In addition, the judgments set the framework for how local people will “benefit” from mining. Therefore, in many ways these decisions are overarching and are essential as the current regulatory system has been decimated. The question that needs to be discussed is whether the judgments go far enough in deciding the sustainable framework for mining in the country. Or, indeed, if these are in the right direction, he added.
The Central Empowered Committee (CEC) of the Supreme Court has classified mining into three categories¡ªA, B and C¡ªtaking encroachment as the basis of the nature of offence committed. To judge the quantum of offence, CEC has taken the ratio of the lease area of each mine to respective encroachment.
Category A: No major encroachment outside the lease area. This does not mean this category is “clean” on other accounts. The mine operations are allowed after the reclamation and rehabilitation (R&R) plan is started.
Category B: Encroachment up to 10 per cent of the mine lease area for mining pit and dumping of waste in area up to 15 per cent of the lease area. They have to complete R&R and pay some fines before resuming operations.
Category C: Encroachment more than 10 per cent of the lease area and dumping of waste in area, which is more than 15 per cent of the lease area. Their lease will be cancelled and then auctioned for captive use.
According to CSE, the bottom line, after all the rigmarole and more than two years of judicial scrutiny, is that all mines, big and small, big offenders or small offenders, will continue in some form or another. The problem with this manner of categorising penalties is threefold.
One, that CEC has defined the “nature” of offence in a very limited manner, which does not take into account the environmental fallout or the cumulative impact of the mines in the region. In this way, when mining reopens first A, then B and then Cit could well be business as usual. The best that is being offered is that there will be an R&R plan, which will take into account “afforestation, check dams, stablisation of waste dumps, soil conservation, rainwater harvesting and use of modern mining technologies”. There is nothing to suggest that these methods will add up to sustainable mining, even if a cap is put on the total mining that will be allowed.
Two, this rulebook could well end up incentivising large mines to commit large offence. The simple fact is that the Bellary formula will work against small mines, as it is based on quantifying the extent of violation as a percentage of the mine lease area. This will end up “legalising” non-compliance of large mines. Mines with large lease areas, for instance of 1,000 hectares, could have encroached 100 ha and still be in legal B category.
Three, the issue of illegal iron ore extraction and sales has been ignored by CEC in defining illegality. In 2012, the Supreme Court directed CEC to assess within three months the actual quantity of illegal iron ore that was sold, so that companies could be fined. But this has not happened. So mines have opened and many more will open soon, and all the talk of recovering ill-gotten funds may well be brushed under the carpet. Small wonder the mining barons are once again in power in Bellary.
Chandra Bhushan said that allowing C category mines in the future once they are auctioned for captive use presumes illegal mining will thus remain in check. But the fact is captive mines discount natural resource, allow transfer pricing and promote poor mining practices, as is evident from cases across the country. Worse, it will distort the market by creating certain companies who will have access to cheap iron ore through captive mines, while others will have to buy ore from the market at higher costs. It is also clear that companies with cheap raw material are not driven to innovate or to be frugal and efficient in their use.
For instance, the recent rating of Indian steel companies done by Delhi non-profit Centre for Science and Environment found that the three top-rated companies did not have captive mines for iron ore their cost of raw material was high and they invested in efficiency, which in turn brought down emissions. Companies with captive mines - Tata Steel, Jamshedpur; Jindal Steel and Power Limited, Raigarh; and SAIL, Rourkela - were rated low in environmental performance.