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Govt's BGML revival plan hits a rich vein of controversy

Mahesh Kulkarni  |  Bangalore 

For former employees, there is still a pot of gold at the end of the Kolar rainbow - if only the govt allows them to look for it

For most of the past decade, there has been precious little glitter for employees at the Kolar gold fields. The mines, owned by state-run Bharat Gold Mines Ltd (BGML), have been shut rendering them unemployed. And assets promised to the workers as part of a government-sanctioned severance package are now likely to go to Nalco, instead. “The false promises amount to betrayal of the employees,” thunders K M Divakaran, former chief engineer at BGML and president of the BGM Employees’, Supervisors’ and Officers’ United Forum.

As the price of gold soars to new heights, the government hopes Nalco will revive the Kolar fields, situated 110 kms from Bangalore in Karnataka, which have been shut for nine years. But, it may not be an easy task, given the strident opposition to the plan by the irate employees. They say handing the mines to the public sector aluminium producer will only delay a revival. The employees have now threatened to approach the Supreme Court to block the handover to Nalco.

At the heart of the controversy is the government’s apparent reneging on a Cabinet decision of 2006 to transfer the mines’ assets to an employees’ cooperative society, based on a fair market valuation to be carried out through a tender inviting bids from global mining companies. The unions proposed to tie-up with an Australian mining and exploration company to reopen the Kolar field and prospect for deposits in the vicinity, as well as in other places in the country. The employees have submitted a memorandum to Minister for Mines B K Handique to adhere to the Cabinet decision.

That Cabinet decision itself was prompted by a September 26, 2003 ruling of a division bench of the Karnataka High Court. The matter went to court after employees rejected a government termination package after the mines were closed and demanded a substantially higher voluntary retirement scheme in line with those at PSUs. In its ruling, the high court asked the government, among other directives, to provide the higher VRS package.

But, when the government offered the employees the company’s assets at the valuation thrown up by the tender, the employees agreed to the lower termination package. However, after distributing the package, the ministry of mines dragged its feet on handing over the assets to employees and the matter remains unresolved. “The government has delayed implementation of its own decision to hand over the assets to the employees’ unions,” says Divakaran.

The government’s new plan — handing over the mines to Nalco — if true, is tantamount to the government going back on the Cabinet decision and a violation of the high court order. Moreover, it is generally believed that handing over the mines to Nalco will prove a non-starter. The simple reason: A Committee, headed by former secretary, department of mines, K S R Chari, which had studied this issue in depth, had clearly recommended that the mines were not viable as a long-term operation due to the exhaustion of reserves.

Both the Geological Survey of India and Mineral Exploration Corporation Ltd have, after extensive exploration work in the area, also concluded that the Kolar reserves have been exhausted after 150 years of intensive mining. “Neither of these agencies has the technology nor the funds to launch the kind of risky exploration programmes now required to look for more gold,” Divakaran told Business Standard.

“We were never against the revival of the company by the government directly. In fact, for all these years, we have been asking the government to do just that. But, the ministry has consistently said that Kolar is no longer viable. If the government now thinks it can revive the mines, we will be happy to accept its proposal. But they must maintain continuity of service of all 3,556 employees, pay back wages for all these years and fully compensate us for the 10 years of litigation,” said Divakaran.

Handique recently said his ministry had sought Cabinet approval to revive BGML by making it an arm of Nalco. Its Director of Finance, B L Bagra, is officiating as MD of BGML and is understood to be playing a major role in the takeover bid. Besides the decrepit mines, BGML has 12,000 acres of freehold land. The mines ministry appears to have chalked out a plan through which Nalco can bag all the assets of the ailing company and is stated to be preparing grounds for seeking Cabinet approval.

It appears that the mines ministry has been evaluating the option of making BGML a subsidiary of Nalco for some time. Although a single-bench company court of the Karnataka High Court had approved the government’s scheme to revive BGML through the employees’ cooperative, under the directives of an earlier division bench, the government recently pleaded for a change of route before another division bench. Following this, the second division bench issued a fresh directive allowing the Centre to revive the gold mining company on its own, if it so desires. In effect, the judgement of Justice Shailendra Kumar has set aside the earlier judgement of Justice Nagaratna, who accepted the government’s scheme to hand over assets to the employees.

Divakaran said several studies conducted in the last 10 years have established the possibility of finding gold in mineable qualities at Kolar. However, substantial funds and world-class exploration technology would be required, which government agencies are incapable of providing.

“However, given our expertise in the field and the technology available with our collaborators, we can extract no less than 10 tonnes of gold every year for the next 15 years. Apart from this, we can extract about 25 tonnes of gold from the tailings (or, cyanide dumps) in 13 places. When the mines were closed in 2001, there was no technology available with BGML to take out gold from the tailings,” says M Narayanaswamy, a metallurgist and former mill in-charge at BGML.

V Ananda Raj, former mines manager with BGML, says, “When the mines were closed in 2001, the employees had suggested the government import technology to extract gold from tailings. But, the government did not show any interest. Today, there are several companies in Australia, Canada and South Africa that can be inducted as our partners.” Clearly, for former employees like Raj, there is still a pot of gold at the end of the Kolar rainbow — if only the government allows them to look for it.

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First Published: Thu, September 30 2010. 00:25 IST