Market boom fuelled illegal mining, Odisha tells Shah panel

Last Updated: Mon, Nov 26, 2012 19:41 hrs

The Odisha government has held the boom in export demand of iron ore and manganese responsible for fuelling illegal mining activities in the state.

“The increase in prices of ore due to global demand gave rise to increased mining activities and is perhaps the primary factor providing motives and incentives for illegal mining,” the state government informed in its reply to the M B Shah Commission of enquiry probing into large scale mining without lawful authority.

The commission desired to know if the boom in export demand of iron ore and manganese was responsible for illegal mining activities in the state.

The state government has also admitted the involvement of mafia in mine related activities like mineral transportation and trading and the links of mafia with the political fraternity.

“Due to huge profits generated from mining activities, both legal or illegal, local mafias are getting involved in mining related activities such as transportation and trade of ore. Such elements having political connections or patronage cannot be categorically ruled out. Four such persons of Keonjhar district were booked under National Security Act in 2010,” the state government said in a statement to the commission.

The state government is also in favour of a taking a holistic view on a blanket ban on export of iron ore and manganese ore.

Replying to a question on whether exports should be banned to prevent illegal mining activities, the state government stated, “In terms of iron ore, it is the fines which are primarily exported while lumpy ore is consumed domestically. While a blanket ban on exports may cause a drop in prices and thus lower incentives for illegal mining, a holistic view needs to be taken on this issue. An effective way perhaps could be to introduce a windfall tax on surplus profits with the proceeds going to the state governments for development activities especially in mining areas.”

Chief minister Naveen Patnaik has been demanding introduction of MRRT on windfall gains made by the miners to ensure that the super normal profits earned from mining activities do not get accumulated in the hands of few merchant miners

According to the state government, imposing a ban on ore exports would transfer surplus profits from mine owners to consumers and industries, may prune ore output and lessen burden on available infrastructure like road and rail.

To effectively curb illegal mining activities, the Odisha government has suggested that government officials may be empowered to confiscate the properties along with minerals involved in illegal mining and mineral trade under the provisions of Section 21-4A of Mines and Minerals (Development & Regulation) MMDR Act-1957.

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