SC verdict on Odisha mining suggests that National Mineral Policy exists only on paper

Had the Great Odisha mining loot — a mining scandal of enormous proportions and one involving megabucks — continued unchecked, the iron ore reserves in the state would have been exhausted by 2040, leaving nothing for future generations.

Between 2001 and 2010 more than 2155 lakh metric tonnes of iron ore and mangenese ore worth Rs 17,576 crore was illegally mined in the state of Odisha. It destroyed not just the environment and forest but also caused untold misery to tribals living in the districts of Keonjhar, Sundergarh and Mayurbhanj.

Stepping in, the Supreme Court recently passed a landmark verdict directing the Odisha government to recover this money (Rs 17,567 cr) from the 187 mining companies. Top companies such as SAIL, Tata Steel, Aditya Birla group’s Essel Mining and Odisha Mining Corp are in the dock for the violations.

Interestingly, the Shah Commission of Inquiry set up in 2010 by the central government to look into the mining irregularities in Odisha, had computed the loss at more than Rs 61,000 cr. But for the purpose the judgment in Odisha mining scam the Supreme Court has not relied on the figure of Rs 61,000 cr. The court has gone along with the recommendations of the centrally empowered committee.

Despite the reduced figure, the Odisha government will face problems in collection of these dues as out of the 187 mines, 102 are closed and the lease holders may not in a position to pay the penalty.

Expanding the environment jurisprudence, the court for the first time has held that violation of environment and forest laws amounted to illegal mining. And the value of the ore so produced or sold can be recovered from the mine owner.

Neither the Karnataka nor the Goa mining judgments delivered earlier dealt with this aspect.

This interpretation of law will have far-reaching repercussions. Environmentalists suggest that the judgment has opened the doors for recovering similar penalties from mine owners who illegally mined iron ore in Goa and Karnataka. It’s only a a matter of time that petitions in the Supreme Court are filed to this effect.

In the past decade, India’s mining sector has been marred by countless controversies, including over-extraction of mineral ore, illegal selling, mining outside the lease area and carrying out mining in officially closed mines.

Alive to the fact that problems in the mining sector will not disappear with judgments such as this, the Supreme Court has directed the central government to revisit the national mineral policy and announce a fresh, meaningful policy and effective policy by the end of 2017.

The court in its judgment says: At present, keeping in mind the indiscriminate mining for operations in Odisha, it does appear that there is no effective check on mining operations nor is there any effective mining policy. The National Mineral Policy seems to be only on paper and is not being enforced perhaps due to the involvement of very powerful vested interests or a failure of nerve.

Besides calling for a change in the mineral policy, the court has also suggested setting up of another committee to identify the lapses that enabled rampant illegal and unlawful mining and to recommend preventive measures not only to the State of Odisha but generally to all other States where mining activities are proceeding on a large scale.

While this Supreme Court judgment deals just with financial penalties, the criminal liability of these companies is yet to be decided and one stakeholder that will be losing sleep in the matter is the private mining sector.