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Will the Shah Commission report on illegal mining in Odisha lead to massive closure of mines in the state, which have a combined annual turnover of over Rs 40,000 crore per annum? This is the question that hangs perilously over miners, their associates and the state government whose major chunk of non-tax revenue is contributed by royalty and other levies on minerals ever since contents of the commission's report were made public in the last couple of weeks.
According to these reports, the commission, among other things, has recommended that mining operations of those who have been accused of violating forest and environment laws and other mining rules should be halted, restrictions on production and export of iron ore should be imposed, and Rs 60,000 crore (the amount of money allegedly made by the miners illegally) should be recovered from them.
Seen against the recent developments in Karnataka and Goa (where mining operations were shut down following the Supreme Court order and the Shah Commission enquiry earlier), the mood of panic and gloom among the state's miners is quite palpable.
The Shah Commission has rapped both the state government and the Centre for rampant illegal mining in Odisha which, according to the commission's assessment, has been happening since the 1990s and facilitated by a nexus of influential politicians, bureaucrats and the mining mafia. Doubting the efficacy of the state police to expose this nexus, the Commission has suggested an inquiry by the Central Bureau of Investigation, or CBI, into all cases where first information reports, or FIRs, have been filed by the police.
According to the report, out of the 192 iron ore and manganese leases in Odisha, 176 were located in dense forest areas and 94 of them were operating without the mandatory clearance under the Environment Protection Act, 1972. Of these 94 leases, 53 were iron ore mines, while 25 were extracting manganese. Out of the 192 mining leases, it was found that 75 lessees had mined more iron ore than what they were permitted to do.
The commission has also recommended revisiting the environment approvals granted to 55 mines belonging to 40 firms around the Baitarani river and its tributaries, and has suggested shutting down these mines till a study can assess the pollution load on the river and the modification of the environmental approvals of the mines by an expert panel.
The corporations which have been faulted by the commission with regard to violation of environment and forest laws and excess production (beyond permissible limit) include state-owned Steel Authority of India, Tata Steel, Essel Mining, Orissa Mining Corporation and Serajuddin and Co.. While the miners have disputed the state government's penalty notice and have approached the revision tribunal of Union mines ministry which has stayed the operation of the notice, it is now up to the state government to move the High Court against the tribunal order.
Meanwhile, the Union ministry of environment and forest has reportedly asked the Odisha government to act tough against the miners who have been accused of violating the laws and send show cause notices to them.
This brings up the crucial question: can the state or the Centre can stop mining operation of the defaulting miners as suggested by the Shah Commission? "It is difficult to implement the panel's recommendation in toto. For example, the state had agreed to capping iron ore production as suggested by the Shah Commission, but in a recent meeting of the committee of secretaries it was opposed on the ground that such a measure would lead to acute raw material crisis for domestic steel units, besides creating unemployment in the mining belt," says a senior officer of the Odisha government.
It may be noted that Odisha is the largest producer and supplier of iron ore in the country: in 2012-13, it accounted for nearly 45 per cent of India's total iron ore production of 143 million tonnes.
Similarly, the proposal to restrict export of iron ore has been opposed by the Union commerce ministry on the plea that it would affect foreign exchange earnings adversely.
The Shah Commission, while arguing for preservation of minerals like iron ore, had mentioned that China despite having 200 billion tonnes of iron ore reserves was importing ore from India and other places to shore up its stock. The Commission feared that if allowed to be exploited at the present rate, the iron ore reserves in Odisha would be exhausted in 30 years. Hence, it favoured capping the iron ore production to below 55 million tonne and also putting restrictions on exports.
In this backdrop, industry circles feel, the Action Taken Report, or ATR, being prepared by the committee of secretaries - to be presented along with the Commission's report in Parliament - might take the middle path to avoid accentuating the raw material supply problems for the domestic steel producers. Instead of shutting down those mines which have violated the forest and environment laws, sources say it may be suggested in the ATR that action may be taken against those who have violated the Environment Protection Act and cases filed against them as provided under Section 15 and 19 of the Act may be pursued vigorously, while allowing the mining companies to operate the lease.
For violation of the Forest Conservation Act, the defaulters may be asked to deposit additional NPV (net present value), a user charge levied for use of forest land for non-forest purpose, and pay penal compensatory afforestation charge instead of asking the miner to completely stop the operation.
Similarly, the ATR may invoke the Mineral Concession Rule, 1960, which permits deemed renewal of mining leases where leases are not renewed within the stipulated one-year period, to allow these mines to operate, as against the suggestion of the Shah panel to stop operation of those mines whose renewals have been pending for years together.
The defensive mood of the state and the Centre vis-à-vis the strictures of the Shah Commission can be gauged from the fact that the Centre is resisting to submit a copy of the panel's report in the Supreme Court, while the state is fiercely denying any need for a CBI enquiry into the illegal mining activity. "With general elections round the corner, neither the state nor the Centre would want to make things murkier by stopping the mining operations completely or instituting a CBI enquiry on the matter", points out an analyst.
