It’s business as usual for miners accused of extracting iron ore in a massive `1 lakh crore scam, thanks to new legislation

dna Investigation Team

Odisha/Jharkhand/New Delhi: Mining giants who were accused of illegally siphoning off iron ore worth thousands of crores are back in business. And they are not flouting the law, but are actually being aided by it.

Accused of massive violations in a scam worth Rs.1.5 lakh crore, the miners have been aided by the Mines and Minerals (Development and Regulation) Act, 2015, enacted on March 27, 2015, and touted as a masterpiece of Prime Minister Narendra Modi’s reform agenda.

Section 8A (clause 5) of the bill, originally pushed as an ordinance, allows the red-flagged miners to continue mining till 2030. The bill calls this ‘deemed extension’. Those without captive mines have been allowed to mine till 2020.

According to government sources, miners have been allowed to mine till 2030 because they have made “heavy investments” in the sector. Most of the severely indicted miners including the big names like Rungta Mines Pvt Ltd, Tata Steel Ltd, Kalinga Mining Corporation, Aryan Mining and Trading Corporation, Bonai Industrial Company stand to gain from the government’s new law.

While the ban on mining continues in 11 of 17 mines in Jharkhand, it has resumed in Goa, Odisha and Karnataka. In a few days, Karnataka and Odisha will be auctioning 15 and six iron ore blocks respectively. However, the mines of the companies that allegedly extracted ore illegally for decades will continue to remain in the same hands.

Of the 792 iron ore mines in the country, according to the Indian Bureau of Mines, 197 are working. Most of these are run by big miners accused of indiscriminate plunder, an official said.

Illegal iron ore mining, as pointed out by the central government appointed MB Shah Commission, is a scam of scary proportions suffixed with enough zeroes to eclipse all scams in India’s history.

It’s business as usual for the companies accused by the Shah Commission of rampant illegal mining without requisite clearances in India’s iron ore rich belts. There are also other indicted companies, including Sarda Mines, Sirrajuddin & Company and KJS Ahluwalia, in the queue seeking permission to mine again after getting necessary environmental clearances.

“While amending the law, the government didn’t take the past track record of these companies into the account. They robbed the state exchequer and now instead of punishing them, they have been rewarded,” says Duskar Barik of the Keonjhar Integrated Rural Development & Training Institute (KIRDTI).

The Shah Commission and the Supreme Court appointed Centrally-Empowered Committee (CEC) have accused these companies of serious violations including corruption, under-invoicing, evasion of taxes, export duties and illegal transfer of mining leases.

“Punishing is a function of the government and it may come from either state or central government. But if you allow or permit illegality to go further forever then it would be tough to have democratic rule in government,” Justice Shah told dna.

The Shah Commission had estimated that unlawful extraction of iron ore and manganese totals a staggering Rs.59,203 crore in Odisha alone. Add the amount of iron ore plundered from states like Goa, Karnataka and Jharkhand and the scam tops Rs.1 lakh crore. According to Defence Minister Manohar Parrikar’s conservative estimate, illegal mining in Goa cost the state over Rs 4,000 crore.

The CEC had estimated that Karnataka had lost close to Rs.7,000 crore every year for a decade as miners continued to under-report iron ore extraction, paid pittance as royalties and brazenly avoided paying taxes to the government.

In Goa, where mining was resumed earlier this year, companies like Vedanta-owned Sesa Goa and VS Dempo are back to mining. Others like Salgaocar, Chowgule, Timblo have also been allowed to mine till 2020 without any restriction or penalties imposed on them. The Shah Commission had detailed how all these miners enriched themselves by exporting more iron ore, primarily to China, than they were showing as actual production.

The report pegged the loss from the illegal exports between 2000 to 2010 at Rs.2,747 crore and suggested recovering this amount from the miners with an interest rate of 24 percent. The report also noted that none of the miners had paid royalty to the state government for the iron ore that they were exporting. This cost the state exchequer Rs.2,756 crore.

The money is yet to be recovered from any of the companies and many have resorted to legal suits to avoid paying the amount. The Commission had also pointed out that these miners were producing far more than the limits imposed on them by their respective environmental clearances.

The scale of the ‘big Indian loot’ in Odisha, which accounts for over a half of India’s iron ore production, is even bigger. Miners like Sarda, Tata, SAIL, NMDC, Rungta, KJS Ahluwalia and Usha Martin – have been accused of causing huge losses to the state through illegal mining. Many of these companies have taken the legal route against the decision to penalise them.

Rattled by the Shah Commission report, Jharkhand shut down 12 of its 17 iron ore mines in 2014. One of them, Tata Steel, managed to get a reprieve from the Jharkhand High Court for its mine at Noamundi and resumed production earlier this year. It has been estimated that the scale of illegal mining in Jharkhand exceeds Rs.20,000 crore. Other companies like Rungta MIning Co and public sector behemoth Steel Authority of India (SAIL) still continue to mine in the Sarandha forests of Jharkhand.

Rungta was allowed to quadruple its production under the previous UPA government despite the fact that it did not have necessary environment and forest clearances for its Ghatkuri mines in the pristine Sarandha forests of Jharkhand. The Shah Commission recommended recovering Rs.14,403 crore for illegal iron ore mining in addition to Rs.138 crore for illegal manganese mining in Jharkhand from a handful of companies in the state.

In addition to Rungta, the Commission has also questioned the environment clearance given to brothers Naveen and Sajjan Jindal’s companies Jindal Steel and Power Ltd (JSPL) and JSW by former minister Jayanthi Natrajan in 2013. The CBI, which is probing the managements of both companies as well as officials of the environment ministry, is yet to to file a preliminary enquiry report or register FIRs. The CBI, it is learnt, suspects that the process of granting Stage 1 approvals to both Rungta Mining Ltd and JSPL in addition to Usha Martin Ltd were fraught with corruption.

“It is disappointing that one goes scot-free despite being indicted by several inquires. The errant companies have been allowed to mine again without paying any penalties or fines imposed on them,” said Rabi Das, a petitioner in the SC who is credited with exposing the scam in Odisha.

Emails to most of the companies mentioned in this article went unanswered.

Law helps tainted firms continue mining