Souparna Lahiri
The Indian mining sector is experiencing profound changes ever since the Government of India announced its New Mineral Policy in 1994. The new policy has opened up excavation, extraction and processing in the mining sector to not only the Indian private industries but also the global mining giants.
The new Mineral Policy brought in the following changes:
1. Thirteen minerals viz. iron ore, manganese, chrome, sulphur, gold, diamond, copper, lead, zinc, molybdenum, tungsten, nickel and platinum group of minerals have been deleted from the list exclusively reserved for the public sector. They are now open to exploitation by the private sector.
2. The ceiling on foreign equity investment in the mining industry has been raised to 50 per cent in Indian companies engaged in mining activities.
3. Mineral and metal processing units which wish to develop captive mines to secure assured supplies of raw material are now permitted to invite foreign equity participation. Equity participation over 50 per cent by foreign parties can also be considered.
4. States no longer require Central approval for grant of mining or prospecting licenses in the case of 15 minerals: apatite, phosphate ores, barites, dolomite, gypsum, kyanite, manganese, molybdenum, nickel, platinum and other precious metals, silimanite and silver, sulphur and its ores, tin, tungsten and vanadium ore.
5. The period of prospecting licenses has been raised from two to three years with a provision for renewal so that the total period does not exceed five years.
6. The period of mining lease has been increased to a minimum of 20 years and a maximum of 30 years with provision for renewal for another 20 years.
Subsequently, in December 1999, the Mines and Minerals (Regulation & Development) Act, 1957, was further amended and made investor friendly. The Foreign Direct Investment policy in mining sector was further liberalized in January 1997 which opened up an automatic approval route for investments involving foreign equity participation upto 74 per cent in services incidental to mining. Several changes were also made on 11th February 2000 including:
a. no difference in the caps on foreign equity holdings at the stages of exploration and that of mining;
b. foreign equity holding upto 100 per cent allowed on the automatic route for both exploration and mining of all minerals with which the Department of Mines is concerned other than diamonds and precious stones;
c. foreign equity upto 74 per cent allowed on automatic route for exploration and mining in diamonds and precious stones. Further increase in equity holding has to be cleared by the Foreign Investment Promotion Board (FIPB);
d. foreign equity upto 100 per cent allowed on the automatic route for processing of minerals and metallurgy; and
e. no requirement of no objection certificate from an existing joint venture partner for fresh investments.
The invasion of global giants
The liberalized mineral policy had a cascading effect on the Indian mining sector. The global mining giants appeared in droves eager to set up joint ventures with their comprador Indian private sector brothers.
Several global giants with tainted antecedents like Anglo De Beers, Alcan, Rio Tinto, BHP, Raytheon, Glencore, Norsk Hydro, ACC-CRA, Pro Am, Lafarge, Meridien Peak have already entered into joint ventures with their Indian Partners. Department of Mines data on FIPB approvals on foreign equity participation as on June 30, 2002 lists 70 such joint venture companies with an eye on exploration and exploitation in the states of Andhra Pradesh, Orissa, Jharkhand, Madhya Pradesh, Rajasthan, Tamil Nadu, Karnataka, Kerala, Uttar Pradesh, Meghalaya, Goa, Haryana, Maharashtra, Gujarat and West Bengal.
During the years 2001 and 2002, as many as 134 mineral concessions were granted by the Central Government. These include concessions for copper, lead, zinc, gold, iron ore, manganese, nickel, diamond, emerald, bauxite, cobalt, silver, tungsten, antimony, bismuth, molybdenum, gypsum, platinum and limestone. Since October 1996, the Central Government has approved 184 proposals for aerial prospecting covering a huge 245,916.272 sq. kms. of area.
Extractive mining and sustainability
Mining as an industrial activity has characteristics distinct from other industries. The most important among them is the fact that mining involves extraction of non-renewable resources. Minerals are by nature depletable and therefore, mining is an industrial activity that leads to its own nemesis. This therefore raises the dichotomy between sustainability of the extractive industries and sustainable development.
Sustainability of mining depends on continuous exploration and prospecting for locating new mineral deposits hidden under the earth’s crust. Unless and until new deposits replenish the depleted resources, the mining industry will come to a grinding halt. On the other hand, indiscriminate and unchecked exploration, from one prospect to the other, devastating and destroying the earth’s crust, natural habitat, social and economic life of a huge population can definitely not lead to sustainable development. The unsustainable and exhaustible character of extractive mining industry led to the 1992 Rio Conference to declare that mining as an extractive industry does not contribute to sustainability on this earth.
The economic reforms actively pursued in India will invariably lead to depletion of our resources and undermine our sovereign rights over the resources. The new Mineral Policy is bound to increase the rate of exploitation of our mineral resources and with its export-oriented approach has already opened up our precious earth to the global mining sharks. The policy also ignores the principles of conservation of mineral resources envisaged in the early stages of India’s industrialization.
The focus of assault
A close look at the target area for prospecting and exploration of the joint ventures in India shows that the mining corridor of India – the Jharkhand, Madhya Pradesh, Chhattisgarh, Orissa, Karnataka and Andhra Pradesh – is under assault. It is not a mere coincidence that this corridor is also home to the largest number of adivasi (tribal) population, has a huge forest cover, natural hills, protected varieties of flora and fauna and wild life. Mining sharks like Phelps Dodge, ACC-Rio Tinto, CRA, Anglo De Beers, Anglo American Exploration, BHP Minerals, Pro Am, Alcan, Norsk Hydro, Ashton Mining have already grabbed approvals to explore and mine diamond, gold, bauxite, copper, silver and associated minerals in Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh, Andhra Pradesh and Karnataka.
Large tracts lying in these states are also included under the 5th Schedule of the Indian Constitution. No tribal land could be bought by or leased out to a non-tribal and non-tribal private entrepreneur. Even the state governments cannot lease land for industrial use to the non-tribals. This restriction had actually prompted a section of the Central Government leadership in 2000 to propose amendments in the 5th Schedule to promote industries in the Scheduled areas. A nationwide resistance movement has for the time being forced them to retreat.
Response to the invasion
An unintended consequence of the State dominated policy on minerals and mining in India before the 1990s was that the civil society chose not to understand the functioning of mines and the impact that they have on people, environment and workers. Their approach to the issues of mining induced deprivation, displacement and loss of livelihood of a large number of people, mostly adivasis was with a contended disinterest. Similarly, there had not been any serious debate on destruction of forest cover, natural habitat, wild life, discharge of toxic effluents and dumping of toxic wastes. Implications of extractive industries on environment had not been a matter of great interest.
At a worldwide scale, it is only during the last ten to fifteen years that the global mining giants are facing a strong people’s resistance to indiscriminate, unplanned and devastating mining. Companies like BHP, Rio Tinto, Alcan and others having operations in Latin America, Africa and the Asia Pacific had to either bow down to the resistance of the local communities, modify their plans, provide sustainable rehabilitation or completely back off from a project incurring huge losses and a severe depletion of their equity value in the stock market. One other very important factor which also contributed to such a turn around in many cases has been the vulnerability of the global capital associated with this industry. Every year fourteen billion dollars are invested by the international financial institutions in this industry, including the World Bank group and of late some private lending agencies.
The World Bank, in particular, has been vulnerable to various political pressures in the face of stiff people’s resistance. The Rio conclave not only increased this vulnerability but also provided a fillip to such community and people’s movements, the world over. Since 1992, the World Bank withdrawal under such pressures resulted in the collapse of three massive mining projects in Madagascar (1992), Surinam (1998) and Rumania (2002).
In India, the first such blow to the privatized mining sector came through a Public Interest Litigation (PIL) in the Supreme Court by a little known Andhra based group called Samata. Vizag district in the north coastal region of Andhra Pradesh is rich in mineral resources like calcite, bauxite, limestone, mica etc. The adivasi population lives on agriculture and forest produce. These adivasi populated tracts are governed by the Fifth Schedule of the Indian Constitution where adivasis enjoy constitutional privileges for protection of their lands. The land transfer regulations prevent non-tribal occupation of adivasis lands. But, powerful private mining companies were already in occupation of tribal lands as was evident from the scenario that existed in the Anantagiri mandal. While tribals were denied title deeds to their own lands, private mining companies were given leases on tribal and forest lands. Birla Periclase, a subsidiary of Indian Rayon and Industries was given a lease of 120 acres in a small interior village of Nimmalapadu in Borra Panchayat, for exploiting calcite for their Sea Water Magnesia plant near Bhimli.
Besides building up a strong people’s resistance, Samata also took up a legal battle against the State questioning the its right to grant mining leases in the scheduled areas to private companies as the leases amounted to transfer of tribal land to non-tribals. On the basis of the Public Interest Litigation filed in 1993, the Andhra Pradesh High Court granted stay order to the operation of the mining leases. In the meantime, the activists of Samata had to face the wrath of the State and its police. Its office and activists’ houses were raided. Activists were locked up in illegal custody and were subjected to mental and physical torture. In 1995, the stay was vacated and the PIL was dismissed by the High Court. Samata went to the Supreme Court. In July 1997, the full bench of the Supreme Court gave (what is now referred to as the historic Samata judgement) declaring that the mining leases in the scheduled areas were against the land transfer regulations and, therefore, null and void. The Court pointed out that Government lands, forest lands and tribal lands in the scheduled areas cannot be leased out to non-tribals or to private industries and government cannot lease out lands in scheduled areas for mining operations to non-tribals as it is in contravention of the Fifth Schedule of the Constitution. This judgement still stands today and has caused a lot of heartburning to the private extractive industries eyeing mining operations in India.
Since 1995, the tribals of Kashipur in Rayagada district of Orissa have been able to stall the Utkal Alumina Project involving Indal, Alcan of Canada and Norsk Hydro of Norway. The local people’s movement and the adivasi community held on to their stiff opposition against all odds since the powerful mainstream political parties including the Biju Janata Dal rallied for the project and demanded action against the local adivasis for being anti-development and working against the industrial development of the State. On December 16, 2000, they had to pay a heavy price for their opposition to the project when police opened fire on the protesters killing three adivasis. On December 19, major political parties organized a joint rally at Kashipur and a bandh in Rayagada in support of the Utkal Alumina Project and demanded closure of local NGOs opposing the project and inciting the adivasis!
The Utkal Alumina project has not been able to take off even after eight years. The blame goes both to the Aditya Birla Group and its MNC partners. They have not been transparent about the project, there has not been any consultation with the local villagers on the feasibility, environmental and social impact of the project. Lands were being acquired without any clear cut rehabilitation proposal. The local people have no idea of the magnitude of displacement the proposed mining project would involve. Though Alcan is firmly entrenched in it, Norsk Hydro has withdrawn its participation. In Keonjhar also the local community and struggle groups are preparing to confront the Rio Tinto Orissa Mining Limited (RTOML) iron ore project. It is a joint venture of Rio Tinto Zinc and Orissa Mining Corporation (OMC). Though the local people know that a new iron ore mining project is on the anvil but no further information is available. According to Rio Tinto officials:
1. The joint venture exists;
2. It has FIPB approval since 1997;
3. A pre-feasibility study of the project is being done;
4. The company has been working closely with the local communities to keep them aware of the work.
5. The decision to mine will not be taken until a full feasibility has been completed including environmental report and public hearing.
6. If any displacement is needed agreement would be sought with the affected communities after a public hearing and full consultation process.
Though the RTOML has taken land from the forest department for exploration, an approach road to the drilling site exists together with a mini crushing plant and an office in Keonjhar town, the villagers and local officials have no information regarding any feasibility study being done, public hearing or consultation with the local people. No clear public document exists on the proposed displacement and rehabilitation process. This absence of information regarding the proposed iron ore project, lack of any consultation with the local population and the furtive manner in which both RTZ and OMC are going around with their activities have infuriated the local adivasis.
Opposition to such mining and mining related projects are continuing in Jharkhand, Gujarat, Karnataka, Tamil Nadu, Chattisgarh, Madhya Pradesh, Uttar Pradesh, Maharashtra and even in Uttaranchal. In all these states, small social action groups, communities and people’s movements were struggling in isolation, at a local scale and with local support. There was a general feeling among all these groups that to confront global mining giants more support in terms of national and international solidarity and flow of information are needed. To fight locally a global phenomenon they need to develop linkages at various levels. There was a complete lack of response to these struggles from the mainstream political parties and mass organizations. Even the organized trade unions in the mining sector have no linkages with these community and social action groups.
Such a need to strengthen the mining struggles in India brought together these groups to form a national alliance in a historic national convention in Hyderabad during April 2000. The convention led to the formation of Mines, Minerals & People (MM&P), a national alliance of about 150 groups. The national secretariat of MM&P co-ordinates with these groups across several states, link their struggles with various national and international solidarity groups. It also acts as a clearing house of information, gathers information on mining projects and mining giants, their activities, international struggles and disseminate to these groups down to the grassroot level. MM&P also helps in capacity building of these smaller groups in terms of understanding the global mining business and trade, the role of the international financial institutions like the World Bank and to equip them to dialogue with the mining companies regarding environmental impact and displacement.
Road after Rio: the changing face of global mining
The ability of the Rio Conference to place the issues of biodiversity conservation, sustainable development and environmental protection on the world agenda paved the way to strengthen the concept of corporate social responsibility. Clean environment, sustainable development and livelihood came within the gamut of human rights. Globally, the extractive industries with a history of depletion, destruction and devastation faced a possible backlash from various movements in the South.
Mining corporates, with a maze of complicated linkages between the international financial agencies, multilateral agencies, government agencies and various think tanks and institutes, struck back with major initiatives aiming at ‘reforming the mining/natural resource industries’ or ‘building up social partnerships to manage social issues in the extractive industries’. Some of these initiatives are Global Compact, Mines, Minerals and Sustainable Development Project (MMSD), Control Risks Group (CRG), International Council on Metals and the Environment (ICME), The Global Mining Initiative (GMI), World Business Council for Sustainable Development and Business Partners for Development (BPD). With a host of corporate CEOs from both mining and non-mining industries, representatives of multilateral agencies including World Bank and the UN and EU and US officials, these initiatives talk of ‘forging greater relationship and partnerships between business and its critics’ and ‘transparent and open engagement with environment groups, human rights groups and government’, mainly to foster their global business interests, especially in the poor countries of the South. They are being helped in this notorious venture by some international NGOs like Care International and Community Aid Abroad, flushed with contributions from the mining giants, in promoting the human face of global mining.
In India, for the first time, such initiatives have moved in, in the form of BPD. BPD which promotes tri-sector partnerships as a new way to manage social issues in the extractive industries, is a unique collaboration between Anglo American Corporation, BP plc, Department for International Development (DFID), UK, Integrated Coal Mining Limited, ICME, Norsk Hydro, Placer Dome, Rio Tinto, Royal Dutch/Shell, World Bank Group and WMC Resources. According to BPD, the concept of tri-sector partnerships is a voluntary collaboration to promote sustainable development based on an efficient allocation of complementary resources across business, civil society and government. The briefing note of BPD blatantly says:
Corporate operations face a new reality throughout the world. Social issues are increasingly affecting the future of their core business. Issues include how to:
Evidence is growing that these issues might be resolved through a collaborative effort between business and wider society.
BPD needs civil society organizations for their local knowledge, capacity to mobilize community participation, tools and methods to ensure relevance to local need and independent monitoring. The potential for tri-sector partnerships is considered to:
1. Achieve direct cost savings during periods of investment uncertainty, e.g. exploration, financing delays, downsizing;
2. Reduce the dependency liabilities that can result from company-dominated social investment programmes;
3. Ensure that local government assumes its responsibilities for public services;
4. Strengthen the company’s negotiating position in bidding for concessions;
5. Utilise Environment Impact Assessment studies to secure the social license to operate;
6. Protect local supply chains and contribution to the local economy;
7. Reduce community dependency at time of closure and decommissioning; and
8. Achieve more equitable spread of wealth across the region of operation.
The same briefing note on BPD further says that:
The BPD Natural Resource Cluster Project which sought to enhance the role of oil, gas and mining corporations in development had listed two mining projects in India – the Kashipur Utkal Alumina project in Orissa and Sarshatali ICMPL/CESC project in West Bengal. The project, which started in 1999, could not find any civil society partner (read NGO) to bail them out in Kashipur in the face of a strong people’s resistance. BPD, therefore, silently withdrew itself from the project. In Sarshatali (near Asansol in Bardhaman district), the CARE international found out its partners in the form of Calcutta based Asha and Suchetana, a local NGO.
The Sarshatali coal mining project is an initiative of Calcutta Electricity Supply Corporation (CESC) aimed at securing a reliable supply of coal to fuel its power stations. The Integrated Coal Mining Private Limited (ICMPL) has been granted a mine concession of 6 sq. km, located near the village of Sarshatali and spread across Bardhaman and Birbhum districts. The project investment is $850 million and is being financed by DFID, UK and International Finance Corporation (IFC) of World Bank group. Excavation was anticipated to begin in 2001 and the BPD project was supposed to end in December 2002.
The BPD documents indicate that the presence of NGO partners to take care of the social ramifications and implications of mining helped to raise the confidence of the company to press ahead with the design and early construction work for the project in the knowledge that its ‘social licence to operate’ is, for the time being at least, secure, provide a means for the company to reduce the risk that social tensions might affect the reliability of securing coal in the future and contribute to the company meeting its investor’s compliance requirements over a 9 month period at a cost saving of 25 per cent. The document also notes that during a period of prolonged investment uncertainty for the company, the costs of community development in the mine impact area were shared with government departments and ICMPL actually spent 89 per cent less on community development!
There is no outside information regarding this mining project as a whole except through the BPD project documents. The share holding pattern of ICMPL is not known. Local groups are not even aware of this project. Information is not available on the Environment Impact Assessment (EIA) of the project, forest clearance, the details of land acquisition and rehabilitation measures. However, it has been reliably learnt that the IFC has withdrawn itself from the project citing prolonged delay in excavation.
Challenges ahead
The mining corridors of India have become the focus of the global mining sharks. With the Government going ahead with second generation economic reforms and FDI norms being further liberalized, more and more foreign mining companies will land up on our shore. The most affected are the adivasis, their forests, their livelihood, the wild life and the flora and fauna. In the name of development there will be mayhem, devastation and destruction. The mining groups and movements have to be vigilant and with the emergence of new and complex international mining initiatives to ‘manage social risks and local disputes’ the tasks have become much more difficult. The local groups and movements need information, the communities have to be made aware of the developments and linkages need to be developed between national social movements and international solidarity groups and mining related groups. Experiences need to be shared with the international groups who have already faced the onslaught of these mining sharks.
If the national alliance of mining related groups is to be sustained, the MM&P needs to bring the current mining scenario into the national political focus. The mainstream political parties should be forced to take a clear and unambiguous stand. Bridges need to be built with the organized trade unions linking them with the mining affected communities. The mirage of a fast pace development and jobs in the mining sector should not create a divide between the trade unions and the movement against the global mining giants. Let not the rhetoric of anti-development and anti-mining ruin an emerging national movement.
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