STRANGE BONDS

Print edition : July 16, 2010

Workers in the illegal mines at Hospet in Karnataka's Bellary district do not even have basic amenities while the mine owners make their billions.-K. MURALI KUMAR

POLITICS makes strange bedfellows, all the more so if business interests are involved. Gali Janardhana Reddy, mining baron, BJP benefactor and now Karnataka's Tourism Minister, enjoyed a special relationship with die-hard Congressman and former Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy.

The bonding was widely believed to be underpinned by mining and business interests. Why else would a Chief Minister go out of his way to defend an iron-ore-mining entrepreneur facing serious charges of encroaching not merely upon areas held by other lessees and upon reserved forest areas but into neighbouring Karnataka, disturbing inter-State border posts and blasting the historically significant British-era Great Trigonometrical Survey station and an ancient temple.

The relationship raised questions about mining policy and the state's role in a situation where mines are milked dry by individuals without contributing any substantial revenue to the treasury. Is it not time to revise antiquated royalty laws that fetch all but a pittance? In the name of attracting investments, should the state forget its role of regulator who has to rein in rogue elements in the mining industry who violate every law using political influence?

Several well-meaning committees have brought out the irregularities committed by the iron-ore-mining industry in general, and OMC owned by Janardhana Reddy and his brother, G. Karunakara Reddy, in particular. The report of the CEC, appointed by the Supreme Court on a petition against illegal iron-ore-mining and encroachment upon forest areas by OMC in Obulapuram and H. Siddapuram villages of Anantapur district, is an eye-opener. In Anantapur, a drought-prone and impoverished district that has rich reserves of high-grade hematite, OMC holds three mining leases. The first, for a site measuring 25.96 hectares, was transferred from G. Ramamohan Reddy in February 2002 and renewed in 2005 until 2017. The other two leases, for areas measuring 39.50 hectares and 68.52 hectares, were granted in October 2006 and June 2007, respectively, by the Rajasekhara Reddy government for a 20-year period.

The CEC did not agree with the Andhra Pradesh government's stand that OMC was not involved in illegal mining in forest areas outside its mining lease. It said the claim suffers from serious defects and inconsistencies and is not at all in conformity with the approved mining leases. The boundaries of these leases should have been demarcated and laid on the ground as per the length and bearings of the boundaries of each of the mining leases, it felt. Instead, the boundaries of these leases had been determined on the basis of the interpretation of the inter-village boundary between H. Siddapuram and Obulapuram villages falling in the reserve forest.

Citing substantial differences and serious discrepancies in mining lease boundaries, the CEC pointed to the difference of about three hectares between the mining lease as it stood at the time of approval and later, after the determination of boundaries, in the case of a mine adjoining that of OMC. The Andhra Pradesh government had concluded that OMC's mining activity did not transgress into un-allotted forest area as the six leases in question, including three belonging to Bellary Iron Ore Private limited, Y.M. and Sons and Anantapur Mining Corporation, were in a compact continuous block. The CEC said this was totally erroneous.

The objectivity, fairness and impartiality which is expected from a State government is shockingly lacking here and does not inspire confidence, the CEC report concluded. It called for the suspension of all mining operations until an independent agency determined their lease boundaries.

The granting of the leases itself had triggered a row as OMC was preferred over other competitors, even as the public sector Visakhapatnam Steel Plant was scouting for a captive mine. The government ruled out foul play and stoutly defended its decision, saying mines leased to OMC would serve as captive mines for Janardhana Reddy's ambitious Bramhani Steel project planned in Kadapa, Rajasekhara Reddy's home district. The project is proposed to be set up at a cost of Rs.4,500 crore (first phase) and spread over 10,675 acres (one acre is 0.4 hectare), land that was allotted by the government for a pittance.

OMC, however, has already started extracting ore from these mines and exporting it, though the commissioning of the steel plant still looks remote. The government's defence was that OMC was raising resources to fund the steel project.

The government's flip-flops gave a handle to the main opposition, the Telugu Desam Party (TDP), which continues to run a concerted campaign against OMC and its links with Rajasekhara Reddy's family, often stalling the Assembly proceedings. It is like the government giving a free licence to OMC to loot and scoot. OMC extracted the ore and ferried it to the coast in lorries and rail wagons for export to other countries, while the State remained satisfied with nominal royalty, said TDP leader Nagam Janardhan Reddy.

Dismissing the charges as politically motivated, Congress leaders contend that mining deals should not be looked at from the angle of royalty alone but in terms of the mining industry's development and employment generation.

The State government, however, has also faced charges of favouritism in respect of the mining of bauxite and the world-famous black galaxy granite. Bauxite mines in the ecologically fragile zone of the Eastern Ghats in Visakhapatnam district were granted to Jindal group owned by a Congress MP's family and the Ras-al-Khaima group despite strong objections raised by environmentalists and the tribal people who live in the area. The government used the fig leaf of AP Mineral Development Corporation (APMDC) to hand over these mines to the two groups.

The allotment of a black galaxy granite mining lease to Rajasekhara Reddy's supporter, Raghava Reddy, invited criticism from the Opposition and the Comptroller and Auditor General. Chimakurthy in Prakasam district is the only place in the world where this type of granite is available and there has been persistent demand from civil society groups to preserve it for posterity. In a patently one-sided deal, the APMDC exchanged its granite-rich land for land with virtually nothing in it owned by Raghava Reddy's Victorian Granite Company. The CAG found that the loss to the exchequer in this deal was Rs.56 crore.

Critics point to basic flaws in the mining policy that give the advantage to entrepreneurs. Is it prudent to allow indiscriminate mining and export of a metal ignoring the future requirements of a still developing country? And what about the politician-mining lobby nexus that seems to grow in power by the day, as witnessed in the recent political developments in Karnataka?

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