by Ashish Khetan ([email protected]) – on 26/01/2014

The MB Shah Commission report on illegal mining in Odisha, exposes how private mining companies earned thousands of crores of rupees by illegally extracting precious iron ore and manganese ore from the mines in Odisha. This is money that should have been used to eradicate poverty in this seriously backward state and improve the quality of life of the tribals and indigent villagers. But instead the money went into the pockets of mining companies.

Orissa coal miningMechanised Coal loading in Talcher in Angul district, OdishaPhoto Credit: Indian Photo Agency (InPA)

What’s even worse is that the union government has not acted on the report till date and has kept it secret.

Gulail has accessed the first two volumes (click here to read the report) of the five volume report on illegal mining in Odisha submitted by the Commission on 1.7.2013. On 14.10.2013 the Commission submitted its second report running into two volumes on Odisha. Though the Commission has not quantified the scam in monetary terms, the recovery notices issued by the Patnaik regime against mining companies indicate that the scam would run in excess of at least Rs 60,000 crores. Big corporate groups like Tata and Rungta figure among the companies involved in illegal mining listed in the report.

The report exposes that for the past ten years the Naveen Patnaik government in Odisha and the UPA at the Centre turned a blind eye even as the bureaucrat-politician-mining mafia nexus plundered the people of its valuable and irreplaceable natural resource. “Not only officers, a number of politicians are involved in such illegal mining activities,” says the Commission in its report. But instead of initiating a fair and independent probe and putting a freeze on the naked plunder of public resources, the Centre has been hiding the report away in its vaults.

The rampant illegal mining has led to irreversible damage to the environment causing large-scale destruction of forest, polluting of rivers and water streams and poisoning of cultivable soil.

In its affidavit before the Supreme Court this past week the Union Government has refused to share a copy of these reports with the court at this stage. It said that the reports were being considered by a committee of secretaries after which it will be tabled in parliament. “Thereafter permit the applicant only before this Hon’ble court in a sealed cover for appropriate consideration and directions of this Hon’ble Court.”

The Shah Commission report lays bare the complete collapse of the regulatory regime pertaining to mining in the state of Odisha and criminal neglect by Central Government Departments like Ministry of Environment and Forests and Ministry of Mines. “There was a large-scale illegal mining during 2008, 2009, 2010 and a part of 2011 in the state. During this period, there was a collapse of government machinery and looked to be ineffective and helpless in front of mining mafia, persons in political life, mighty lessees and some corrupt officials,” says the report.

Of late, as reports on illegal mining started trickling out into the media the BJD Government registered a few cases to cover up its inaction for the past decade. For instance in late 2010 Inspector of Mines of Joda District registered a case stating that a quantity of about 40,24,400 MT of iron ore and 610 MT of manganese ore had been removed by a few miners from outside the lease area. The illegal extraction and transportation had been going on since 2004. In the complaint the value of iron ore thus illegally extracted is estimated at seventeen hundred and seventy six crores. The case was filed just before the visit of the MB Shah Commission to Odisha raising a serious question about the bona fides of the action. What was the state government doing for the past six years when truckloads of iron ore were being illegally extracted and transported? The suspicious timing of the complaint was not lost on the Commission. “The cases are mainly to cover up such a big scandal and for finding a way out to escape. Such a large magnitude of illegal mining cannot take place without a conspiracy,” says the report (page 22, Volume 1).

Besides the Joda case mentioned above, the state has registered a few more criminal cases. But the Commission has expressed its dissatisfaction with the progress and the effectiveness of such probes. “As seen from the present progress in the investigation and further exploration in tracing illegalities, there is hardly any substantial progress. Since there is involvement of mighty lessees, big traders of state and outside the state, political entities, officers at higher ranks, it will not be possible by state police to find the facts and realities and there would be no justice done for the quantum of illegalities took place,” the Commission has observed in its report. It has further recommended a CBI investigation in all the cases registered by state police and state government departments like forest and revenue departments.

In the State of Odisha, a total of 192 leases of iron ore and manganese ore are in operation. After the Shah Commission submitted its report on illegal mining in the State of Goa, the Naveen Patnaik government started issuing show cause notices to mining companies for recovery of the value of excess extraction of iron ore and manganese ore. So far a total of 146 notices raising demands of recovery to the tune of Rs 59,203 crores have been issued. The Commission has pressed the need for an expeditious recovery of these dues and recommended that it should be used for the development of Keonjhar and Sundargarh districts, the two most badly affected districts from illegal mining in the state.

Major Findings of the Shah Commission on Illegal Mining in Odisha

Mines running in flagrant violation of laws and regulations

All possible modes of illegal mining in blatant violation of the statutory regime pertaining to mining were found rampant in the state.

The facts gathered by the Commission “highlight a complete disregard and contempt for law and lawful authorities on the part of many among the emerging breed of entrepreneurs taking undue advantage of country’s non-renewable assets/resources for export earnings. Pursuit of super profit has absolutely drained them of any feeling for fellow human beings, for the nation and the moral values.”

Law has been rendered helpless when it comes to illegal mining in Odisha. “Instances of non-implementation of law have led many people in this country to believe that disregard of law pays and that the consequence of such disregard will never be visited upon them-particularly, if they are men with means and deceitful skill to pollute and spoil the administration.”

Continual extraction of excess minerals for the past 20 years

Mechanised Coal loading in Angul district, Odisha Photo Credit: Indian Photo Agency (InPA)Mechanised Coal loading in Angul district, OdishaPhoto Credit: Indian Photo Agency (InPA)

In as many as 130 mines operating in the state, iron ore and manganese ore worth thousands of crores of rupees has been extracted in excess, that is beyond permissible limits. The illegal extraction had been going on since 1994.

Abuse of deemed extension rule

Commission found flagrant misuse of the rule pertaining to deemed extension of mining lease. “There is gross misuse of deemed refusal and deemed extension of both provisions of renewal of leases under Rule 24A of MCR, 1960. This casual and negative approach has caused dearly to State exchequer in the form of hundreds (of) crores of stamp duty.”

For years, sometimes decades, together renewal applications of mining leases were kept pending even as private companies kept extracting lakhs and lakhs of metric tonnes of minerals from these mines.

Following is the break-up of the time period for which renewal applications were kept pending:

  1. 15 to 20 years in 08 leases;
  2. 10 to 15 years in 35 leases;
  3. 05 to 10 years in 43 leases;
  4. less than 05 years in 14 leases; and
  5. deemed rejection in 47 leases.

In nutshell as many as 147 cases of renewal applications were not decided. “The sufferer is the Government and such long delay breeds corruption at all level. Al the aforesaid 147 lessees continued in possession of the lease hold property without execution of the lease deeds.” The Commission further says that because of the non-implementation of the statutory provisions, the eco system, forest, environment, roads, natural streams, the wilds and human beings have been affected to an extent of irreparability.”

Mines operating without forest clearance

The Commission found that out of 192 mines, 176 mines were located within dense forest area. As many as 47 mines were found to be operating without mandatory forest clearance from the Ministry of Environment and Forests.

The Commission has observed that “55 mines are located in such a manner that either river or tributaries or rivulets are flowing close to the boundary of leases or passing through that. No proper protection as required under the law is taken to prevent pollution of water which is used by the villagers, tribals and wilds.”

Ten leases in Mayurbhanj district are located within 10 kms from the outer boundary of Simplipal National Park. 31 mines are adjacent to projected elephant corridor in Sundargarh and Keonjhar districts. “The result thereof is vast destruction of standing crops, huts and human habitats by the elephants, as observed.”

Violation of Environment Protection Act

Large-scale mining operations have completely polluted the air and ground water in the neighbourhood.

Out of the 192 mining leases, 94 mining leases are without environment clearances. 53 of these are iron ore mines while from 25 mines manganese ore is extracted.

“In 130 mining leases there is excess production in violation of environmental clearances. Out of these 130 mining leases, 75 leases are having EC but production is beyond the EC limit or production extracted before grant of EC for some period. Further out of these 130 mining leases, in 55 mining leases, lesses have not bothered to obtain EC permission. Therefore in such cases action is required to be taken against the lessees under Section 21(5) of MMDR Act, 1957.


On the basis of Google image it was found that in 82 mining leases there was encroachment.

Click here to read the first two volumes of the report.

Volume 1
Volume 2

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