Orissa: In this conflict-ridden district of Orissa, where the Kandha and Pano communities fight over jobs and resources, one path to peace might actually lie right under them. Literally.

Lagging behind: Labourers carry iron ore at a mine in Keonjhar, Orissa. The state has signed about 50 preliminary agreements to set up steel plants, but has not updated its mineral map for 30 years. Adam Ferguson / Bloomberg

“There is bauxite, graphite, iron ore, gold and coal in Kandhamal," says G.C. Prusty, senior surveyor at the local mining and steel office in the district. “But nothing is happening. Company representatives keep coming here and ask me about the status of their application. I just tell them to wait for the state government’s approval. I am also waiting."

Prusty has been waiting for two years. In this two-storeyed building, where spiders have spun homes in nooks of locked doors, he comes in every day, sits behind an empty desk and stares out of the window. “I don’t understand why nothing is happening," he says.

The situation is not unusual, says P.K. Mishra, former coal secretary in the Union government and now based in Bhubaneswar. “This is the story in all other parts of the state. These things are just kept pending. Unless you are very close to the political circles or are moving a lot of money to officials, nothing will happen. It has become a culture to expect money for every application that is approved."

It was not always this way. Until four years ago, companies say they could just ask for a lease and get it. Then, as the global iron ore boom came and prices shot up by 60% in just one year, “everyone woke up to the potential of mining. Until then, there would be heaps of iron lying about like scrap", says Subrankant Panda, managing director of Indian Metals and Ferro Alloys Ltd (Imfa), India’s largest producer of ferrochrome, a mineral used to make stainless steel.

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That was when Orissa— which has an estimated 60 billion tonnes of coal, 12 billion tonnes of ores and 70 billion tonnes of mineral reserves—discovered the importance of its mineral resources.

Panda speculates that now the state is so busy pursuing big mines of lucrative minerals such as coal, iron ore and chromite in the more obvious districts of Rayagada and Jajpur that it does not have the bandwidth or the will to explore smaller deposits in areas such as Kandhamal.

Since 2004, some of the country’s largest steel companies such as Tata Steel Ltd and Jindal Steel and Power Ltd, Korean steel maker Posco and Vedanta Resources Plc. have tried to cash in on international demand by signing preliminary agreements worth Rs1.08 trillion with the Orissa government to set up steel plants in iron ore-rich areas such as Jajpur, Deonjhar, Keonjhar and in the port town of Paradeep.

But more than ever before, clearing these small leases, so that new jobs can be created in Kandhamal, has become critical, amid the simmering Kandha-Pano conflict. Security experts believe that if this conflict is left unresolved, the district with its thick jungles and disaffected people is likely to become a haven for Maoist guerillas.

“If their economic problems are left unheeded, then these people are likely to become sympathizers of the Maoists," says A.N. Sinha, deputy commissioner of police in Cuttack, who has served three years in Gajapati, a district of Orissa that borders southern Kandhamal. Maoists are active in Gajapati.

On 5 November, an activist of the Hindu-nationalist Rashtriya Swayamsevak Sangh (RSS) in Kandhamal, Dhanu Pradhani, was gunned down by suspected Maoist rebels.

“Three men walked up to him and fired more than five bullets into his body. We have also discovered a poster," says Praveen Kumar, superintendent of police in Kandhamal.

And if policy improves, investors say they will come to this district, despite the recent conflict. “Conflict will not keep mining companies out. I would certainly be interested in going there," says Panda of Imfa.

Like him, many are convinced that economic development could help defuse tensions between the Kandhas and Panos. Riots broke out in Kandhamal on 23 August, when armed assailants broke into a Hindu ashram and gunned down Swami Lakshamananda, a Hindu leader who had led a movement against Christian missionaries in the area.

In a retaliation that lasted several weeks, mobs torched Christian homes and churches, killing 38 and displacing thousands.

“We generate employment. We employ locals at our mines in Jajpur and Rayagada; we employ them for dispatches, bringing in equipment. Then there is a multiplier effect. Other jobs come up with a mine," Panda says.

To win over locals, companies also undertake social projects; Imfa reports spending 2% of its net profit (approximately Rs412 crore every year) to set up health and veterinary camps and to build hospitals and schools in Orissa.

Locals, too, say they would welcome the mining companies. Asthik Digal, a Pano who is a stone-breaker and migrates to earn daily wages of Rs200, says he would rather work in a place close to his family. “If I get a job here, why will I go so far from my wife and children? I will stay here and work in a mine," he says.

But right now, the idea of industries, schools and hospitals in Kandhamal seems like a distant dream, says Prusty.

He may be right. Because even though there is a lot of investment coming into the state—Orissa has signed about 50 preliminary agreements worth about Rs1.98 trillion to set up steel plants—the government’s mining policy is deficient, by many accounts.

To begin with, the state has not updated its mineral map (map of all the resources in the state) in 30 years.

“We have no idea of what resources we have or if the ones we do have are mature enough to sustain such large-scale exploitation," says Shantanu Mohapatra, former director of mines in Orissa. Panda agrees. “So far, we have looked only for the most obvious minerals such as iron ore and bauxite in the most obvious places. Places such as Kandhamal have not been investigated closely."

When winds changed and mining became lucrative, companies seized the opportunity and forced the state to play catch-up.

The government’s inability to reshape its mining policy has prevented it from earning revenue and also hampered jobs from being created in Kandhamal, where both Kandhas and Panos could have benefited from the rising global demand for the minerals lying beneath their lands.

Pradip Kumar Amat, the state minister of mines, did not return calls for comment and ignored messages sent to his mobile phone.

Observers say that if the government had acted in time and channelled investment here, maybe the conflict, which is essentially an economic battle between two of India’s most deprived groups, would have been avoided.

They say a long-term economic plan is essential to stop the violence in Kandhamal. That won’t start, residents say, until the government allows them to mine the benefits of their mineral wealth.