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Welcome to Bellary IRON ORE Section

Bellary bleeds as mine owners, politicians mint money

I will show you fear in a handful of dust.
T.S. Eliot, in The Wasteland.


Recently, a police inspector paid Rs 50 lakh as bribe for a posting in Bellary district. Even Bangalore, with its IT-driven prosperity, does not command such high posting prices. For Bellary, which is ranked among the four most backward districts of Karnataka, the amount is paltry.

The reasons for redefining corruption in Karnataka's 'back of beyond' lie in distant China. A boom in the construction industry there, accelerated by the 2008 Olympic Games in Beijing, pushed the international price of iron ore from $17 per tonne in 2000-2001 to the present $55. At its peak-in 2004-2005-the price touched a mind-boggling $75.

With the Centre allowing the private sector into iron ore export since 1999, an unbridled exploitation of Bellary's iron-rich mountain ranges by a handful of mine owners (lessees) followed. The international boom has made India the third largest exporter of iron ore in the world; a third of the exports in 2005 went from Bellary.

Said a proud mine owner: "The quantity of ore that was mined in this district in the last 30 years may be less than what was mined in the last four years. With the latest excavation equipment, all these mountains will be at ground level in the next 10-15 years." Politicians and government officials have not been immune to the lure of big money. The recent controversy involving Janardhana Reddy, MLC, and Chief Minister H.D. Kumaraswamy brought out the ugly face of mining politics.

Bellary is believed to have huge iron deposits-between 2.5 billion tonnes to 4 billion tonnes-65 per cent of this is in forest area. The Karnataka State Remote Sensing Applications Centre has reported that Bellary's mining area has increased from 230 hectares to 1,508 hectares now. What's more, large areas of forest land were denotified for mining operations just before the boom began.

With the iron rush came traders, transporters, miners and labourers from far and near. The three-year drought that lasted till 2005 brought thousands of agricultural workers from villages in Karnataka, Andhra Pradesh, Tamil Nadu and even parts of Maharashtra to work in these opencast mines.

Once a labour-intensive industry, Bellary's mines mechanised rapidly. As millionaires became billionaires, the latest excavators, crushers, loaders and transport trucks were purchased. Recalled Gogga Sidramaiah, a prominent mine owner in Hospet and one of the earliest to enter the business: "Earlier, we had nearly 300 workers on our mine. Now, though production has increased manifold, we don't have more than 60 workers." There were only 73 leases 35 years ago. Presently, there are over 120 leases operated by about 60 lessees. "Mining was a tough business in the 50s and 60s right up to the 90s," said Sidramaiah. "There were no vehicles or roads in the mines. My father and uncle used donkeys to bring the ore from the mines. The price per tonne was just Rs 40, but we were very happy with that.'' Said Bandayya (name changed), a former miner: "Even in the late 80s, lifting 1,000 tonnes a day was a big deal. A hundred tippers working on a hundred acres was considered unthinkable. Today, the lowest production from the smallest lease of 10-12 acres is about 1,500 tonnes a day. Mind you, that's just the legal production.''

Even after the Karnataka government decided to bring a semblance of control on the activity, as many as 10,000 trucks roll out of the Sandur, Bellary and Hospet mining belts every day. Each 10-tyre truck carries between 17 tonnes (which is the legal limit) and 30 tonnes.  In 2005, 30 million tonnes of ore were legally exported from this region.

The loss to the exchequer is staggering. The government charges a royalty of Rs 27 a tonne. In 2005, the government earned only Rs 80 crore as royalty from ore worth Rs 3,600 crore. Interestingly, the royalty remains the same from the days when the ore was priced Rs 150 a tonne!

The government is losing because of illegal mining. Said a source close to most mine owners in the Hospet sector: "More than 80 per cent of mining is illegal." Government sources peg it slightly below.

Most of the illegally mined ore is transported through the railways. "Each railway rake carries 3,500 to 3,800 tonnes," said the source. "The difficulty is to transport the ore from the mine to the railway siding. Once loaded on the train, there is no hurdle till it reaches the port. Transporting illegally mined ore by road has many hurdles. From Bellary to Goa, it has to pass through several jurisdictions. Everyone from the forest department, police, mines and geology departments to transport department, weights and measures department are paid."

Illegal mining happens in many ways. The State's Mines and Geology Department issues mining permits depending on the ore deposits (as recorded by the Indian Bureau of Mines). A certain number of permits are issued for a certain amount of ore; say, one lakh tonnes (for a year).

Some lessees mine more than the permit, paying off officials. Some others obtain illegal 'permits' at the rate of Rs 150 to Rs 200 per tonne. In a major drive launched by the then Bellary Superintendent of Police Pankaj Kumar Thakur in 2005, a major racket in fake permits was unearthed. Many mine owners do not work within the leased area. They start mining in adjacent forest areas until the authorities raise an objection.

In many instances, transporters who carry the ore from the mine head to the port pilfer high grade ore and make up with lower grade ore. The ore thus pilfered has made several people millionaires. Ore-theft from mines and stock-yards has become so common that mine owners employ round-the-clock security to keep a watch over heaps of red dust. "This is not mud," said an employee of PVG group, the biggest company in Bellary as far as logistics is concerned. "This is called black gold. One tonne of this is worth Rs 1,300 to Rs 1,400."
The most visible signs of illegal mining are in the plains which have float ore deposits. Agricultural activity has come to an end in this once fertile belt, irrigated by the Tungabhadra. Plots of agricultural land are leased out to contractors who sell the float ore to big players at Rs 600-Rs 800 a tonne.

Huts along the Hospet-Bellary road have small piles of ore stacked in front of them. "My brother and I collect these small ore-stones," said little Ugrappa, who has not gone to school after his fourth standard. "My father sells it when we have collected enough. We all know the grade of iron by the colour."

While the living conditions of labourers is dismal, that of mine owners' resemble Hollywood lifestyles. Though there is no road worth its name in these regions, mine owners are helping themselves to the latest luxury cars. While one of them owns a Rolls Royce, there are more than half-a-dozen Bentleys in Hospet and Bellary. Brands like Jaguar, Porshe are BMW are common. Those who want to avoid the roads are buying helicopters. Though it cannot be officially confirmed, Bellary could have the largest number of privately-owned helicopters in the country.

While the literacy rate is below that of sub-Saharan Africa, there is a make-believe feel-good factor in Bellary and Hospet. The number of ATMs, consumer goods showrooms, two-wheelers and cloth brands outlets has transformed the two towns. Yet, people realise that the quality of life is deteriorating by the day. Rent for houses has more than doubled in the last three years. The mine dust has polluted the air and water, leading to health problems. A study by the National Environment Engineering Institute in 2003 found unacceptable levels of heavy metals in water and suspended particulate matter (dust) in the air.

The Bellary district  hospital records prove that respiratory disorders are on the rise. Dr Bhagyalakshmi, a volunteer of Mines, Minerals and People, pointed out that women and child labourers were the worst-affected. "Anaemia, tuberculosis and skin diseases are rampant," she said. "But, doctors in Bellary are better geared to tackle HIV than these common diseases." Incidentally, Bellary has the highest incidence of HIV in Karnataka.

Once a wildlife haven, the forests here now reverberate with the blasting of dynamite every afternoon. Surprisingly, neither the Archeological Survey of India, the State Archeology Department or the UNESCO has objected to the operation of mines so close to the Hampi world heritage site.

Said J.R. Ramamurthy, former librarian at the Hampi University and a resident of Hospet: "The cultural fabric is weakening with outsiders coming here. Even the so-called custodians of culture are now doing mining. This district will be like Hampi in the next 10 years-a ruin.''

Meanwhile, there is no sign of the prices of iron ore falling in the near future. Beijing builds while Bellary bleeds. Sporting laurels may continue to elude India in the Olympics but she could take pride in the fact that Bellary's black gold built the Beijing Games! After all, we are known for our sporting spirit!


Political minefield
Bellary was always a Congress bastion. Congress president Sonia Gandhi deciding to fight the 1999 Lok Sabha election from here was the political highpoint of the district. But 1999 also brought, Sushma Swaraj, the BJP stalwart into Bellary.

The BJP's foray into Bellary began with the boom in iron ore exports in 2001. The wealth created a new political class that has considerable clout. Though members of all political parties have a stake in mining, the neo-rich has found favour with the BJP. They broke the Congress stranglehold on the district, thanks to their unlimited financial resources.

THE WEEK was the first to report that it was the mine-owning politicians of Bellary who pulled off the coup against the Dharam Singh government and installed H.D. Kumaraswamy as chief minister.

Bellary MP Karunakara Reddy was elected on the BJP ticket, as are many MLAs and MLCs. Janardhana Reddy, MLC, who alleged that the chief minister had taken a bribe of Rs 150 crore from mine owners, is a BJP man (now suspended for his tirade). Bellary, Siruguppa and Kudligi taluk panchayats are held by the BJP as is the Bellary City Corporation.

With the government forced to order a judicial inquiry into the bribery scandal and the mining operations, Bellary is likely to be in political limelight for a long time.