Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 150
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Code Context


        trigger_error($message, E_USER_DEPRECATED);

    }
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 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php.'
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deprecationWarning - CORE/src/Core/functions.php, line 311
Cake\Http\ServerRequest::offsetGet() - CORE/src/Http/ServerRequest.php, line 2421
App\Controller\ArtileDetailController::index() - APP/Controller/ArtileDetailController.php, line 150
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Cake\Http\ActionDispatcher::_invoke() - CORE/src/Http/ActionDispatcher.php, line 120
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Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Error\Middleware\ErrorHandlerMiddleware::__invoke() - CORE/src/Error/Middleware/ErrorHandlerMiddleware.php, line 96
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Http\Runner::run() - CORE/src/Http/Runner.php, line 51
Cake\Http\Server::run() - CORE/src/Http/Server.php, line 98

Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 151
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Code Context


        trigger_error($message, E_USER_DEPRECATED);

    }
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 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php.'
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deprecationWarning - CORE/src/Core/functions.php, line 311
Cake\Http\ServerRequest::offsetGet() - CORE/src/Http/ServerRequest.php, line 2421
App\Controller\ArtileDetailController::index() - APP/Controller/ArtileDetailController.php, line 151
Cake\Controller\Controller::invokeAction() - CORE/src/Controller/Controller.php, line 610
Cake\Http\ActionDispatcher::_invoke() - CORE/src/Http/ActionDispatcher.php, line 120
Cake\Http\ActionDispatcher::dispatch() - CORE/src/Http/ActionDispatcher.php, line 94
Cake\Http\BaseApplication::__invoke() - CORE/src/Http/BaseApplication.php, line 235
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Routing\Middleware\RoutingMiddleware::__invoke() - CORE/src/Routing/Middleware/RoutingMiddleware.php, line 162
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Routing\Middleware\AssetMiddleware::__invoke() - CORE/src/Routing/Middleware/AssetMiddleware.php, line 97
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Error\Middleware\ErrorHandlerMiddleware::__invoke() - CORE/src/Error/Middleware/ErrorHandlerMiddleware.php, line 96
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Http\Runner::run() - CORE/src/Http/Runner.php, line 51
Cake\Http\Server::run() - CORE/src/Http/Server.php, line 98

Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Code Context
            if (Configure::read('debug')) {

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        LATEST NEWS UPDATES | ‘Iron’ic? Story of the Great Indian Loot by Shankar Raghuraman    </title>
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Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are..."/>
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                            <p align="justify"><br /><font >Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are dominant. Is this just a coincidence? No, that would stretch credulity. </font></p><p align="justify"><font >So what connects the Maoist menace with forests and mining? Clearly, forests give a guerilla force its best chance of taking on the might of the state. But any guerilla army needs more than just thick foliage. Insurgents thrive where the local population is sympathetic to them or at least not sympathetic towards the state. </font></p><p align="justify"><font >That&rsquo;s where mining comes into the picture. There has been a long history of traditional forest dwellers being denied the right to live off the forest, a process that cannot but lead to alienation. Add to that a mining policy regime that has allowed massive scaling up of mining in the same areas for super profits, and it is not difficult to see why many tribals believe the state is hostile to their interests, but in tune with corporate interests. </font></p><p align="justify"><font >Mining projects have repeatedly led to localized protests. In many cases, the administration has muttered darkly about agent provocateurs from outside fishing in troubled waters. In states like Orissa, Maoists have been accused of exploiting local resentment for their own ends. </font></p><p align="justify"><font >To understand how mining policy has actually helped the Maoists, let&rsquo;s take the specific case of iron ore &mdash; crucial for Chhattisgarh and Orissa and not insignificant for Jharkhand, all states with a serious Maoist problem on their hands. </font></p><p align="justify"><font >At the turn of the millennium in 2001-01, India exported iron ore worth a measly Rs 358 crore. By 2008-09, that figure was up to Rs 21,725 crore, a sixty-fold jump in just seven years. </font></p><p align="justify"><font >Driving this export of ore were several factors. One was the decanalisation of exports of ore with an iron content of 64% or less in the late 1990s. The other was China&rsquo;s seemingly insatiable appetite for iron ore in the run-up to the 2008 Beijing Olympics. As a result, the international price of ore &mdash; with 63% iron content &mdash; soared to $200 per tonne in March 2008, more than four times the price five years ago. </font></p><p align="justify"><font >Indian ore exporters thus had a ready and profitable market. The icing on the cake was provided by the royalty rates charged by the government. The rates fixed in October 2004 varied from as little as Rs 4 per tonne for low-grade ore to a maximum of Rs 27 per tonne for the highest grades. There was also no export duty. </font></p><p align="justify"><font >To see what this meant, check out what the Karnataka Lok Ayukta had to say on the allegations of illegal mining in the Bellary region of the state. Its report submitted in December 2008 pointed out that when the export price was hovering around Rs 6,000 to Rs 7,000 per tonne, the state government was getting between Rs 16 and Rs 27 by way of royalty. The extraction cost to the miner was, by the state&rsquo;s own admission, of the order of Rs 150 per tonne. The Lok Ayukta noted that even if the transportation cost was estimated at Rs 250 per tonne, the total cost for the exporter would be not more than Rs 427 per tonne. </font></p><p align="justify"><font >Since the export price of the ore even in a slump was never lower than Rs 1,500 per tonne, that would leave a neat profit of Rs1,073 per tonne. Out of this, the state was getting at best Rs 27. </font></p><p align="justify"><font >So outraged was the Lok Ayukta by these calculations, that the report went on to advocate a complete ban not just on export of ore but also on its trading, saying it should be reserved only for captive mining by domestic steel producers. </font></p><p align="justify"><font >A committee appointed by the planning commission in 2005 to examine the national mining policy, observed that &ldquo;the margins available in the mining sector have been very substantial and are widely expected to continue being so in the foreseeable future&rdquo;. It recommended in December 2006 that royalty rates be reviewed. A subsequent study group suggested that the royalty be pegged at 10% of the sale price of ore. </font></p><p align="justify"><font >It took another two years before the ministry finally notified the new rates in August 2009. But there was a catch. The &ldquo;sale price&rdquo; which was to form the basis for the ad valorem rates would be determined by the Indian Bureau of Mines (IBM) on the basis of the average of sale prices reported by non-captive producers. </font></p><p align="justify"><font >To see why this made a mockery of the 10% rate, just look at the numbers for February 2010, the last month for which the IBM has put up the sale prices on its website. The all-India sale price average for lumps of 62-65% iron content was Rs 1,760 per tonne. The highest sale price for any state for this grade of ore was put at Rs 1,949 per tonne. </font></p><p align="justify"><font >Against this, the average international price prevailing in February for Indian ore of 63% iron content bound for Chinese ports was $128 per tonne, which is closer to Rs 6,000 per tonne. Even allowing for transportation costs, which can be significant, clearly there is a wide gap between the price at which the royalty rate is being applied and what the exporter is actually getting. </font></p><p align="justify"><font >Why do these details of iron ore extraction and sale matter? Because the enormous margins involved &mdash; in exports as well as domestic sales &mdash; mean that the scope for sleaze and the temptation for illegal mining are huge. </font></p><p align="justify"><font >And this is where the connection with Maoists lies. Not only has rapacious mining turned the tribal away from the state, it has reportedly provided a steady source of funding for the Maoists through extortion. In short, by promoting this variety of crony capitalism, the state has shot itself in the foot. </font></p><p align="justify"><font >So, what&rsquo;s the way out? When TOI recently asked a Union minister whether it would be a good idea to auction mines to raise more revenues for the states, which could then put a chunk of it back into development work for the local community, the minister&rsquo;s response was, &ldquo;But why allow exports in the first place?&rdquo; </font></p><p align="justify"><font >That&rsquo;s the language of Left radicals, but when it comes from a minister, it&rsquo;s an indication of how serious the problem has become. </font></p><p align="justify"><font >Since 2007, the government has imposed export duties on iron ore that have varied between zero and 15%, but are we in for a further tightening of the screws? </font></p>                                                           
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    <br><a href="http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms" class="re" target="_blank">The Times of India, 5 June, 2010, http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms</a><div class="clear"></div>
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Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are..."/>
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Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are..." />
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    <h1 class="cat-box-title">‘Iron’ic? Story of the Great Indian Loot by Shankar Raghuraman</h1>
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		 Published on</span><span class="text-date"> Jun 6, 2010</span>
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                            <p align="justify"><br /><font >Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are dominant. Is this just a coincidence? No, that would stretch credulity. </font></p><p align="justify"><font >So what connects the Maoist menace with forests and mining? Clearly, forests give a guerilla force its best chance of taking on the might of the state. But any guerilla army needs more than just thick foliage. Insurgents thrive where the local population is sympathetic to them or at least not sympathetic towards the state. </font></p><p align="justify"><font >That&rsquo;s where mining comes into the picture. There has been a long history of traditional forest dwellers being denied the right to live off the forest, a process that cannot but lead to alienation. Add to that a mining policy regime that has allowed massive scaling up of mining in the same areas for super profits, and it is not difficult to see why many tribals believe the state is hostile to their interests, but in tune with corporate interests. </font></p><p align="justify"><font >Mining projects have repeatedly led to localized protests. In many cases, the administration has muttered darkly about agent provocateurs from outside fishing in troubled waters. In states like Orissa, Maoists have been accused of exploiting local resentment for their own ends. </font></p><p align="justify"><font >To understand how mining policy has actually helped the Maoists, let&rsquo;s take the specific case of iron ore &mdash; crucial for Chhattisgarh and Orissa and not insignificant for Jharkhand, all states with a serious Maoist problem on their hands. </font></p><p align="justify"><font >At the turn of the millennium in 2001-01, India exported iron ore worth a measly Rs 358 crore. By 2008-09, that figure was up to Rs 21,725 crore, a sixty-fold jump in just seven years. </font></p><p align="justify"><font >Driving this export of ore were several factors. One was the decanalisation of exports of ore with an iron content of 64% or less in the late 1990s. The other was China&rsquo;s seemingly insatiable appetite for iron ore in the run-up to the 2008 Beijing Olympics. As a result, the international price of ore &mdash; with 63% iron content &mdash; soared to $200 per tonne in March 2008, more than four times the price five years ago. </font></p><p align="justify"><font >Indian ore exporters thus had a ready and profitable market. The icing on the cake was provided by the royalty rates charged by the government. The rates fixed in October 2004 varied from as little as Rs 4 per tonne for low-grade ore to a maximum of Rs 27 per tonne for the highest grades. There was also no export duty. </font></p><p align="justify"><font >To see what this meant, check out what the Karnataka Lok Ayukta had to say on the allegations of illegal mining in the Bellary region of the state. Its report submitted in December 2008 pointed out that when the export price was hovering around Rs 6,000 to Rs 7,000 per tonne, the state government was getting between Rs 16 and Rs 27 by way of royalty. The extraction cost to the miner was, by the state&rsquo;s own admission, of the order of Rs 150 per tonne. The Lok Ayukta noted that even if the transportation cost was estimated at Rs 250 per tonne, the total cost for the exporter would be not more than Rs 427 per tonne. </font></p><p align="justify"><font >Since the export price of the ore even in a slump was never lower than Rs 1,500 per tonne, that would leave a neat profit of Rs1,073 per tonne. Out of this, the state was getting at best Rs 27. </font></p><p align="justify"><font >So outraged was the Lok Ayukta by these calculations, that the report went on to advocate a complete ban not just on export of ore but also on its trading, saying it should be reserved only for captive mining by domestic steel producers. </font></p><p align="justify"><font >A committee appointed by the planning commission in 2005 to examine the national mining policy, observed that &ldquo;the margins available in the mining sector have been very substantial and are widely expected to continue being so in the foreseeable future&rdquo;. It recommended in December 2006 that royalty rates be reviewed. A subsequent study group suggested that the royalty be pegged at 10% of the sale price of ore. </font></p><p align="justify"><font >It took another two years before the ministry finally notified the new rates in August 2009. But there was a catch. The &ldquo;sale price&rdquo; which was to form the basis for the ad valorem rates would be determined by the Indian Bureau of Mines (IBM) on the basis of the average of sale prices reported by non-captive producers. </font></p><p align="justify"><font >To see why this made a mockery of the 10% rate, just look at the numbers for February 2010, the last month for which the IBM has put up the sale prices on its website. The all-India sale price average for lumps of 62-65% iron content was Rs 1,760 per tonne. The highest sale price for any state for this grade of ore was put at Rs 1,949 per tonne. </font></p><p align="justify"><font >Against this, the average international price prevailing in February for Indian ore of 63% iron content bound for Chinese ports was $128 per tonne, which is closer to Rs 6,000 per tonne. Even allowing for transportation costs, which can be significant, clearly there is a wide gap between the price at which the royalty rate is being applied and what the exporter is actually getting. </font></p><p align="justify"><font >Why do these details of iron ore extraction and sale matter? Because the enormous margins involved &mdash; in exports as well as domestic sales &mdash; mean that the scope for sleaze and the temptation for illegal mining are huge. </font></p><p align="justify"><font >And this is where the connection with Maoists lies. Not only has rapacious mining turned the tribal away from the state, it has reportedly provided a steady source of funding for the Maoists through extortion. In short, by promoting this variety of crony capitalism, the state has shot itself in the foot. </font></p><p align="justify"><font >So, what&rsquo;s the way out? When TOI recently asked a Union minister whether it would be a good idea to auction mines to raise more revenues for the states, which could then put a chunk of it back into development work for the local community, the minister&rsquo;s response was, &ldquo;But why allow exports in the first place?&rdquo; </font></p><p align="justify"><font >That&rsquo;s the language of Left radicals, but when it comes from a minister, it&rsquo;s an indication of how serious the problem has become. </font></p><p align="justify"><font >Since 2007, the government has imposed export duties on iron ore that have varied between zero and 15%, but are we in for a further tightening of the screws? </font></p>                                                           
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    <br><a href="http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms" class="re" target="_blank">The Times of India, 5 June, 2010, http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms</a><div class="clear"></div>
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        LATEST NEWS UPDATES | ‘Iron’ic? Story of the Great Indian Loot by Shankar Raghuraman    </title>
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Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are..."/>
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Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are..." />
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                            <p align="justify"><br /><font >Take a look at the accompanying map and you can&rsquo;t but notice the extent of overlap between India&rsquo;s thickly forested areas, the regions with the bulk of the country&rsquo;s most important mineral wealth and the territory over which Maoists are dominant. Is this just a coincidence? No, that would stretch credulity. </font></p><p align="justify"><font >So what connects the Maoist menace with forests and mining? Clearly, forests give a guerilla force its best chance of taking on the might of the state. But any guerilla army needs more than just thick foliage. Insurgents thrive where the local population is sympathetic to them or at least not sympathetic towards the state. </font></p><p align="justify"><font >That&rsquo;s where mining comes into the picture. There has been a long history of traditional forest dwellers being denied the right to live off the forest, a process that cannot but lead to alienation. Add to that a mining policy regime that has allowed massive scaling up of mining in the same areas for super profits, and it is not difficult to see why many tribals believe the state is hostile to their interests, but in tune with corporate interests. </font></p><p align="justify"><font >Mining projects have repeatedly led to localized protests. In many cases, the administration has muttered darkly about agent provocateurs from outside fishing in troubled waters. In states like Orissa, Maoists have been accused of exploiting local resentment for their own ends. </font></p><p align="justify"><font >To understand how mining policy has actually helped the Maoists, let&rsquo;s take the specific case of iron ore &mdash; crucial for Chhattisgarh and Orissa and not insignificant for Jharkhand, all states with a serious Maoist problem on their hands. </font></p><p align="justify"><font >At the turn of the millennium in 2001-01, India exported iron ore worth a measly Rs 358 crore. By 2008-09, that figure was up to Rs 21,725 crore, a sixty-fold jump in just seven years. </font></p><p align="justify"><font >Driving this export of ore were several factors. One was the decanalisation of exports of ore with an iron content of 64% or less in the late 1990s. The other was China&rsquo;s seemingly insatiable appetite for iron ore in the run-up to the 2008 Beijing Olympics. As a result, the international price of ore &mdash; with 63% iron content &mdash; soared to $200 per tonne in March 2008, more than four times the price five years ago. </font></p><p align="justify"><font >Indian ore exporters thus had a ready and profitable market. The icing on the cake was provided by the royalty rates charged by the government. The rates fixed in October 2004 varied from as little as Rs 4 per tonne for low-grade ore to a maximum of Rs 27 per tonne for the highest grades. There was also no export duty. </font></p><p align="justify"><font >To see what this meant, check out what the Karnataka Lok Ayukta had to say on the allegations of illegal mining in the Bellary region of the state. Its report submitted in December 2008 pointed out that when the export price was hovering around Rs 6,000 to Rs 7,000 per tonne, the state government was getting between Rs 16 and Rs 27 by way of royalty. The extraction cost to the miner was, by the state&rsquo;s own admission, of the order of Rs 150 per tonne. The Lok Ayukta noted that even if the transportation cost was estimated at Rs 250 per tonne, the total cost for the exporter would be not more than Rs 427 per tonne. </font></p><p align="justify"><font >Since the export price of the ore even in a slump was never lower than Rs 1,500 per tonne, that would leave a neat profit of Rs1,073 per tonne. Out of this, the state was getting at best Rs 27. </font></p><p align="justify"><font >So outraged was the Lok Ayukta by these calculations, that the report went on to advocate a complete ban not just on export of ore but also on its trading, saying it should be reserved only for captive mining by domestic steel producers. </font></p><p align="justify"><font >A committee appointed by the planning commission in 2005 to examine the national mining policy, observed that &ldquo;the margins available in the mining sector have been very substantial and are widely expected to continue being so in the foreseeable future&rdquo;. It recommended in December 2006 that royalty rates be reviewed. A subsequent study group suggested that the royalty be pegged at 10% of the sale price of ore. </font></p><p align="justify"><font >It took another two years before the ministry finally notified the new rates in August 2009. But there was a catch. The &ldquo;sale price&rdquo; which was to form the basis for the ad valorem rates would be determined by the Indian Bureau of Mines (IBM) on the basis of the average of sale prices reported by non-captive producers. </font></p><p align="justify"><font >To see why this made a mockery of the 10% rate, just look at the numbers for February 2010, the last month for which the IBM has put up the sale prices on its website. The all-India sale price average for lumps of 62-65% iron content was Rs 1,760 per tonne. The highest sale price for any state for this grade of ore was put at Rs 1,949 per tonne. </font></p><p align="justify"><font >Against this, the average international price prevailing in February for Indian ore of 63% iron content bound for Chinese ports was $128 per tonne, which is closer to Rs 6,000 per tonne. Even allowing for transportation costs, which can be significant, clearly there is a wide gap between the price at which the royalty rate is being applied and what the exporter is actually getting. </font></p><p align="justify"><font >Why do these details of iron ore extraction and sale matter? Because the enormous margins involved &mdash; in exports as well as domestic sales &mdash; mean that the scope for sleaze and the temptation for illegal mining are huge. </font></p><p align="justify"><font >And this is where the connection with Maoists lies. Not only has rapacious mining turned the tribal away from the state, it has reportedly provided a steady source of funding for the Maoists through extortion. In short, by promoting this variety of crony capitalism, the state has shot itself in the foot. </font></p><p align="justify"><font >So, what&rsquo;s the way out? When TOI recently asked a Union minister whether it would be a good idea to auction mines to raise more revenues for the states, which could then put a chunk of it back into development work for the local community, the minister&rsquo;s response was, &ldquo;But why allow exports in the first place?&rdquo; </font></p><p align="justify"><font >That&rsquo;s the language of Left radicals, but when it comes from a minister, it&rsquo;s an indication of how serious the problem has become. </font></p><p align="justify"><font >Since 2007, the government has imposed export duties on iron ore that have varied between zero and 15%, but are we in for a further tightening of the screws? </font></p>                                                           
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    <br><a href="http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms" class="re" target="_blank">The Times of India, 5 June, 2010, http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms</a><div class="clear"></div>
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‘Iron’ic? Story of the Great Indian Loot by Shankar Raghuraman

Published on Jun 6, 2010   Modified on Jun 6, 2010

Take a look at the accompanying map and you can’t but notice the extent of overlap between India’s thickly forested areas, the regions with the bulk of the country’s most important mineral wealth and the territory over which Maoists are dominant. Is this just a coincidence? No, that would stretch credulity. So what connects the Maoist menace with forests and mining? Clearly, forests give a guerilla force its best chance of taking on the might of the state. But any guerilla army needs more than just thick foliage. Insurgents thrive where the local population is sympathetic to them or at least not sympathetic towards the state. That’s where mining comes into the picture. There has been a long history of traditional forest dwellers being denied the right to live off the forest, a process that cannot but lead to alienation. Add to that a mining policy regime that has allowed massive scaling up of mining in the same areas for super profits, and it is not difficult to see why many tribals believe the state is hostile to their interests, but in tune with corporate interests. Mining projects have repeatedly led to localized protests. In many cases, the administration has muttered darkly about agent provocateurs from outside fishing in troubled waters. In states like Orissa, Maoists have been accused of exploiting local resentment for their own ends. To understand how mining policy has actually helped the Maoists, let’s take the specific case of iron ore — crucial for Chhattisgarh and Orissa and not insignificant for Jharkhand, all states with a serious Maoist problem on their hands. At the turn of the millennium in 2001-01, India exported iron ore worth a measly Rs 358 crore. By 2008-09, that figure was up to Rs 21,725 crore, a sixty-fold jump in just seven years. Driving this export of ore were several factors. One was the decanalisation of exports of ore with an iron content of 64% or less in the late 1990s. The other was China’s seemingly insatiable appetite for iron ore in the run-up to the 2008 Beijing Olympics. As a result, the international price of ore — with 63% iron content — soared to $200 per tonne in March 2008, more than four times the price five years ago. Indian ore exporters thus had a ready and profitable market. The icing on the cake was provided by the royalty rates charged by the government. The rates fixed in October 2004 varied from as little as Rs 4 per tonne for low-grade ore to a maximum of Rs 27 per tonne for the highest grades. There was also no export duty. To see what this meant, check out what the Karnataka Lok Ayukta had to say on the allegations of illegal mining in the Bellary region of the state. Its report submitted in December 2008 pointed out that when the export price was hovering around Rs 6,000 to Rs 7,000 per tonne, the state government was getting between Rs 16 and Rs 27 by way of royalty. The extraction cost to the miner was, by the state’s own admission, of the order of Rs 150 per tonne. The Lok Ayukta noted that even if the transportation cost was estimated at Rs 250 per tonne, the total cost for the exporter would be not more than Rs 427 per tonne. Since the export price of the ore even in a slump was never lower than Rs 1,500 per tonne, that would leave a neat profit of Rs1,073 per tonne. Out of this, the state was getting at best Rs 27. So outraged was the Lok Ayukta by these calculations, that the report went on to advocate a complete ban not just on export of ore but also on its trading, saying it should be reserved only for captive mining by domestic steel producers. A committee appointed by the planning commission in 2005 to examine the national mining policy, observed that “the margins available in the mining sector have been very substantial and are widely expected to continue being so in the foreseeable future”. It recommended in December 2006 that royalty rates be reviewed. A subsequent study group suggested that the royalty be pegged at 10% of the sale price of ore. It took another two years before the ministry finally notified the new rates in August 2009. But there was a catch. The “sale price” which was to form the basis for the ad valorem rates would be determined by the Indian Bureau of Mines (IBM) on the basis of the average of sale prices reported by non-captive producers. To see why this made a mockery of the 10% rate, just look at the numbers for February 2010, the last month for which the IBM has put up the sale prices on its website. The all-India sale price average for lumps of 62-65% iron content was Rs 1,760 per tonne. The highest sale price for any state for this grade of ore was put at Rs 1,949 per tonne. Against this, the average international price prevailing in February for Indian ore of 63% iron content bound for Chinese ports was $128 per tonne, which is closer to Rs 6,000 per tonne. Even allowing for transportation costs, which can be significant, clearly there is a wide gap between the price at which the royalty rate is being applied and what the exporter is actually getting. Why do these details of iron ore extraction and sale matter? Because the enormous margins involved — in exports as well as domestic sales — mean that the scope for sleaze and the temptation for illegal mining are huge. And this is where the connection with Maoists lies. Not only has rapacious mining turned the tribal away from the state, it has reportedly provided a steady source of funding for the Maoists through extortion. In short, by promoting this variety of crony capitalism, the state has shot itself in the foot. So, what’s the way out? When TOI recently asked a Union minister whether it would be a good idea to auction mines to raise more revenues for the states, which could then put a chunk of it back into development work for the local community, the minister’s response was, “But why allow exports in the first place?” That’s the language of Left radicals, but when it comes from a minister, it’s an indication of how serious the problem has become. Since 2007, the government has imposed export duties on iron ore that have varied between zero and 15%, but are we in for a further tightening of the screws?

The Times of India, 5 June, 2010, http://timesofindia.indiatimes.com/India/-Ironic-Story-of-the-Great-Indian-Loot/articleshow/6012491.cms

Tagged with: Environment

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