A veritable minefield

Banning iron ore exports is not the real solution

Illegal iron ore mining, which has rocked the Karnataka government for months, has now become a national issue with the Union Cabinet deciding to institute a commission of enquiry, headed by a retired Supreme Court judge, to look into it. While the terms of the commission are yet to be announced, they are likely to cover all instances of illegal mining, not just of iron ore, across the country. Illegal mining has been an issue not just in Karnataka but in several other states like Andhra Pradesh, Chhattisgarh, Orissa and Jharkhand, and as the Congress is in power in only one of them, Andhra Pradesh, the central move can be seen as an attempt to fix those states which do not come out unscathed in the enquiry. Illegal mining has become a particularly sensitive issue with the spread of Maoist violence among tribals in mineral-rich forest areas. As mining, even when legally undertaken, has been a development activity whose benefits have largely escaped the tribals who are the original inhabitants of most mining areas, the Union minister for mining used the occasion to assert that 26 per cent of the gains from mining would be reserved for the benefit of the tribals.

A high-powered commission is certainly needed when wrongdoing is as widespread as is the case with illegal mining. But as the report of the commission will be available only after 18 months, some decisive remedial action is needed right away. A case in point is the decision by the Karnataka government to entirely ban the movement and export of iron ore through 10 minor ports which are under the state government. This has brought to a standstill iron ore exports from a state which accounts for a significant share of total iron ore exports. The Karnataka chief minister has gone on to add that he is against iron ore exports per se as the raw material should be conserved for use by steel companies like ArcelorMittal which have been invited to set up major plants in the state. The BJP has also asked the Centre to entirely ban iron ore exports. It is easy to see political factors playing out more than economic ones in this case! Moreover, all this diverts attention from the current key issue of illegal mining, which has shown the Karnataka administration in an unfavourable light. The state’s Opposition, the Congress and the Janata Dal (S), has launched a major political campaign over this as the mining lobby, with two of its kingpins being ministers, seems to hold the fate of the government in its hands. The country has continued with iron ore exports despite a campaign against it in the past by some key steel producers who will benefit if exports stop and domestic iron ore prices drop. In all industries that process agricultural produce or minerals, be it sugar or steel, the interests of manufacturers and raw material producers have to be balanced. While industry chambers have been quick to welcome the Karnataka ore export ban, few have spoken out loudly enough against illegal mining and other illegal business practices, as well as the rights of tribals and others dependent on the affected areas for their livelihood. If mining royalties are properly collected and there is no illegal mining, it will also help state governments raise revenues which can then be invested in providing livelihood opportunities for tribals.