New Delhi: State-run Steel Authority of India Ltd (SAIL), the country’s second largest producer of the alloy, was allowed by the ministry of environment and forests (MoEF) on Tuesday to extract iron ore from its Chiria mines in Jharkhand. This will allow SAIL to more than quadruple capacity to 60 million tonnes (mt) by 2020.
The forest clearance by the ministry comes soon after it approved Posco India Pvt. Ltd’s Orissa steel project, allaying investor concerns about India’s business environment and raising the hackles of environmental and rights groups.
This is also the second major project—after Posco—this month that environment minister Jairam Ramesh has passed in spite of a forest advisory committee (FAC) recommending that permission not be given. The Chiria mine already has environmental clearance.
The mine covers around 2,376 hectares (ha), which constitutes around 3% of the Saranda forest area, and the permission for a period of 20 years was “sought for diversion of a total 595ha, which is 25% of the Chiria mine area”.
Rakesh Singh, an environmental scientist who’s researched the region as part of a PhD thesis, said there would be a significant loss of forest that would be ecologically unsustainable.
“This is one of the best sal forests in the country. Moreover, it’s a key elephant habitat,” he said. “It would have been better to allocate clearance to nearby mines that are far less threatening to the forest habitat.”
In a four-page note, Ramesh, who has been under attack for making ecological concerns a stumbling block for development, said that one of the “factors weighing in the decision” for the forest clearance for the mine was SAIL’s proposed Rs 18,000 crore initial public offering, with the government receiving 50% of the proceeds.
He also added that with the mine being in a “Left-wing extremist affected region” having a significant tribal population, the corporate social responsibility (CSR) activities of SAIL will help in the region’s development.
“The forest advisory committee’s objection was largely on the ground that the mine was almost in the middle of the forest. This would have compromised the integrity of the forest,” said an FAC member, who did not want to be named.
In his order, Ramesh noted, “The FAC will continue to focus single-mindedly on forest-related, biodiversity-related issues and concerns, while as a minister I will have to necessarily take a broader view, but placing on public record in a complete manner the reasons for taking that view.”
However, the FAC member quoted above lauded Ramesh’s decision to set up a full-time body that would monitor the ecology of the forest and report the impact of the mining on a quarterly basis. “Though common in the West, it’s an unprecedented move in India. I’m not sure how it is going to be implemented though,” he added.
The other significant conditions that SAIL will have to adhere to include a Rs 20 crore contribution in the next five years towards biodiversity and wildlife-management programmes in the Saranda forest region, earmarking at least 2% of net profit towards CSR programmes such as skill development and training of tribal youth, and ensuring no discharge into the adjoining Koena river.
While Ramesh did not respond to phone calls or to a message left on his cellphone, SAIL chairman C.S.Verma said the company will have “security of raw material” for its expansion programme. The company plans to invest around Rs 5,100 crore to mine the ore.
“We are planning to invest Rs 10,200 crore for mining operations. Of this, around 50% will go towards the Chiria mines,” Verma said.
Around 40% of the iron ore requirements of SAIL will be met from the Chiria mines over the next 50 years.
SAIL’s existing iron ore resources are not enough to meet long-term needs. It has a current hot metal production capacity of 13.84 million tonnes per annum (mtpa) for which it requires 23 mtpa of ore. As part of its expansion plans, SAIL wants to produce 24 mtpa of hot metal by 2012-13 for which it will require 39 mtpa of ore. By 2020, it plans to have a production capacity of 60 mt for which its iron ore requirement will be 100 mt.
After SAIL merged with Indian Iron and Steel Co. Ltd in 2006, the new entity won the mining rights to three of the six blocks in Chiria, while the remaining three are sub judice before the Supreme Court.