Mine Mints

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In the just concluded assembly session, J&K’s political class converted reforms into a threat to state’s special status and successfully sold it to scared gullible people so that their interests in mineral deposits survive unscathed, reports Masood Hussain

Athwajan-Stone-Quarry-photo-by-Umar-Asif-1

“Bastards,” an angry BJP lawmaker told a PDP minister at the peak of ruckus in the assembly on June 24, Friday, over SRO 105. “How people from Punjab can come to loot our resources. After all, what will happen to the Article 370?”

For a moment, it seemed a devil reciting the verses. But the pandemonium that had overtaken the house required fire-fighting. That day, BJP had fed lawmakers from across the political class information about a Chandigarh miner Mohan Pal Singh getting a lease over 40 hectors on Ravi river bed. Apparently, Congress and NC lawmakers with independents like Yousuf Tarigami and Hakim Yasin were, for a moment, un-manageable. Invoking Article 370, they all saw the grant of lease to the non-local on June 22, a definite bureaucratic conspiracy to weaken J&K’s special status.

In the official gallery, officers felt squeezed to their chairs. Juniors would get up, move out and return with sullen faces. Top babus were hunting for the Industries Commissioner who had missed the sitting.

“How could it happen when a House Committee constituted already is looking into the issue?” Speaker Kavinder Gupta agreed to the noisy bench demands. “I direct that the contract be withdrawn.”

Major-Contributors-to-Public-KittyLawmakers wanted heads to roll. Mohammad Akbar Lone, the head of House Committee on SRO 105 sounded clear: those responsible for granting the contract “in back date” must be placed under suspension and the breach of privilege motion must move against them for compromising the prestige of the House. For a moment it seemed as if the Chander Prakash Ganga led ministry would be blown up. Personally, he fumbled and trembled in his frequent responses.

Reporters were desperate to know more. When the lawmakers behind the pandemonium were requested to share more details, they pointed towards their BJP colleagues insisting they hold the “explosives”.

Later that afternoon, tensions started easing after the top Industry ministry officials met the Speaker and explained. With a clear demarcation of roles and responsibilities between the executive and the legislature, Speaker was explained; certain things are not in the interest of administration. Since SRO 105 had taken over the entire mining sector, it was impossible to roll it back and create a vacuum on the ground. Even the lease to Punjab miner was not only as per the law but within the system that the Supreme Court had set up.

A day later, executive agreed to place the services of Director Geology and Mining under suspension and withdraw the lease order. It was a face saving for both sides but did not bury the debate: Is SRO 105 a real danger to J&K’s special status?

SRO 105 that governor’s administration issued on March 31, 2016, replaced J&K Minor Mineral Concession Rules, 1962, an archaic system that remained untouched for 58 years. It was the state response to Supreme Court guidelines envisaging reforms and improvements in mining set-up to protect the ecology and interests of the workforce in addition to making the exercise someway profitable to the public kitty.

Royaliyu-From-Cement-FactoryThe new law is eco-friendly. No stone crusher can emerge on the banks of trout-rick Arin stream on political considerations and Athwajan millionaires will have to reinvest part of their earnings to rehabilitate the sites they devour. No lease can go beyond five years and everything will have to be given through auction within the geological coordinates. Illegal mining of rivers for stones and sand will become difficult. Major mines will require environmental clearances from the highest authority.

SROs brighter side triggered a fierce reaction. Unlike mining by major lease holders, quarrying froze in protest, jamming the construction activity at the very start of the season. The tensions ruled the roost for more than a month until the government acceded to the industry demand that the stakeholders should get a six-month breather for adopting the new system that SRO brings in.

With the dust settled in Athwajan and thousands of people associated with quarrying, sand-mining and other mineral-related activities returned to work, politics took over. They singled out the SRO to assert that the ruling PDP-BJP alliance was playing with the special status that Article 370 dictates by making no distinction between the state and the non-state subjects.

MLA-Mines-relations

“This SRO will permit entry of non-state subjects, which will grossly undermine the locals’ interests,” Comrade Tarigami said on June 2. “It will deprive livelihoods of thousands of labourers associated with quarrying and construction activities.” He sought a House Committee on the controversial SRO.

Next morning Speaker Kavinder Gupta acceded to his demand. Led by Lone, the Committee included Hakim Yasin, Tarigami, Nawang Rigzin Jora, Choudhary Sukhnadan Kumar, Syed Altaf Bukhari, Javid Rana, Ashraf Mir, Mohammad Yousuf Bhat, Javaid Hassan Beig and Bashir Ahmad Dar. It started meeting immediately and submitted its report to the house on June 29.

Speaker’s direction that the SRO be put on hold was not accepted by the government. But it agreed to exclude non-locals from bidding. Interestingly, nobody paid heed to the fact that the earlier SRO 58 which SRO 105 replaced had kept the mining activity open to non-locals! In 2013, quarrying in Srinagar froze for a fortnight after the locals opposed a lease to a Mumbai-based firm.

But 2016 is the first time ever when J&K under a BJP-supported regime blocked entry of non-locals in mining, an area that was open for the last 58 years.

J&K lacks fossil fuels but is sitting on vast mines. Apart from well identified 15.80 million cubic meters of marble reserves at five spots in Kupwara (1.5 million square meters), Granite deposits stand identified in 700 sq kms in Leh and Kargil, 50 sq kms in Doda and 35 sq kms at two spots in Baramulla. Barring Jammu districts, gypsum exists everywhere.

Limited mining was happening for the last many centuries but the modern processes took over after the Geology and Mining Department was set up in 1960. Mining had barely started when militancy erupted and forced a closure of almost all the six units, especially in Kashmir. At the time of their closure, these units had extracted only 4,100 cubic meters of marble.

Unlike the coarse-grained Rajasthan marble, Kashmir has fine-grained marble, which experts insist lacks colour consistency but fetches wild colours to suit wall panelling. Drugmulla has pink marble which only exists in Italy.

“We had a mining firm (in Kupwara) and were in the process of setting up a finishing plant at Khunmoh (Srinagar),” says Dr Mubin Shah whose family had literally pioneered the marble mining. “By 1989, both cost us Rs 3.25 crore. Building for the factory was ready and machines from Italy reached, they are still packed in boxes. As the militancy hit business, most of my family left Kashmir.” They unit was mining 10,000 sq ft a month and the factory was supposed to finish 1.50 lakh sq ft a month.

As the work stopped, troops took over the entire mine-infrastructure. “When they vacated in 1998, one building was destroyed,” Shah said. Now the family is keen to reopen the unit but liabilities totalling Rs 12 crore are to be managed first and there is no help around. Even the leases have lapsed.

Shah is not alone. “We had invested a fortune to import the 60-blade Calmel Gangsaw machine but we were picking up when we closed,” said Azad Khan of Soura Marble Industries. “Till 2003, for 13 years, the entire infrastructure was with the army and BSF. Part of it is still with them.” Neither Shah nor Khan was paid the rent.

In 2003, the government encouraged some of the units to revive after asking security forces to make room for them. Soon after, the mines were declared part of the forests and everything stopped. Authorities are trying to de-notify the area to resume some sort of mining operations.

Geology and Mining Department has not been able to do much, partly because it is explorer, facilitator, regulator and the monitor.

“In 2015-16 we have granted 11873 permissions for extraction of quarry stone, boulders, sand, and nalla makh across the state,” explained one senior officer. “We collected Rs 55.04 crore as royalty of which Rs 31.52 crore came from Jammu region.”

State’s wholly owned J&K Minerals is a 1960 PSU that actually is the official miner. With 900 employees, mostly casuals and contract labour, the PSU requires Rs 12 crore as salaries alone. With its marble mining in Kupwara already closed, its activities are reduced to three things: coal mining in Kalakote (Rajouri), Gypsum mining in Assar (Doda) and Parlanka (Ramban) and once-in-a-year caretaking visit to Sapphire mines of Paddar (Kishtwar).

Lately, it has improved its production, productivity per worker and sales in Kalakote. Abid Suhail, the MD said that the PSU generated revenue of Rs 8.87 crore by selling 13796 MTs of coal in 2014-15. “We are now chasing a target of 29,000 tons this year,” Abid said.

Its Gypsum mining in Assar since 1974 and at Parlanka Hadoge (Gool) since April 2007 had its own problems. Its overall gypsum production was 46318 Mts in 2012-13 making a sale turnover of Rs 4 crore.

Given its accumulated liabilities of Rs 25 crore, the PSU is struggling on day to day basis. Taking the VRS route for downsizing has not helped the corporation much. The Year 2010-11 was perhaps the first year in its history when it recorded a cash surplus of Rs 1.10 crore after spending Rs 14.46 crore. Its cumulative fund requirement is in deficit with what it earns.

PSU insiders foresee a better future from its two operations. Firstly, the Parlanka where it started gypsum mining from the proposed dam site area of 1800-MW Sawlakote project this year. The government granted its funds for laying a 5.40 km road to the site and a mining lease order almost a decade ago after finding 29 million deposits of high-quality gypsum in a range of hillocks spread over 246 hectors. These deposits would submerge once the power project comes up. With an anticipated production of 1.20 lakh MTs, the PSU hopes additional revenue of Rs 10 crore. “We have given extraction contract to an Udhampur firm but sale we will make,” Abid said.

Secondly, it intends to get into Magnesite mining. Way back in 1989, it entered into a Joint Venture with NDMC for exploitation of high-grade silica magnesite deposits near Panthal. NDMC holds 74 per cent stakes and JK Minerals 26 per cent stakes in the JV. The JV decided to set up a 100 Tons Per Day (TPD) Dead Burnt Magnestite (DBM) plant. However, due to the dumping of low priced BDM from China in India, the project became unviable. Post-2009, top officials in the Industries Ministry said, the market started looking up. Now the JV, the J&K MDC is setting up two plants – one each at Katra Chipprian near Panthal.

“It is a Rs 230 crore project and NDMC has already invested Rs 54 crore,” Abid said. “We hope that the first plant gets into the commercial generation later this year as machinery is being imported.”

The project, however, has a new challenge: the Ministry of Environment, Forests and Climate Change has kept the environmental clearance in absence based on the persuasion of the shrine board! Industry insiders said that Shrine Board has already taken a land compensation of Rs 2.50 crore but is now throwing spanners.

JK Minerals is still loss-making but it is gradually getting down. Against the loss of Rs 4.11 crore in 2012-13, it booked a loss of only Rs 3.60 crore. In fiscal 2014-15, the loss reduced to an all-time high – Rs 1.99 crore

Interestingly, however, there is a lack of facilitation in helping Kargil manage its 40,000 cubic meters of granite. Officials had set up Chagrathang industrial estate to offer a base for the mining activity and 35 provisional registrations were made. In fact, two entrepreneurs purchased the plant and machinery last fiscal. But when six applicants sought a lease for mining, all of them were found in-eligible under new rules!

Unlike the official miner, private enterprises are performing better. The massive sand-mining activity in Jhelum, boulder collections in Sindh and Rembiara and a massive appetite for more crushers offers an idea of the market and the production, albeit disorganized and against ecological basics.

The single biggest difference that helps the private sector move faster is the market itself. The construction boom has appreciated the appetite for building material like never before. Demand for POP alone in Kashmir has crossed 100 thousand Mts a season. Marble imports have already crossed one million sq ft many years ago. But the lack of facilitation and adequate monitoring is a major de-motivator.

There are quite a few POP producing units. “Last month when my raw material reserves touched the lowest levels, I made one last attempt to procure it from Uri but I was shocked to see the mining actually jammed by the local administration,” one POP maker with a daily sale of 15000 bags said. “Then I went to Gool belt to make some purchases from J&K Minerals and there I was pained to see that nothing was happening. I met a driver of an earth remover who said he would definitely help once he gets the fuel for his machine to work and his boss was out with no idea when he will resume his duty.” The desperate buyer drove to Jammu and made some purchases to keep his furnace running. “I got the raw material but its quality is highly inferior and it adds to our costs.”

While the new law is sensitive towards a number of issues, it also has to be clear about sustaining the industry J&K already has. If it does not, the private sector will have to follow the political class and help it deepen its vested interests in the sector.

Some of the lawmakers who were part of the ruckus on SRO 105 had personal stakes. All of a sudden they forgot their political differences and party groupings. For the first time Congress, PDP, BJP and NC had a common ground. A few of them eventually managed to get into the House Committee. They used J&K’s special status to create an unreal impression and objective was apparently to prevent a reform.

Barring that it talked in detail about the importance of barring non-locals (that the government had already announced), the house committee recommendations indicate a reforms blockade.

Its first of the 12 recommendations was that SRO 105 be revoked till the stakeholders are consulted. It genuinely upheld the mass concern that non-locals should lack access to biding for mining in J&K but left unexplained why it has happened for more than half a century.

Income-from-Stone-Quarries“The rate of fee, non-refundable fee, transfer fee, security deposit, guarantee amount, royalty etc be rationalized,” reads one of the recommendations. It wants a committee to fix these fees while taking into consideration “the impact of rise of the price of such minor mineral on the general public”. The committee wants open auction and e-tendering be limited to “lease areas of more than 25 hectors” and previous system retained in smaller mine areas. In minor mineral areas, the committee took an interesting turn on ecological issues suggesting “where ever possible” the extraction should be permitted “so as to rule out overexploitation” and its “negative spill over on the environment”. Many officials see the recommendation as a way out to free the miners from ecological rehabilitation of the sites they devour.

What next? Wait and see.

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