Bangalore: A Supreme Court appointed panel has recommended the implementation of a 30,000 crore environment plan, funded by miners, over 30 years, in districts ravaged by mining in Karnataka.

In its report submitted to the Supreme Court on Thursday, the Central Empowered Committee (CEC) recommended the establishment of a special purpose vehicle (SPV) for “undertaking works which are related to socio-economic development, infrastructure development, afforestation, soil conservation, biodiversity conservation, etc. for ensuring inclusive growth of the area surrounding the mining leases".

The SPV will be formed under Section 25 of the Companies Act, which governs the constitution of not-for-profit firms, with the Karnataka chief secretary as chairman. The project will be implemented across Bellary, Chitradurga, and Tumkur districts.

According to CEC, the company will focus on improving medical, water and educational facilities and promoting high yielding agriculture.

The project will be funded in the first year by sales of existing stock of iron ore lying with mining lease holders, stockyards, steel mills, and also from the fines levied by the Supreme Court for illegal mining. But over the long term, much of the money for the SPV will come from 10% of the revenue from sale of freshly mined ore, and the allotment of cancelled leases through a transparent process linked to the market value of metals.

CEC calculations estimate that over the first five years, nearly 9,347 crore will be transferred to the SPV from sale of ore and auction of cancelled leases. Once mining operations resume, CEC estimates the SPV will get 2,200 crore (over the following) five years and 12,500 crore over the subsequent 25 years (from the 10% share).

CEC expects the cancellation and subsequent auctions of so-called category C mining leases—ones where the current licensee has committed major violations warranting a cancellation—to yield 3,800 crore over the next five years and 10,000 crore over the subsequent 25 years.

The CEC report comes even as another court panel has been tasked with calculating fines that will be paid by iron ore miners in the state.

Last week, the Supreme Court laid down guidelines for levying fines on 63 mines where violations don’t warrant cancellation of the mining lease. These mines, classified as category B mines, are located in Bellary, Chitradurga and Tumkur.

The determination of quantum of illegal mining and the rehabilitation process are seen as the last steps before the Supreme Court can allow resumption of mining in these 63 mines. Mines in this category include those run by Sesa Goa Ltd, Mysore Minerals Ltd and SB Minerals.

The court has said three kinds of fines need to be levied. The first is for encroachment of land—5 crore per hectare for mining outside the sanctioned lease area and an additional 1 crore per hectare for over-dumping, construction of illegal roads and other such violations.

Mint has calculated that the 63 mines will have to pay 936 crore as fines for these violations.

A total of 101.70 hectares has been mined outside the sanctioned lease area, while 128.39 hectares has been encroached for dumping ore. Another 300 hectares has been encroached upon for other purposes.

The second kind of penalty involves money that miners have to deposit for the implementation of reclamation and rehabilitation (R&R) programmes in the lease areas. According to the Federation of Indian Mineral Industries (FIMI), which is assisting in preparation of the R&R plans, nearly 53 reports have been submitted, of which 25 have been approved. FIMI submits the plans to the Indian Council of Forestry and Research Education.

R.K. Bansal, chief executive of FIMI’s Sustainable Mining Initiative, said mines that are less than 50 hectares in area will have to spend between 1 crore and 5 crore on this, while larger mines will have to spend 10-12 crore. At these rates, total R&R deposits for the 63 leases amount to 400-600 crore.

The completion of the R&R process is crucial for the resumption of mining, as the Supreme Court has ordered that mining can restart only once this is completed. Bansal said the length of the R&R process would vary depending on the size of the mining lease. “It can vary anywhere between three months to a year and a half to complete R&R operations," he added.

The third fine is for illegal extraction of ore and its quantum depends on the value of ore extracted. This may be the most difficult to calculate. According to a senior officer involved in the cleanup of Bellary, this process will involve measuring the ore extracted from the pit head for each mine.

“The court has given the committee three months, but it will be difficult to complete this process within that time," added this person who did not wish to be identified.

The fine in this case could approach 10,000 crore, the officer said. To get a sense of the scale of illegal mining, the Karnataka Lokayukta report in 2011 estimated that around 30 million metric tonnes (mt) of iron was illegally exported between 2006 and 2011. Taking the average selling price for each of the five years, the value of illegally exported iron ore could be 12,228 crore.

The CEC has not factored in the amount realized from this for setting up the SPV.

Mining was stopped in the three districts in July 2011 by the Supreme Court on account of massive illegal mining. The CEC has submitted a series of reports to clean up mining operations in Karnataka. Mines were classified category A if there were no violations, category B for minor violations and category C for major violations. In September, the court allowed the resumption of mining in category A mines. However, only one mine has all the required clearances for resuming mining.