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Mines of scandal

“If things (illegal mining) were allowed to continue, Karnataka, which is blessed with rich natural resources, would turn into barren land.” Justice Santosh Hegde, Karnataka Lok Ayukta.

india Updated: Jan 12, 2010 23:03 IST

“If things (illegal mining) were allowed to continue, Karnataka, which is blessed with rich natural resources, would turn into barren land.” Justice Santosh Hegde, Karnataka Lok Ayukta.

The Central Bureau of Investigation (CBI) on December 14 told the Orissa High Court that it was prepared to investigate illegal mining in the state.

But the Orissa government opposed it, saying the state’s vigilance directorate had been entrusted to probe the scam.

The division of responsibilities as to who should probe illegal mining is just one symptom of the disease. All illegal activities have subterranean links with the state apparatus. But illegal mining is a phenomenon that sometimes sustains the structure itself. It is prevalent in Karnataka, Andhra Pradesh, Orissa, and Jharkhand.

The surge in illegal mining is chiefly due to exports to China on account of the manufacturing activity in that country. Industry and construction account for nearly 50 per cent of China’s GDP.


The Karnataka government asked the Lokayukta to inquire into illegal mining in the state between 2000 and 2006.

The Lok Ayukta report was on illegal mining in Bellary, Chitradurga and Tumkur districts (north central Karnataka).

The Lok Ayukta is looking into Mysore Minerals Ltd’s (a state government undertaking) contracts that are alleged to have favoured select individuals and companies (their names could not be ascertained). Illegal mining has been noticed in almost all the mining areas.

Of the five questionable iron ore mining leases being probed by the CBI, two were given to the Obulapuram Mining Corporation (OMC) and one to Anantapur Mining Corporation, all owned by the Reddy family, which has two ministers in the Karnataka government. The other two are in the names of Bellary Iron Ore Co Pvt Ltd and Y Mahabaleswarappa & Sons.

The report asked: How can OMC export iron ore from mines in Obulapuram when they were supposed to be captive mines meant for the proposed steel plant coming up in Cuddapah district (south Andhra Pradesh)?

Janardhana Reddy, a member of the Reddy family and tourism minister in Karnataka, has defended it saying the proceeds from the mine (Rs 1,500 crore) were invested in setting up the plant, which will go on stream in October.

The Central Empowered Committee on Environment and Forest, constituted by the Supreme Court to save forest and wildlife, has taken cognizance of the allegations that OMC had encroached other areas exceeding the limit of the leased mines.


Some years ago, Orissa earned about Rs 73 crore as annual royalty from iron ore. But it also collected Rs 225 crore from liquor excise. Illegal mining is the answer to such paltry earning.

The issue of illegal mining in Orissa began to surface in the assembly in July when Bharatiya Janata Party (BJP) legislators alleged irregularities in the activities of a company called Ram Bahadur Thakur (RBT) Ltd.

The state government started a crackdown on alleged illegal mining. More than 600 mine trading licences were scrutinised and 450 of them were cancelled. Ten cases were registered against some mining companies.

“We found several irregularities in the mines we raided,” said Anup Kumar Pattnaik, director, state vigilance department.

As of now, the state government has suspended work in 125 mines. “The operators did not have clearance from the Union ministry of environment and forest,” said JR Patnaik, director of mines, Orissa.

The trading, transporting and stockyard licences of several mine operators including RBT, Sirajuddin, Arjan Lodha and Indrain Pattnaik group have been cancelled.

The Supreme Court’s central empowered committee, which was given six weeks to submit a report in mid-November, is yet to complete its job.


Central Coalfields Ltd (CCL) Chairman-cum-Managing Director RK Saha had said that around 720,000 tonnes of coal were smuggled out of Jharkhand every year, and that accounts for a revenue loss of up to Rs 600 crore.

In the state’s Kolhan region (south-east of Ranchi), there are more than 135 illegal crusher units, according to Ho Mahasabha, a tribal body that did the survey. More than 80 per cent of the mines and crusher units here are in the Saranda forest area, spread over 840 square km, leading to environment degradation.

According to the rules, a lessee cannot mortgage, sell or sub-lease his mine but can only surrender it to the government.

A majority of vehicles transporting ore in the mine belt operate on fake permits. A drive by the police revealed that of the 55 vehicles caught in a day, only one had proper permits, the authorities said.

“Currently the state is getting only one-tenth of the revenue from mining,” said Jharkhand Mines Area Coordination Committee (JMACC) Secretary Xavier Dais.

(With inputs from Priya Ranjan Sahu in Bhubaneswar & B Vijay Murty in Jamshedpur)