National Mineral Policy 2008

After much deliberation, the UPA government has finally released the National Mineral Policy (NMP) 2008. This policy has been in the offing for quite some time, and considering the magnitude of the issues at stake, it was eagerly awaited. However, the NMP 2008 has come as an anticlimax, since it is amazingly devoid of clarity and detail.

It is important to understand the background of this policy. India’s considerable mineral resources are being coveted not just by the Indian industry, but increasingly by foreign capital. The battle for prime mineral ore is so intense that we sometimes even see corporates vying for the same piece of land and subsequently waging a protracted struggle for it (like for instance West Chiria mines in Jharkhand and Rawghat mines in Chhattisgarh).

If corporates are battling it out, state governments of the mineral-rich states are falling over each other in their attempts to become more “investor-friendly” than their competitors. The Chhattisgarh, Jharkhand and Orissa governments in particular are offering all varieties of sops to entice investors away from their rivals. In this process, they have essentially become agents of corporate houses.

The devastation that mining has wreaked in mineral-bearing states of course needs no elaboration. Whether it is large-scale displacement of tribals, or devastation of water, land and forests, the story is all too familiar. The massive profits that mining entails do not reach state governments, let alone the people who lose their lands and livelihoods to mining. The royalty that companies have to pay state governments for extracting minerals is around 2-3 per cent of the price that minerals fetch in the market! Sometimes the loot is even more criminal, as in the case of iron ore, where the royalty paid is actually less than 1 per cent of the market price.

These are some of the burning issues connected with mining activity, and one would expect a National Mineral Policy to address them. However, the NMP 2008 is characterized by either silence or ambiguity on most issues of importance. For instance, NMP 2008 has thrown in words like “sustainable development”, “restoration of ecological balance” and “stakeholder interest”. In other words, all the vocabulary demanded by the World Bank and the like. There is however no substantial backing of these grand sounding claims. For example, this is what the NMP 2008 has to say about displacement, rehabilitation and compensation:

“Special care will be taken to protect the interest of host and indigenous (tribal) populations through developing models of stakeholder interest based on international best practice. Project affected persons will be protected through comprehensive relief and rehabilitation packages in line with the National Rehabilitation and Resettlement Policy.”

Therefore, the NMP 2008 has almost completely ignored the demands that have been raised connected with relief and rehabilitation. What after all is a “model of stakeholder interest based on international best practice”? Who decides the “best practice”? On what basis is this decision taken? The non-seriousness of NMP is made clear from the very next sentence, where all pretence of “international best practice” and “stakeholder interest” is thrown to the winds, and the good old National Rehabilitation and Resettlement Policy (NRRP) is brought back. The NRRP has been severely criticized on several grounds for its inability to ensure adequate compensation for the project displaced people, and what the NMP 2008 is suggesting, after all the tall talk, is maintaining the status quo!

On mining in Scheduled areas, the NMP 2008 only says: “In grant of mineral concessions for small deposits in Scheduled Areas, preference shall be given to Scheduled Tribes singly or as cooperatives.” The policy has not even tried to ensure that the spirit of the original central Panchayat Extension to Scheduled Areas Act (which was drastically diluted by most state governments to the extent of making it largely ineffective) is translated into reality.

Equally interesting is the coy treatment of an important issue like royalties due to the state governments. This is only place where the word royalty finds a mention: “The fiscal dispensation will generally aim to ensure that adequate compensation is forthcoming to the state in return for the concessions it grants.” Again, there is no concrete attempt to correct the glaring difference in market price and the royalty due to the state.

On the controversial issue of mineral exports, the NMP 2008 has largely gone with the mining sector, since it has agreed to their demand of a no-holds-barred approach to exports. However, though the policy is unclear and reticent on some key issues, it has a definite focus. Firstly, there is a strong push for more mechanized, less labour-intensive mining, where the industry will largely depend upon “skilled” labour with a high level of technical competence.

Secondly, the policy is a blueprint for large-scale privatization and Foreign Direct Investment (FDI) in mining. These trends are not new, but NMP 2008 proposes to substantially increase the existing scale of privatization. For the first time, prospecting and exploration of ores has been opened to venture capital in a big way: “the private sector would in future be the main source of investment in reconnaissance and exploration.” Risk investment in survey and prospecting, joint ventures and Public Private Partnerships are the clear mandates of the policy.

The UPA government will soon introduce amendment bills in the Parliament to give effect to the NMP 2008. Key issues like fixing royalty are said to be resolved by the Union Cabinet. However, NMP 2008 makes the UPA’s policy directives clear: Displace tribals and the rural poor from their lands and livelihoods while securing the occupation of mining companies, mechanize mining and create jobs for mining engineers, geologists, geo-physicists, geo-chemists and geo-instrumentation specialists, and ensure that the wealth from mining is reserved for corporate houses.

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