A mining controversy

Opposition parties allege that a bauxite mining agreement between the Orissa Mining Corporation and a Sterlite Group company violates forest laws and affects the interests of the State.

in Bhubaneswar

HAVING failed to do anything substantial for the industrial development of the State in his first term in office, Orissa Chief Minister and Biju Janata Dal (BJD) president Naveen Patnaik is now making a desperate bid to attract private investment in the steel and alumina sectors. But are the State's interests being sacrificed in the process? They are, if the Opposition parties' allegations are to be believed.

At the centre of the controversy is an agreement between the Orissa Mining Corporation (OMC) and Vedanta Alumina Ltd. for bauxite mining in Kalahandi district. A Sterlite Group company, Vedanta Alumina signed the joint venture agreement with the OMC on October 5 for developing bauxite mines at the Niyamgiri hill near Lanjigarh in Kalahandi district and the Khambasi hill in adjoining Rayagada district, for use in its one-million-tonne alumina refinery being set up at a cost of Rs.4,000 crores. Interestingly, the Chief Minister had laid the foundation stone of the refinery last year.

According to the agreement, Vedanta Alumina will hold a 74 per cent stake in the joint venture company, with the remaining 26 per cent being held by the OMC. But Vedanta Alumina, through its majority holding, will control and oversee the day-to-day operations of bauxite mining.

Opposition parties such as the Congress, the Communist Party of India (Marxist), the Communist Party of India, the Orissa Gana Parishad, the Janata Dal (Secular) and the Jharkhand Mukti Morcha (JMM) have come together to demand an inquiry by the Central Bureau of Investigation (CBI) into the mining agreement, alleging that it violated forest laws and the State's mineral policy. It amounted to a total sellout of the State's interests, they said.

In a memorandum submitted to Governor M.M. Rajendran, the Opposition parties alleged that the agreement was signed at the behest of the Chief Minister and demanded its cancellation to stop the "destruction of forest and environment" and the "illegal mining operation".

It is the first time that the Opposition has launched an onslaught on the Chief Minister, raising questions about his probity and claims of running a corruption-free government.

The controversy dominated the proceedings of a six-day session of the State Assembly between November 1 and 6. Unsatisfied with the reply of Steel and Mines Minister Padmanav Behera, Congress legislators stalled the proceedings. It led to a scuffle between members of the Opposition and the ruling Biju Janata Dal-Bharatiya Janata Party alliance. Anup Sai, a Congress legislator, hurled chappals at the viewers' gallery. The House was adjourned after Naveen Patnaik sustained injuries on his foot during the scuffle.

Following media reports on the controversy, the State government clarified that Vedanta Alumina had not indulged in any sort of unauthorised industrial activity at Lanjigarh in the backward Kalahandi district.

According to the government, the company has applied for 723.343 hectares for the alumina refinery project, out of which 58.94 hectares was forest land and the rest private or revenue land. The proposal to acquire forest land was pending with the Centre and no activity had been undertaken by the company on this land.

For bauxite mining, the company needs 721.323 hectares, which includes 580.861 hectares of forest land. The Orissa Forest Department received a proposal for the diversion of the forest land and it will be sent to the Centre after field verification, the government said. "No activity will be allowed on forest land before the necessary clearances are received from competent authorities,'' it said.

The OMC too issued a clarification claiming that the agreement was in the best interests of the State. It said: "The MoU signed with the company in 1997 has been vastly improved upon under the agreement and the interests of the OMC has been protected by not transferring the lease of the mines.''

The Opposition alleged that the deal was struck without calling for an international tender, which could have fetched better revenue to the State. In addition to the mines located at the Niyamgiri and Khambasi hills, the agreement mentioned handing over the bauxite deposits in the Karlapat reserve, which is part of a wildlife sanctuary.

Orissa Gana Parishad president Bijay Mohapatra alleged that Vedanta Alumina was guilty of violating forest and environment laws. The company was yet to obtain forest clearance for its project as per the Forest (Conservation) Act, 1980. Mohapatra said the company had cleared the site and constructed its rehabilitation colony, office building, guest house and 22 concrete pillars for the conveyor system from the mines at the Niyamgiri hill to the plant site at Lanjigarh without the approval of the Union Ministry of Environment and Forests.

Congress legislator L.B. Mahapatra, who raised the issue in the Assembly, said that drilling and blasting of the mines had commenced in the Niyamgiri hill without forest clearance. Mining in Niyamgiri will affect the Dongria Kondh group of tribal people, who have been living there for generations, he said.

The company, however, claimed that it had not violated any law so far. "We started the construction of the refinery after obtaining necessary clearance from the Orissa State Pollution Control Board and the Union Ministry of Environment and Forests,'' a company official said.

The official said the company had started construction of the refinery anticipating clearance from the Centre. "We have given one of the best rehabilitation packages for those who have lost their homes and land for the refinery project.''

As regards mining, the official admitted that the company had engaged Mineral Exploration Corporation Ltd. to carry out exploratory drilling in the Niyamgiri hill, but the company had not started any work for mining on its own. "Some politicians are trying to spread misinformation over the mining agreement,'' the official said.

The Opposition, however, is sticking to its stand. It has decided jointly to petition Prime Minister Manmohan Singh about the agreement and the "loss of revenue'' to the State. A Kalahandi-based lawyer has moved the High Court challenging the agreement.

The Naveen Patnaik government has already signed MoUs with 14 companies for setting up of steel plants. While one MoU was signed in 2002, seven were signed in 2003 and six this year.

Besides, several new proposals, including those from the BHP Billiton-Posco combine, Tata Steel and Essar Steel, for setting up steel projects are pending consideration. The government has also received a few proposals for setting up alumina plants.

Since the State government will have to grant mining leases to almost all the companies that will set up alumina or steel projects, the Chief Minister may face many more problems in future.

Transparency in the agreements and adherence to forest and environmental laws by the project proponents alone can prevent such controversies.