All you wanted to know about: The mining ban

Of late, not a month goes by without a court ruling against the mining industry. New bans are being imposed even as older ones are being lifted. While the earlier ban on iron ore mining in Goa was lifted recently, a new ruling banned 26 iron ore mines in Odisha.

Traditionally, only public sector companies in India were given mining licences. But in recent years, private players were allowed to mine as demand for minerals grew. A company could obtain a lease from the State after obtaining statutory permits such as environmental clearances. A mining licence is granted for a minimum period of 20 years and a maximum period of 30 years and for a maximum area of 10 sq. km.

As you can well guess, private firms soon found that digging up the ore and selling it is hugely profitable. Listed miners of manganese and iron ore make net profit margins of 40-50 per cent. With the commodity boom in China, global metal prices shot up, making ore exports unbelievably lucrative.

Thus a few private firms, especially small ones, neatly ‘stretched’ operations beyond the leased areas. They ‘forgot’ to pay royalty and taxes and also flouted environmental norms on dumping the waste. ‘Illegal mining’ was born.

Locals near the mines suffered from pollution. Losses to the government from lost royalty payments was also huge. In Karnataka alone, the Lokayukta pegged the loss at over ₹16,000 crore.

Environmentalists went to court. Iron ore mining was banned in Karnataka in July 2011 and in Goa in September 2012. Thus India’s iron ore shipments plunged from nearly 168 million tonnes in 2010-11, which fetched nearly $7 billion, to a mere 18 million tonnes in 2012-13.

While private mines were banned, more law-abiding public sector firms such as NMDC were allowed to continue their operations. Still, the wholesale ban had other implications. It curtailed India’s export growth and brought steel-making to a halt. The Supreme Court lifted the ban on many mines in Karnataka after 21 months in April 2013, but put in place a cap on output. The ban in Goa was lifted in April 2014, again with a production cap.

The supreme court intervention in mining operations goes back to 1997 when it recommended that at least 20 per cent of the profits be set aside as a permanent fund for development need. Also, in 2002 the SC said that the Aravalli mountain range in Haryana and Rajasthan is forest land and no mining should be allowed there.

But the stakes have increased over the years. The Church of Goa recently demanded that mining companies be fined ₹30,000 crore for the illegal quantity mined during five years, plus ₹35,000 crore more for operating outside leased areas.

Mining bans are tricky territory, even if you’re not a tree-hugger. If you reside in Goa or Bellary, mining would have a direct impact on your life. Illegal mining can create a murky cocktail of corruption, politics and kickbacks that impacts taxpayers. But an outright ban impacts the livelihood of all those who receive direct or indirect employment from the mining industry.

Yes, rules and regulations may weigh down a sector. But flouting them can practically bury it.

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