Needed: A responsible mining policy

Mining is as old as mankind’s attempts at civilisation. From hacking away at rocks to make cutting implements to digging hillsides for stones to build freestanding structures to digging pits to access ores from which metals could be extracted for weapons, mining has been as ancient an activity of man as agriculture.

Just because it has an environmental aftermath (as does any other human activity) is not reason enough to assume we can do away with it. For a country like India, with 1.2 billion persons, of whom 505 are desperately poor, the exploitation of its mineral resources is inevitable.

But India needs to evolve a policy on mining that minimises its adverse fallout. The first aspect is the fact that mineral resources are not renewable; thus, their exploitation should combine future needs and present demand to deliver maximum benefit. The country must maximise its gain by converting the mineral into the highest value finished product within the country.

Allowing the export of minerals implies three sins: (i) it lowers India to the level of a primitive state that is exploited by developed countries; (ii) it damages the environment for the benefit of the importing nations; and, (iii) it risks India’s future strategic requirements.

For instance, with India’s current steel demand pegged at 55 million tonnes per annum, its iron ore reserves of around 25 billion tonnes may seem vast. But this thins when we consider that steel capacity output is expected to rise to 150 million tonnes per annum by 2020 and, perhaps, 300 million tonnes per annum by 2030. Yet, India is merrily exporting iron ore. Last year, half of the 200 million tones ore mined was exported to China, which has twice our reserves but has banned exports for years now.

India must not permit mining for the purpose of export. This will result in strategic conservation and reduce the massive environmental damage and the displacement of thousands of people in areas like Bellary, Goa and the Chattisgarh-Orissa-Jharkhand belt.

The second aspect of conservation is deriving maximum value and wasting the least amount of the ore. This has not been adhered to because mining licences are fragmented into small lots that do not allow for an integrated mining plan to ensure maximum recovery. Moreover, licenses have issued to small parties, who are financially and technologically incapable of well-planned and scientific mining.

Tata Steel vice-chairman B Muthuraman had recently observed: “Mining needs to be done on a large scale to be economical and competitive. The government should encourage companies to undertake large-scale mining instead of operating small, uneconomic mines that can only succeed under opportunistic pricing conditions.”

I must also add that the concessionary periods granted to mining firms should be long enough to enable them to properly explore the resource, adequately plan for maximum recovery, and implement meaningful rehabilitation of the land post-exhaustion of the mine.

Indian laws have been strengthened to put the onus of relief and rehabilitation (R&R) on the mining companies. But the practice of most mining companies, particularly the small ones, has been to exploit and scoot. To tackle this, a certain portion of the annual turnover of a mining company - depending on the environmental damage potential of the operations - should be deposited in a special fund meant for the rehabilitation of the mined area.

India’s major mineral resources are located in forested areas that have been home to the country’s tribal population for millennia. The government proposes to compensate displaced tribals with a part of the profits of mining companies, in addition to other measures. But profits can be uncertain and comes only after mining has commenced, whereas displacement occurs in the beginning. Profits can also be diminished by accounting legerdemain. It would be better if compensation was tied up as a percentage of the investment on the mining project.

Past experience has also shown that attention to R&R wanes once the actual operations commence. Hence, it would be better if R&R is implemented before the digging even starts. An important part of R&R should be investment in imparting relevant vocational skills to the displaced tribals, so that they can get employment benefits from the project.

Finally, the government also needs to examine the possibility of the displaced tribals benefiting from equity ownership of the project as part of the deal for giving up their land. This is practiced in some form in mines in Native American reservations in the United States.