Minesgate digs Odisha’s grave

The Pioneer, March 28, 2010
Precious minerals have been siphoned off with the tacit patronage of those in the corridors of power, giving birth to the biggest scam of independent India, reports Saswat Panigrahi


It is a scam of such magnitude that it will put the likes of Union Minister D Raja and former Jharkhand Chief Minister Madhu Koda to shame. While experts are still working out the final figure, a conservative estimate puts Odisha’s mining scam at Rs 3,00,000 crore. This basically involves millions of tonnes of minerals that have been smuggled out of the mineral-rich Keonjhar-Sundargarh-Mayurbhanj stretch and Jajpur district over the years. Among the State’s rich mineral resources — iron ore, bauxite, chromite, manganese and limestone — iron ore has been clearly the biggest target. Informed sources say the State has produced nearly 420 million tonnes of iron ore worth Rs 84,000 crore but has only earned a paltry sum of Rs 743 crore. The rest is quite obviously unaccounted for. However, the State anti-corruption wing puts that figure at only Rs 409 crore.

The scam first came to light when the ruling BJD MLA Samir Ranjan Das put up a question on the floor of the Assembly about the illegal mining activities of Ram Bahadur Thakur (RBT) Limited. That opened a Pandora's box. Subsequently it came to light that the Odisha Government was in the process of settling a lease in favour of the company last year which no longer exists and was liquidated way back in 1999. In order to obtain a mining lease, the defunct company executed a Power of Attorney (PoA) in favour of Shakti Ranjan Dash who happens to be a close aide of BJD’s Pyarimohan Mohapatra and which probably explains why the State Government had considered the lease application. It has come to light that RBT was mining manganese at Rudukela and Katasahi in Keonjhar district without obtaining a legitimate lease; the manganese mine area was being guarded by none other than the Directorate of Mines.

According to the prescribed rules, a mining company must initially apply for a Prospecting Licence (PL) or a Mining Lease (ML). The applicant has to first clear the mining plan from the Indian Bureau of Mines, submit the forest diversion proposal for the land to be used for mining and provide the compensatory afforestation programme with a deposit of a non-payable amount and a wildlife management plan. Only then does an application get the Union Forests and Environment Ministry’s nod. Once the environmental clearance is granted, the State Pollution Control Board gives the Consent to Operate (CTO) certificate and stipulates the amount of ore that can be extracted in a year. The quantity of ore to be extracted annually is specified in the mining plan which is approved by the Indian Bureau of Mines. The limit is specified with an eye on collateral environmental damage. After an application obtains the statutory clearance of the Union Forests and Environment Ministry and the State Pollution Control Board, the State Mines Department issues a mining lease. The lease deed is then agreed upon by both the lessee and the State Government.

The State Revenue Department demarcates and stipulates the mining area or lease area according to the mining map. The mining area is specified with a central point which is known as the grid point. As per provisions, an allottee can only raise minerals within the allotted area.

However, throwing these existing laws out of the window has now become routine in the State with illegal mining going on rampantly. For the past decade, a well-organised illegal mining mafia has been involved in large-scale smuggling of precious mineral resources from Odisha’s mineral rich districts, bleeding an already impoverished State. A standard operation syndicate usually comprises mine-owners, traders, contractors and criminal gangs who work alongside bureaucrats and unscrupulous officials of the Mining, Forest, Environment, Pollution Control Board, Revenue, Transport and Police departments. This nexus has even reached the corridors of power.

Both genuine lease holders and the mafia are involved. Scores of mine owners have been excavating iron ore, chromite, manganese and other minerals much beyond the stipulated limit. With sophisticated machinery at their disposal, they are able to extract enormous amounts in the least time. In some cases, 800-1000 per cent beyond the permitted limit is mined and the activity even crosses the boundary of the stipulated lease area. Several mine owners even continue mining without renewing their lease. Then there are lease holders who have obtained permits for non-forest land but have brazenly encroached into forest land, including reserve forest areas. There are countless mining plants running without the due environmental clearance. According to an estimate, as much as 80 per cent of the State’s mineral rich forest land is being exploited. The mining mafia, too, operates in a well-organised manner. They largely mine in the forest areas, reserve forest areas, Government mines and unallotted mineral areas. In fact, on many occasions, illegal mining can even be traced to officials of the Mines, Forest, Environment, and Police departments.

Smugglers involved in illegal mining employ both the road and the rail route. The road essentially involves the Kolkata-Mumbai National Highway 6 which goes via Keonjhar and National Highway 215 that connects Panikoili and Rajamunda. Thousands of trucks are engaged in these activities and local criminal networks are actively involved. The weigh bridges and check gates meant for giving clearance to mineral-laden vehicles are inadequately manned. The smuggling is so organised that fake Transit Permits (TP) are regularly printed and used to take away mineral-laden lorries to different destinations. While some are transported within the country, others go to the ports at Paradip, Visakhapatnam and Haldia for export. The rail route is usually used to smuggle minerals to the neighbouring States of Jharkhand, Bihar and West Bengal.

Illegally extracted minerals are usually exported to India’s immediate neighbours. From the transit point at Champua in Keonjhar district the route travels across Bihar’s porous border with Nepal, and from there consignments are sent to China and Bangladesh. The Paradip, Haldia and Visakhapatnam ports are used for smuggling on sea routes. Courtesy the boom in the steel sector in the past decade, there is a huge demand in China. Reports suggest that in 2006-07, 12 million tonnes of iron ore fines was exported to China, Hong Kong and Singapore from Paradip port alone. In 2007-08 the export amount went up to 13 million tonnes and in 2008-09 it crossed 20 million. Similarly, 3.8 million tonnes of iron ore fines from Odisha was exported from Visakhapatnam port in 2007-08, an amount that rose to five million tonnes in 2008-09. The State Government is completely apathetic. A recent “confidential” official communication indicated that 4.5 lakh metric tonnes of iron ore worth Rs 150 crore was smuggled out of Joda in Keonjhar district in January alone. There are big names involved in all this. Among those accused of mining in excess of the permitted limit are the Aditya Birla Group owned Essel Mining and Industries Limited, SR Rungta Group, SL Sarda and ML Sarda with a controlling interest by Jindal Steel and Power Limited, Tata Steel, Sirajuddin and Company, Indrani Patnaik company, IMFA group, apart form Government companies like the Odisha Mining Corporation.

Of all these, RTI documents obtained by Biswajit Mohanty of Transparency International show that the biggest beneficiary is Essel Mining and Industries Limited. Between 2000 and 2006 the company extracted 138,01, 391 mega tones worth Rs 2,555 crore in excess of its stipulated limit from Jiling Langlota Iron and Manganese mines of Keonjhar district. Again, between 2003 and 2006, the company extracted 68,58,460 mega tones valued at Rs 1,714 crore in excess of its stipulated limit from Kasia Iron and Dolomite mines in Keonjhar. The total excess production adds up to almost Rs.4,269 crore.

The SR Rungta group, another baron, exceeded its stipulated limit in a similar fashion. The RTI document, quoting the Ministry of Environment and Forests report dated December 18, 2006, shows that the company mined 92,39,805 mega tonnes worth Rs 1,910 crore in excess of the permitted quantity from six of its mines between 2003 and 2007. It is learnt that the SL Sarda and ML Sarda owned Thakurani B mines in Keonjhar, in which Jindal Steel and Power Limited has a controlling interest, mined iron ore worth Rs 1,850 crore in excess of the stipulated limit. Reports suggest that Tata Steel, which has chromite mines at Sukinda in Jajpur district and iron ore mines at Joda in Keonjhar district, mined ore worth at least Rs 1,700 crore in excess of the permitted limit between 2004 and 2008. Sirajuddin and Company mined iron ore worth Rs 750 crore in excess of its limit from the Belda mines in Keonjhar district between 2000 and 2006. Indrani Patnaik company owned by a member of former Congress Minister Niranjan Patnaik’s family, extracted iron ore and manganese worth at least Rs 132 crore in excess of the permitted quantity in the past decade. The Government-owned Odisha Mining Corporation itself extracted chromite worth at least Rs 100 crore in excess of the permitted limit from its South Kaliapani mines in Jajpur district between 2004 and 2008.

That the Navin Patnaik Government has been aware of this scam has been revealed in documents submitted in the Orissa High Court in connection with the mining scam. A letter written in 2006 by the then transport Commissioner, SB Agnihotri, to about 45 central organisations involved in handling of mineral resources highlights how minerals were being illegally mined and transported. But the BJD Government did nothing to stem the rot. It is now being said that the ruling BJD’s 2009 poll campaign was largely funded by the illegal mining lobby. “A sizeable chunk of black money made from mineral smuggling was gifted to the BJD in the form of a political donation ahead of 2009 polls. To receive those undue benefits, a review meeting was held in Joda of Keonjhar district on January 24, 2009. BJD poll manager Pyarimohan Mohapatra chaired the review meeting of the mine owners and mineral traders. A Deputy Director of Mines also attended the meeting. The Rajya Sabha member’s visit was issued as an official programme by the District Magistrate,” senior Odisha BJP leader Bijoy Mohapatra told The Pioneer.

The mining scam was brought to the Supreme Court’s notice in a 150-page petition filed by Rabi Das, senior journalist and president of Odisha Jana Sammilani. “The organised illegal design injurious to national interests implemented in a systematic way with the active connivance of the State Government has resulted in breakdown of the constitutional machinery. Rule of law has been deliberately subverted by the State Government for unjustly enriching the individual functionaries,” the petition said citing a host of official communication to prove its point.

In response to the petition, the apex court has entrusted the Central Empowered Committee (CEC) to investigate the mining scam. Rattled by the Supreme Court directive, the State Government has ordered suspension of work in at least 200 mines and scrapped 450-odd trading licences. The State Government has set up a task force headed by Chief Secretary Tarun Kanti Mishra and hurriedly engaged the State’s vigilance department for a probe. Meanwhile, sleuths have arrested eight senior Government officials over their alleged involvement in the scam. Eleven cases have been registered against some mining companies. Many heads are still to roll. The Income Tax department has launched nationwide raids on mining plants and mineral export establishments spread across the country. The Director of Mines, Rabindra Narayan Sahu, has been suspended. Steel and mines secretary Ashok Dalawai had to confess before the CEC that there have been irregularities in the mining sector in the past decade.

The BJD Government’s reaction has been knee-jerk. Underplaying the scam, it has only ordered a vigilance inquiry, while the Opposition is demanding a CBI probe. Clearly, going by the reluctance of the State Government to order an honest and transparent probe, there is a lot more to this scam than meets the eye.