipping term, the seller does not have to procure marine insurance against the risk of loss or damage to the goods during transit. The impasse over iron mining is costing the nation about Rs 500 crore per day in terms of the value of the raw material and its upstream addition in steelmaking. This is a criminal waste of national wealth and can’t go on. The government and the court must step in without any longer delay to allow lawful operation of India’s mines. (IPA)
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