Voting in this week’s Andhra Pradesh byelections took place without the frontrunner in attendance. Instead of the polling booth, YSR Congress president YS Jagan Mohan Reddy found himself behind bars.
The son of a former chief minister, Reddy’s personal assets allegedly include mining leases for over 181,000 acres. Earlier this week, the regional government cancelled two huge iron ore projects that had been granted to his brother-in-law.
“The scale of lawlessness that prevails in India’s mining sector is hard to overstate,” a report, Out of Control, published today by campaign group Human Rights Watch claims. “Even government officials acknowledge that the mining sector faces a myriad problems.”
Andhra Pradesh is certainly no exception. Official statistics point to more than 82,000 cases of illegal mining across the country, all of which leave environmental destruction in their wake.
Standards in India’s 2,800 registered mines are far from perfect either. In iron mining areas of Goa and Karnataka, for example, Human Rights Watch charts extensive evidence of water pollution, toxic waste and health problems resulting from metallic dust.
Disreputable companies are undoubtedly part of the problem. An ongoing campaign against FTSE 100 mining firm Vedanta, which has operations in an indigenous area of western Orissa, has served to highlight the nefarious activities of individual operators.
But companies operate in a wider context, and it is to this broader operating environment that Human Rights Watch turns its attentions.
“India has a reasonably good legal framework to address these issues … but these laws aren’t being enforced, to such an extent that they are almost meaningless,” says Chris Albin-Lackey, senior research at Human Rights Watch and co-author of the report.
The licensing system provides a case in point. By law, mining companies are obliged to produce an environmental impact assessment at the project proposal stage. No mechanism exists, however, to verify the independence of these reports nor to investigate their accuracy.
“Then there’s pressure to move forward these assessments with great speed because the country is trying to grow investment in this sector”, says Albin-Lackey.
As India’s economy shows signs of slowing, mining remains one of the bright spots on its horizon. India is the world’s third largest producer of coal and the fourth largest of iron ore. Its mining industry is predicted to grow to $36.2bn by 2016.
“We’re not trying to say that mining should be brought to a halt”, Albin-Lackey insists.
“But the government does have a core set of obligations to regulate the industry and mitigate its impacts … All we’re asking them to do is make the systems that they’ve already put in place function.”
The report’s findings win wide support among Indian civil society groups, which have become increasingly vocal in recent years over rampant abuses in the mining sector.
All too often, the laws work against those they are supposed to protect, observes Ramesh Gopalakrishnan, a researcher at Amnesty International and author of a report on Vedanta’s Indian operations.
He points to the Forest Act, for instance, which makes special provision for the protection of land traditionally occupied by indigenous groups.
“The problem is they have to file their claims before the same authorities who are alienating their lands in favour of the companies, so really they can’t get any justice”, he argues.
Endemic corruption is clearly a problem. This is nowhere clearer than in the mineral-rich state of Karnataka. The Human Rights Watch report describes how mining magnate Janardhana Reddy worked with government regulators to allegedly extort huge quantities of iron ore from other mine operators.
Understandably, a key recommendation of the report is for greater transparency in the permitting and licensing process. The introduction or strengthening of regional anti-corruption ombudsmen is also flagged up.
As Amnesty International’s Gopalakrishnan points out, the granting of rights to sub-surface resources in India is “completely arbitrary and opaque” and often determined on a “first come, first served” basis.
The need to establish a more transparent investment policy is echoed by Leo Saldhana, coordinator of the Environment Support Group, a Karnataka-based campaign group.
“This business of our state resources belonging to the current state minister has to end … At present, local governments have absolutely no say in what happen to the resources in their state,” he says.
India’s mining industry is as hamstrung by under-resourced government agencies as it is corrupt officials, the campaign group maintains. Also high on Human Rights Watch’s recommendation list, therefore, is greater capacity for government agencies.
The Ministry of Mines only has a “couple of dozen” monitoring officials for the entire country, notes Albin-Lackey.
“The government hasn’t allowed the regulatory institutions to grow apace [with the sector], so you have government officials who have no time to do any kind of infield assessments”, he adds.
The primary problem isn’t new laws. A proposed new mining bill is being debated in the Indian parliament right now. Where the system falls down is in the implementation stage.
In practical terms, this means more and better-equipped monitoring staff, Human Rights Watch insists. Likewise, it is calling for more resources to be earmarked for the review of proposed new mining projects.
It’s not only NGOs that should salute such measures. Companies should too. Operating in an environment that lacks clear rules introduces extraneous costs and additional risk.
“For the fly-by-night operators, the situation is good. But an investor interested in mining over a long period needs the assurance of no illegality,” states Sridhar Ramamurthi, chairperson of the local NGO coalition Mines, Minerals and People.
Appeals to the Federation of Indian Mining Industries have so far gone unheard, he laments.
That’s not to say India’s mining sector has been totally inactive. Joe Phelan, country director for the International Business Leaders Forum (IBLF) in India, points to an electronic auction platform for steel and coal called mJunction.
“mJunction has brought transparency to the market and helped raise standards in procurement”, he argues.
Another example is provided by Siemens. The German engineering giant, which sources iron ore in India for its steel production, now insists on full transparency and compliance from all its business operations.
Working in isolation is very tough, however. Examples of collective action remain rare in India. One tentative step towards industry cooperation is the business-led Sustainable Mining Initiative.
Convened by London-based mining company Rio Tinto, the ten-member initiative adheres to six core principles. The list is fairly generic: integrate sustainable development into decision-making, uphold human rights, conduct business ethically, and so forth. But it’s a start.
It behoves all companies operating in India’s mining sector, the vast majority of which are domestically-owned, to lobby for better regulation, concludes Albin-Lackey.
“Responsible companies shouldn’t just sit there passively and watch all this chaos”, he argues.
“Along with other stakeholders, they should be actively encouraging the government to put more meaningful governance in place for the whole sector.”
Oliver Balch is author of India Rising: Tales from a Changing Nation.
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