Bellary Iron ore mines: ‘Rape’ of national resources by unscrupulous politicians

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By Philip Mudartha
Bellevision Media Network

Doha, 02 August 2011 : Hospet, this once green town in Bellary District in the heart of southern India has recently turned the color of rust. “It’s everywhere,” P.N. Sreepad, warns a guest upon checking in his downtown hotel Malligi. “You cannot escape it.” Its new cloak comes from a nearby cluster of low mountains where dozens of open-pit mines kick up clouds of red dust. The mines contain some of India’s richest reserves of iron ore.


The total value of iron ore produced in Bellary has jumped more than twenty times in the last eight years, since 2003, the beginning of a China-driven explosion in global demand for the mineral. It has made a handful of the district’s 2.3 million residents into overnight millionaires, but sucked tens of thousands of others including children under 14 into slave-like labor.


How did this come about?:


The Reddy brothers, who are ministers in state government, were small time miners in neighboring Andhra Pradesh not too long ago. With a brilliant strategy of creating the right cocktail of political power, business, criminals, money and best minds in technical, legal and street management, they founded an empire that must put Godfather to shame.


An intro to ordinary folks on iron ore:
Iron ore is smelted in blast furnaces with limestone and coal to produce pig iron, which is turned into steel. Iron and steel are world’s most commonly used metal. Iron ore reserves exist in most countries; however, Brazil, Australia, and India dominate the global market as sellers and Europe, Japan, US and since a decade, China as buyer. Chinese steelworks account for nearly half the global steel production and hence imports more than 600 million tons annually. Of this, India’s share is 20%.  Orissa, Karnataka and Goa account for most of it, with high grade ore from Karnataka about 35%.


Iron ore market and prices:
For decades, and even today, three big corporations Vale, BHP and Rio Tinto control the trade and prices. A ton of 65% iron content grade ore traded at $15-20 range until 2002, and the prices were fixed for a year in contracts worked out behind closed doors by Japanese and Europeans. Then China arrived. During August 2008, the prices breached $250. Before the bust and slump to $60 by end of 2008. Prices have recovered and are around $175. While optimists forecast prices to double, pessimists predict fall to $60 and others want stability at $100 by 2014.


It is a veritable gold mine, if your patta land holds in its belly a deposit with at least 35% iron content. You want a government license to dig, a few hands, pickaxe, blade, shovel, and a bucket. Well, in a few years down the road, you can acquire, lease or hire the earth-movers that work the mines in Bellary, whether they are owned by Reddys or any xyz…



 There were and still are many ordinary folks in Bellary and other districts that lived on and in the vicinity of hidden wealth, only unaware and unknowing how to benefit. And, most importantly of course, the means to get the government license.


Once you get the license, you can control the government of the day. A prostitute sells his/her body to make a living, while the government of the day sells its body and soul not for its living but to hoard wealth both within and outside the nation out of sheer greed.



The sheep doeth have no power to consent for butcher’s license to kill:

The sheep has no power, but in democratic dispensation such as State of Karnataka, the ordinary people do, which is casting of vote. But votes are always sold, harangued, stolen, and received in ingenuous fraudulent manner. Brilliant lawyers and pliant public servants ensure that votes went to the ruling elites, or elites emerged out of whoever acquired the vote. Home made bombs and smuggled AK-47, claimed to be supplied by terrorists from Pakistan to ‘untrue Indians’, but often produced by underworld servants of ruling class help in no uncertain ways to manipulate the votes.

Because the ruling elite have that most important weapon: the license to expropriate public wealth. Known or unknown, visible or invisible, of past, present or of future. The license raj. No political party, Congress (ruled maximum period), BJP (ascendant and current rulers), JDS (gap fillers and aspirants) and their sidekicks. No one has an agenda to give the power back where it belongs: the powerless ordinary men, women and children we see below, the citizens of the nation. 


Corruption is only a symptom; the disease is abuse of power:


The nation is angry. The Loka Ayukta has indicted and dealt at length on the financial loss, both revenue loss to the state treasury and the economy of the state. No doubt, it is a colossal loss. For a pittance of Rs16.75 per accounted ton paid as royalty to the state for granting the license to dig the hell out of the lands, the mafia has siphoned of twice as much and earned as much as Rs7,000 per actual ton, making it Rs12,000 per accounted ton. Any profit sharing Public Private Partnership (PPP), which is the legitimate and ethical business practice under a sustainable development model under any nationalistic administration would have given 75% of the Rs12, 000 to the state treasury. The loss is mind boggling amount, not only in Karnataka. The actual loss has to be on 120 million tons a year for India and 40 million tons a year for Karnataka.


 The 2G scam is a temporary sale of the right to use thin air to send sound and image bytes in certain ultra high frequency ranges, which brought in foreign money, from Arabs, Europeans and Africans and their Indian proxies, by fraudulent means into India to own the airwaves for future profit by cellular business depending on a technology that might not exist five years later. (I am using 3G and most of the world may migrate to 6G or higher).  Iron ore, in contradiction, does not rot like mangos, nor does not bec0ome obsolete like phone technology.  It is real tangible loss, unlike the notional loss in 2G licensing (loss nonetheless).

But money is only the tip of the iceberg: 

The realities are (due to abuse of power):

1. The government is run by a mafia, consisting of business-goon-pimps.
2. The Child labor exploitation. (Ask Fr. Jose Pazheparambil, Director of the Don Bosco Centre for Social Action who runs schools for the children of mine workers. He could be beaten up for forced conversions, anyone’s guess). Of the 400,000 who work in the mines, roughly half are under age 14, according to a report last year by Indian labor and environmental NGOs.
3. Health & Sanitation Issues: that world renowned Dr. Modi had to conduct several free eye clinics in the area for those who lost sight due to eye injury from flying dust or getting hit by blasted rocks tells the story for those who can read between the lines. Most workers live and labor in barren, sun-baked fields with little or no water, pulverizing fist-sized lumps of iron ore with sledge hammers. They earn Rs8 for every shallow iron basin the size of an outdoor grill. A family of four working together can earn as much as Rs1, 200 a week, six times what they could earn in agriculture. But does that justify the working conditions?




There are other aspects to the resource curse that is Iron ore Wealth in Karnataka. And would require discussion of what happened to Kudremukh Iron Ore Company Limited, a public enterprise. Of that, and more, forms the whole story.

Credits: The title, some photos and a few quotes are borrowed from Tehelka. Some photos and information are taken from a Frontline magazine story. 





Comments on this Article
Philip Mudartha, Qatar Fri, August-12-2011, 12:36
17 lakh people are reportedly are jobless after Supreme Court enforced its ban on iron ore mining in Bellary. Livelihoods are always affected when wrongs are sought be righted. Public pressures will mount as economy of the region collapses. Unemployment and social crisis stare at the new state administration. Therefore, an optimum solution has to be found. Banning is not a solution. The State can consider legislation taking over the mines, then auctioning parcels to the highest bidder in a transparent open bid process, and the new owner to pay royalty at rates linked to market prices of ore. The state should also consider to incentive s to promote steel production in the country and set a deadline to stop all iron ore exports, say in a decade. Keeping iron ore underground for ever is the solution. In the case of KUDREKMUKH IRON ORE COMPANY, the SC judgement rendered several crores invested from public treasury worthless, because of environment NGO activism. While activism is for public good, a reasonable compromise to achieve development must be found. In my opinion, mining must be resumed including at Kudremukh, the KIOCL pellet plant in Mangalore must operate at full capacity..
Benedict Noronha, Udupi Wed, August-3-2011, 4:45
Poor result of the rape is that BSY is facing prosecution ( has to take care of the illegitimate child of the Rape?) and walkint towards Tihar-s the report in some pappers.One has to reap what he has sown and BSY had sown wind and hence forth has to reap whirlwind? let see the results of the voting going on, because of the challenge to High command of BJP. Is it not the real character of a National party?
Victor DSouza, Moodubelle / Doha Tue, August-2-2011, 10:42
Nice article Philip. These people even if they are caught, will serve a short jail term in luxury and will come out and the money they looted will never be recovered. If justice is to be done, then all the money is to be recovered back, all their assets to be seized and they should be sent back to their original state.
Ronald Sabi, Moodubelle Tue, August-2-2011, 9:52
True story of power hungry politicians. Classic example of leaders(political) cheating the govt exchequer and these dirty leaders claiming to strive for the development of state! Shamelessly doing it in the name of religion!!! Thousands to support them! We need a successor Lokayuktha as good a Hegde if not create some fear and shame!!
Eugene DSouza, Moodubelle Tue, August-2-2011, 1:22
A well analytically written article by Philip Mudartha. According to the recent news, in spite of the Supreme Court orders, the iron ore has been transported clandestinely from the Bellary mines. This shows that there is scant respect to the Supreme Court orders by those who had been involved in the illegal mining operations in Bellary.
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