Push comes to shovel

In an environment of slowing economy with threats of a double-dip looming larger than ever, the industry has been hoping for some time for some good news from the government. That wait for mining companies just got longer. With the new Mining Bill, which the Cabinet approved without any changes from the draft, 26 per cent of a coal mining company's profits will be shared with displaced local populations, while100 per cent levy will be imposed on royalty in case of non-coal mining. In addition, a new cess (10 per cent state and 2.5 per cent central) will be applicable. These new impositions, while for a noble social cause, are likely to result in a temporary dip in investments and interest in the mining sector. More importantly, it will fuel illegal mining, at least in the short term, unless the regulator starts with a bang and takes control of monitoring systems quickly.

The industrial boom in China is a major reason for illegal mining. Recent reports also say Chinese companies have even colluded with Indian mining companies. The implementation of the mining policy hitherto has shown up so many loopholes that it is not surprising they were rampantly taken advantage of. Ore prices need regulation. The lack of proper monitoring of transportation between the mine gate and the destination (port or plant) has meant that volumes and weights can vary freely. Inordinate and mostly inexplicable delays by state governments in granting or even renewing mining licences makes legitimate mining companies bleed in the interim, and they surreptitiously resort to illegal mining. Mining while a licence renewal is pending is considered illegal (as opposed to, say, irregular).

The new Act and government measures cannot kill illegal mining; indeed, the government acknowledges that illegal mining cannot be completely stopped under the existing boundaries of satellite technology and monitoring systems. The Indian Bureau of Mines will naturally seek to inspect and evaluate existing mines, resolving some forms of illegality-overstepping geographic or permitted limits of extraction, non-compensation to affected people, etc. The most consequential of illegalities in India happen this way. But this is not enough.

As our Cover Story section mentions, technology is available to curb illegal mining: Satellite maps can easily show illegalities in mining (recently, Google Earth revealed illegal mines in Goa; CBI used satellite images as evidence in the Bellary mining scam). The government has already evolved an interface whereby these images and local mining data will be matched. This is a badly needed mandatory provision in an industry where it is far easier than in others to falsify data, and one would expect mining states to eagerly adopt this technology. The fact that only two states have adopted it so far is concerning. The Centre does tell us, however, that four or five other states are “examining” or customising the technology. The confusion in land ownership can also be exploited, as reported in Meghalaya, where mining is carried out at domestic levels on pretext of land ownership and the state has not bothered to amend the law.

The politics at the Centre and some high-pitched (often literally) anti-government stance by the right-wing opposition seems to have stymied decision making. Bringing in new stringency in execution of monitoring in the mining industry will be both relieving to above-board mining companies and can be politically expedient for the government.