Undermined Abundance

Orissa has one of the countrys largest mineral deposits. It also has one of the lowest utilisation records. Strangely, this bleak picture sends investors positive signals it indicates the enormous scope for fresh investment.

To get an idea of the states potential, scan these statistics. Orissa accounts for 18.4 per cent of Indias mineral deposits, but only 9.7 per cent of production.

The state has the largest deposits of chromite (98 per cent of Indias reserves), nickel (95), bauxite (70), graphite (33), manganese (32), iron ore (26), coal (24) and dolomite (12). But except for manganese and graphite, the rate of exploitation has been less than one per cent of reserves.

 

Though overall mineral production in Orissa has increased from 310.7 lakh tonne in 1990 to 438.6 lakh tonne in 1994, a growth of 41.2 per cent, exploitation has been skewed. Coal production during this period has been the maximum at 80.6 per cent, but the output of metallic minerals has been just one per cent. For non-metallic minerals, production has increased by only 9.3 per cent in the same period.

The differences between the production of coal and other minerals is largely due to the varying efficiency of the agencies responsible for mining. The presence of the central sector Mahanadi Coalfield (MCL), a subsidiary of Coal India, has contributed to the rapid growth in coal output; for other minerals, most mines are operated by the state-owned Orissa Mining Corporation (OMC) and small-mine owners who lack the money and know-how to boost production.

Recognising these difficulties, the state proposed a new mineral policy that focuses on increasing private investment. But none of this has taken shape because the Centre is yet to relax norms for this sector.

The state has 16 mining and mineral exploration projects on its agenda worth more than Rs 16,000 crore in investment. Of this, 10 projects worth Rs 3,091 crore are for coal mining. Notable among the coal projects is the Rs 1,500-crore project by steel major Nippon Denro Ispat at Talcher in Dhenkanal district. The company intends to lift 10 million tonne of coal from Talcher for its power project in Andhra Pradesh.

The second-largest private coal-mining project has been proposed by Videocon International which has already received government clearance for a Rs 1,000-crore project in the state. The company is currently negotiating with Australian, South African and Indonesian firms for technical tie-ups.

This apart, to meet the increasing demand for coal from thermal power plants, the public sector MCL has asked for Rs 350 crore from the World Bank to buy modern equipment and revamp mining operations. Bank president James D Wolfensohn visited MCLs mines at Talcher during his three-day tour of Orissa in October in this connection.

Besides coal, there are two large alumina projects proposed by the National Aluminum Company (Nalco) and Utkal Alumina International, a joint sector unit owned by Indal, Tata Industries and Norsk Hydro of Norway.

Nalco proposes to double bauxite-mining and alumina-refining capacity in Koraput district to 4.8 million tonne and 1.35 million tonne respectively at a cost of Rs 1,647 crore, but the project has been waiting for Union government approval for the past four years.

But Utkal Aluminiums Rs 2,500-crore one million tonne project, which is also coming up in Koraput district, is in progress with the company overcoming initial local opposition. We hope land acquisition,which has started, will be completed by the end of the year so that we can start building the plant early next year, says B K Patnaik, chief administrator of the project.

Another important sector, chromium ore, however, has been steeped in controversy for some time because of a clamour for mining leases by user industries.

The state has 98 per cent of the countrys chromite deposits of which 90 per cent is concentrated in the Sukinda Valley alone. Since independence, Tisco has had a monopoly over chromite-mining lease. In July this year, however, a Supreme Court judgement reduced the companys lease area from 1,261 hectares to only 406 hectares and upheld a central committees recommendation that suggested allotting the area divested from Tisco to four user-parties Indian Charge Chrome, Ferro Alloys Corporation, Ispat Alloys and Jindal Strips

But the state government seems to be in no mood to re-allot the leases and has appealed to the apex court through the Orissa Mining Corporation, claiming rights over the area vacated by Tisco.

Even as the controversy intensifies, the user parties with units in the state (except for Jindal) suffer for want of raw material in a land, ironically, abundant in it.

Iron ore is another underexploited mineral. With 13 steel projects lined up, over 20 million tonne of iron ore are required to meet their combined raw material needs. Yet the current annual production rate is eight million tonne.

To augment ore production and develop the infrastructure to transport it from the mines to the Daitary Steel Complex and Paradeep port, OMC had signed an agreement with British mining giant RTZ for an ambitious Rs 2,500-crore project.

The project involved mining and processing at least 15 million tonne of ore annually and constructing a direct rail link between the mines in the Keonjhar district and the Paradeep Port via Daitary. But the project is still awaiting sanctions from the Centre.

Similarly, another high-sounding plan of the state government to undertake gold and diamond mining in the state has been in limbo for over a year now. After an Australian government-aided aero-magnetic survey pointed to the possibility of deposits of these precious metals and stones over a wide area of 50,000 hectares in the western and south-western parts of the state, many Australian and European firms showed interest in prospecting and exploration.

OMC had even asked the state government for permission to sign joint-venture agreements with nine shortlisted firms, domestic and foreign. But the proposals have been mired in delays in government clearance and strict prospecting rules.

In short, the lack of more investor-friendly guidelines both at the Centre and in the state, infrastructure bottlenecks, obsolete mining methods and technology and frequent eruption of labour problems in the mines have obstructed growth in Orissas mining sector.

Nonetheless, the sector continues to be an important contributor to the states non-tax revenue. The income from mining cess and royalties at Rs 250 crore in 1994-95 accounted for 39 per cent of the states total non-tax revenue. Similarly, the total value of the minerals produced during the year was Rs 1,300 crore, an increase of 100 per cent over the figure recorded in 1990, thanks mostly to the increase in the prices in the interregnum. By delaying policy initiatives, the state is killing the golden goose.