New Delhi: Bellary, Karnataka’s ravaged iron ore and manganese mining district, might finally see a new lease of life after India’s highest court intervened on Friday, imposing a blanket ban on mining till the damage is restored.
The Supreme Court directed the state government to start restoration efforts by asking miners to pay for the environmental damage, while observing that royalty rates on the strategic mineral were too low.
Nearly 15 years of large-scale illegal mining will now stop after a bench led by Chief Justice S.H. Kapadia ordered: “We are satisfied that, on account of over-exploitation, considerable damage has been done to the environment. We are taking a holistic view of the matter. We have suspended these operations keeping in mind the precautionary principle, which is the essence of Article 21 (Right to Life) of the Constitution.”
The court’s overall view of the situation was based on an expert report by a joint fact-finding committee that said, “There was a systemic failure—mining regulators failed, forest regulators failed...”
Click here to read SC order
The court was hearing an environmental public interest case on illegal mining in Bellary, filed by Samaj Parivartan Samudaya, a non-profit society from Karnataka.
The ministry of environment and forests, through attorney general Goolam E. Vahanvati, said it will undertake a “comprehensive, cumulative impact assessment” that could take two-three years and recommend how to reverse the ecological damage.
The court said that until the full extent of degradation in Bellary was known, excavation could not be permitted.
Chief Justice Kapadia also told the Karnataka government to create a fund to which all the miners and companies operating in Bellary will be asked to contribute. The court directed that this fund be used to restore and rehabilitate the environment in Bellary; its bench will monitor the process.
“Please ask your highest concerned officer to be present at the next hearing and we want to know what steps you will take to restore the damage,” the court said to the state government’s counsel. “Whoever has mined this area should be made to pay for it.”
On a possible hindrance to the supply of iron ore to the steel industry, the court directed the ministries of environment, steel, commerce and mines to immediately hold a joint consultation on the steel industry’s requirement of the mineral, Bellary’s production, and the percentage of this that is consumed domestically. The ministries were directed to file a report within a week.
The only relief that might emerge at next Friday’s hearing will be to allow state-owned NMDC Ltd, which operates the large Kumaraswamy and Donimalai mines, to continue operations. The expert report said NMDC has largely practised scientific mining and could be allowed to continue mining, which the court seemed agreeable to.
NMDC produces around 140,000 tonnes of ore annually, whereas the total declared production in Bellary is about 5 million tonnes (mt) a year.
Prashant Bhushan, lawyer for the petitioner, said the estimate of illegal production in Bellary was arouind 50 mt a year, and about two-thirds of this production was exported, primarily to China, the world’s largest steel maker.
Shyam Divan, senior counsel who is assisting the court as the amicus curiae, said the Karnataka government, on account of illegal mining, had commissioned a comprehensive regional environmental impact assessment in 2001. This report was received in 2004 by the National Environmental Engineering Research Institute (NEERI). The institute recommended several measures to prevent damage to the ecology as well as a systematic mining plan to ensure iron ore reserves last several years.
“The report remained unimplemented and there was no follow up to the NEERI report at all,” Divan told the court, fearing that the reserves were now much lower than they should be.
The court was critical of the rate of royalty being charged by the government on exports. “We also want to know why is royalty not being fixed at international rates for exports?” asked the bench.
Iron ore is classified as a major mineral by the Union government. Royalty on iron ore is around Rs 61 a tonne, while the mineral sells for about Rs 5,000 a tonne in the international market.
The government didn’t seem to agree with the court’s view.
“Royalty should be seen in the light of the total taxation and charges in the industry. While the royalty rate looks low, the total incidence of all charges on the sector is comparable to other countries,” said an official in the mines ministry, declining to be identified. “However, we do feel that there is a room for increasing the taxes and, therefore, we have the provision in the Mines and Minerals (Development and Regulation) Bill. When we add those, the total cost and taxes on this sector will become one of the highest in the world.”
Under the Bill, substantial payouts will be mandated and royalty, which is 10% of the realized price of iron ore, could effectively double “as the same amount will need to be shared with locals”, the official said.
Experts have long said India’s minerals are not bringing back enough wealth to the government and people.
Maria Ligia Noronha, director of the resources, regulation and global security division at The Energy and Resources Institute, said states get very little royalty. “Half the money has to be kept for inter-generational purpose and a bit has to be kept for the local people whose lives get messed due to the mining activity,” she said. “Since mining depletes resources which won’t be available for the future generations, there has to be some way to store wealth for the future generations. It has to be invested in some fund and in developing human capabilities.”