Mining wealth wisely
Jharkhand, Orissa and Chhattisgarh, the nation’s prime mineral resource repositories, have attracted much investor interest.
According to a CII estimate, the investments intentions expressed by domestic and foreign players in Jharkhand, between 2006 and 2008 touched Rs.1.4 lakh crore. In 2008, the proposed investment in Orissa totalled Rs.2.5 lakh crore. During 2009, Chhattisgarh received 293 investment proposals worth Rs.1.3 lakh crore.
But the rush of investors in the last five years has also thrown up myriad problems — conflicts over land, violation of human rights and serious concerns over environment degradation, and corruption at high places. All these have kept the pot boiling. The proposals for massive investments in mining, mineral processing and metalwork projects have opened up new opportunities for the States to race into rapid industrialisation from slow-changing, primarily agricultural, economies.
It is estimated that by 2015, these three States can aspire to produce close to 130-195 million tonnes of iron ore, 56-80 million tonnes of steel and 500-650 million tonnes of coal. , a relatively minor resources player of the region, also can look forward to produce 80-100 million tonnes of coal and expand its current steel capacity.
However, the systemic and regulatory frameworks have not been able to catch up with the emerging scene. In the last few years, it became increasingly evident that the institution-building work lagged behind too. The policy framework too has been slow in reacting to a changed situation.
In the backdrop of competitive demand and growth dynamics, industry's need for raw material security, as also deprivation and rising political aspirations of the inhabitants, mostly tribal, the three eastern States are now finding themselves at the development crossroads.
‘Resource curse’ syndrome
The past decade witnessed a war of sorts between the major stakeholders — the investors and local people. The World Bank had warned against an unregulated growth strategy and the risk of a “resources curse” syndrome.
It said in a 2007 report on Jharkhand that there were already some signs of the “resource curse” syndrome. “The State (Jharkhand) is yet to develop appropriate institutional, regulatory safeguard conditions for embarking on a fast–paced mineral-based growth strategy. In fact, without having such institutional safeguards in place, an unregulated mineral-based growth strategy can bring more risks than rewards.”
The organisation further said: “This can be judged by several examples. One relates to the manner in which institutional safeguard of local communities directly affected by mining activities is being addressed. Other examples relate to the institutional hurdles that genuine investors face in undertaking new investments in the sector, that is, the efficiency aspect of mining-based growth”.
It noted that in a survey of international mining companies, , including Jharkhand, ranked extremely poorly as an exploration destination because mining development faces major regulatory, environmental and social obstacles.
After the multi-crore scam involving the former Chief Minister and a few other former Ministers of Jharkhand surfaced, the land acquisition related-debate generated by the Singur episode in and Vedanta's bauxite mining misadventure in Orissa, the States have been forced to sit up and review growth strategies. The global financial crisis of 2009 also had an impact on the investment flow to the eastern States’mining and metal sector. According to the CII, “under the impact of global financial crisis, 2009 saw a visible decrease in investment intention” in Jharkhand. It also noted a sharp decrease in proposed investments in Orissa.
There were also instances of some domestic investors developing cold feet after signing MoUs. Certain proposals could not progress as courts struck down the exploration licences or mining leases. Land acquisition and project implementation for many were slow, tricky and cumbersome. From the standpoint of the industry investors, the biggest stumbling block seems to be the legal framework that gives tribals complete control over land and resources. This is followed by poor physical infrastructure.
Some of the senior bureaucrats, while talking to this correspondent, conceded that had there been implementation of the Panchayats (Extension to Scheduled Areas) Act, 1996, in its letter and spirit, then many of the projects that had taken off or were in the advanced stages of implementation, would not have seen the light of day.
The World Bank suggested a middle path that avoids conflicts. It said: “Although the mining sector has huge potential of growth over the long term, it has high risk that needs to be carefully managed. The solution lies somewhere in between, with the crux of the overall strategy aimed at reducing risks associated with growth, especially in an economy with high levels of poverty and inequality”.
A top official of a public sector mining company in the East felt that the nation, more specifically the mineral-rich States, still lacked a balanced and coordinated approach towards issues such as mineral resource exploitation, conservation of ecology, tribal empowerment, poverty alleviation, spread of education and employment. “For the industry, it requires reinventing corporate social responsibility,” he added.