Odisha Opening Mining Gates, But What’s In It For Odisha?

Odisha is opening its ratna bhandara (treasure vault) and we should be aware of how this would change our lives forever. Don’t bracket the author as an anti-mining activist just because he’s trying to break the slumber of civil society. These thoughts are without an iota of politics.

Rapidity in development was probably never this fierce. The BJD government in its fifth term and the central government in its second term are embarking on a gambit to auction mines before their leases expire in March 2020. Everyday there is mounting pressure to auction all the mines.

Opening of the mining is laying bare all our resources, flora, fauna and all we have. The treasury of the house is in the marketplace. Almost 25 per cent of the country’s iron and manganese ore resources will be up for sale to captive users and merchant miners.

By doing so Odisha, the projected steel capital of India, will be the principal provider to India’s targeted 300MT steel capacity by 2030.

Odisha’s mines have a direct influence on the economy of India and world trade. India, the world’s second-largest steel producer, is now a net importer. We as a country are struggling with the capability to produce high-quality steel and have lost some of our global clients to China, Japan and South Korea. These three countries are major exporters to the United States, Europe and Canada and are anticipated to divert steel into India because of the recent trade actions. The US-China trade stress might lead to dumping of Chinese steel in India. Domestic steel production will be significantly affected if there is delay in mine auction. Steel production in India is expected to double by 2031 and this would accelerate the country’s share of global crude steel production by over 8 per cent from the existing 106.5 MT.

But this will be possible only if we have the raw material, the ore. The steel sector contributes about 2.1 per cent to the nation’s GDP and in the next decade its share should be exceeding by 3 per cent.

Odisha’s soil holds the key to the nation’s development. This is only about the steel sector and there are other minerals from Odisha’s mines, which can transform India’s economy forever.

Our target is to grow annually at 12 per cent over the next five years to a $5 trillion GDP by 2024 and Odisha can play a significantly dominant role in this unprecedented growth story.

But, so far, mining has not yielded dividends commensurate with life in the state.

The intoxication of easy money through a rent-seeking behaviour is abnormally binding but shockingly short-lived. In the past three decades, less than 1 per cent of Odisha has enjoyed abnormal affluence without creating new wealth. The “rent seeking” addiction is of maniac proportions.

The richest state of India (the mineral rich state accounts for 7 per cent of India’s forests and 11 per cent of its surface water) has been bled poor by only a few in the extraction industry and brazen crony capitalism that includes rampant illegal miners.

In rural Odisha, the average value of assets people have is estimated at Rs 2.81 lakh — which is lowest in the country. Even in urban Orisha, the average value of assets people have, Rs 7.9 lakh, is the poorest.

If we are tinkering with our naturally gifted resources, it should be for a purpose for the state. The “mining cream” is not there for people of the state to enjoy. Someone else has scooped all the cream. Odisha’s civil society is clueless, silent and inactive. Rent-seeking economy and its low hanging fruits have stifled our consciousness about the state’s development vis-à-vis our contribution to the national economy.

Apathy towards our state’s development is worse than flagrant loot of the resources.

Under its soil, Odisha is a ratna bhandara (treasury of gems), and over the soil it is a perennial struggler. Mining royalty is the biggest non-tax contributor to the state’s revenue stream, pegged at Rs 6,130.97 crore from production of 270.84 million tonnes (MT) and supply of 287.80 MT of minerals in 2017-18.

With the opening of the mines, the revenue from mining is estimated to cross Rs 12,000 crore after 2021.

Odisha is the biggest mineral storehouse of India and one of the largest in south Asia, but the state is today reeling under an unemployment rate of 7.1 per cent, which is more than the national average of 6.1 per cent.

The GSDP growth by 8.4 per cent is largely due to the industries sector, whose share has been consistently rising in the past four years and is expected to contribute 39.47 per cent to the Gross State Value Added (GSVA) in 2018-19.

Extraction industry accounts for over 30 per cent of the industry’s contribution. But with high unemployment, Odisha’s youths and households are not benefitting.

A school student today would not have many options for his/her career inside the state, if we don’t build niche and specialised institutions for him or her. Agriculture production is sharply declining. Education and agriculture term loans have the highest NPAs in the state.

With the revenue from mining, the state should build parallel resources as standby. In about five decades from now all our reserves would be depleted and we would be an empty drum, ravaged and dumped.

I am all for mining, but it should be responsible mining. Odisha is probably one of the best examples in the world of how non-renewable natural resources are disproportionately important to poor and fragile economies, as typically they are their main endowment and revenue source.

Economic inequality plagued by socio-economic factors need to be tackled on a war footing.

The government should ensure that corporations pay up their fair share of CSR, tax and development fees, which should be invested to strengthen public healthcare and education.

Mine auction is meant for fair play among bidders without any geographical barriers or hegemonies. But this would not necessarily encourage “local” entrepreneurs who don’t demonstrate investing capabilities on a large scale.

They are limited in their funds. So, it is quite obvious that mining behemoths and conglomerates come, dig gold, truck it and build empires. Where is the boy or the girl from Odisha nurturing his/her dreams of being an entrepreneur? In the last three decades, only about 80 young people have joined the mining/extraction industry independently (not as scion of established mining families) as mining and allied entrepreneurs and have sustained.

Less than 10 mining companies belong to homegrown entrepreneurs. All the rest, numbering six times the figure, do not belong to Odisha. Can the government of Odisha provide special incentives for homegrown businesses?

The only trades (and not industries) that mining has spurred over the years are automobile, rentals, logistics, hospitality (low end) and brokering. Odia youths are not present either in the upstream or downstream of mining, neither as entrepreneurs nor as employees. Students from Odisha, even if professionally qualified, are not employed by mining conglomerates for various reasons.

Of the total skilled & semi-skilled workforce less than 12 per cent are Odisha domiciles. There is a skill gap and there is also an opportunity gap. I can see the implosion waiting to happen.

Odisha is at the bottom of the health index score. Among the larger states, Odisha had the highest Neonatal Mortality Rate (NMR), which hovered from 35 to 32 neonatal deaths per 1,000 live births from 2015 to 2016.

The state had the highest Under 5 Mortality Rate (U5MR), which is a critical indicator of child survival. All the mineral-rich districts of the state featured in the list of most backward districts of the country. In Keonjhar, the epicentre of mining, 62 per cent of the population lives below poverty line. In Koraput, Asia’s bauxite capital, 79 per cent live below poverty line.

The income from mineral extraction has not benefitted the regions from where the minerals are removed. Rather, poverty has increased in many of these districts and has majorly affected the social fabric owing to quick gains due to the “middlemen” syndrome.

The skewed development in the state is leading to a kind of implosion among the youth. The CSR programmes of the mining companies are not targeting the health or education sectors in these areas.

Only 10 districts get CSR funds deployed (as per the perception of the CSR teams and not as per the needs of the communities assessed) more as tokenism.

Has civil society in Odisha cared to conduct any social audit or impact measurement of these programmes? This is no blame game. As a part of civil society, the author takes responsibility for having failed in driving development in the state.

Primary health centres could have been managed by these companies to tackle doctors’ absence, infrastructural shortcomings but they are not. Odisha has been a pioneer in non-government management of PHCs (with a policy made as early as 2004-05).

But CSR funds are “directed” to be spent in specific agenda. The CAMPA and DMF funds are lying unused.

After the auction of mines and the commencement of mining, Odisha’s time would be ticking. Every day there would be depletion of natural endowment. Do we watch this, helpless or build alternate, complimentary strengths?

The auctions are being pursued by all governments with unimaginable alacrity. If this speed and interest could have been used prudently in other sectors too, Odisha would have been the leading example in the world now, of a low-income economy aiming at equitable growth in spite of being a victim of climate emergency and of a legacy of intergenerational poverty.

We have missed the bus in the past, but we are not late. Even now we can make Odisha an island of development by using mining judiciously and smartly, with legitimate Odia nationalism and development in heart. It seems that Odia nationalism and Odisha’s wealth are racing in the fast lane of self-destruction.

Let’s take three baby steps:

  • Let the mining department make public, the area development plans of the competing mining companies. This must (made mandatory) include the plans to mitigate Climate Emergency that Odisha is inevitably, a sitting duck.
  • Let the communities (and specifically the PVTGs) be sensitised about the future of their lands and the future of their lives in lieu of their donations (they are now made to donate their gold mines to something which they are not aware of)
  • Let us have Gram Sabhas on the area development plans of the mining companies and have social approvals of the plans. The social approvals should be devoid of any politics.
  • Mines and Minerals Development and Regulation (MMDR) Act, 2015 is all encompassing and supportive. Let Odisha leverage the supportive provisions laid down by the policies and be a global best practice of ‘responsible mining’.

This is Odisha’s biggest gamble and would make or break the state in no time. Let’s wake up & take care of our home.

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