ON 26 NOVEMBER, a CBI court rejected the bail plea of mining baron and former Karnataka minister Gali Janardhan Reddy for the sixth time since his arrest in September last year. Besides activists and some bureaucrats who painstakingly documented the Bellary mining scam, several mining companies that had suffered under the ‘Reddy Republic’ too were overjoyed by the news. Among them was the Reddys’ biggest rival company in Bellary — Mineral Sales Private Limited (MSPL) of the Baldota Group — that had been awarded the ‘President’s National Safety Award (Mines)’ just four days earlier. As the Bellary clean-up begins, it is important to examine this other company that ran the largest mining operation in Bellary until 2008, and after the Reddys’ ignominious exit, is once again the largest mining group in the ravaged region. Indeed, the Baldotas seem to be the future of Bellary.
While NA Baldota heads the Group, his sons Rahul Baldota and Shrenikkumar Baldota are the executive directors of MSPL, its flagship company. Rahul is known as a maverick who had resisted the Reddys’ rampage in Bellary. In October 2010, Forbes magazine called Rahul “the last man standing” in the battle for Bellary against the Reddy Brothers.
However, many state government officials credit the Baldotas with setting the precedent for the infamous ‘Bellary way of mining’ that the Reddys later honed to ‘perfection’. In 2008, the then Karnataka Lokayukta Justice N Santosh Hegde had brought to light major violations and systematic corruption, including encroachment of forestland and underpayment of royalties to the government. Justice Hegde resigned from the Lokayukta’s post in June 2010 citing non-cooperation by the state government. In July 2011, another Lokayukta report detailed how miners, bureaucrats and ministers colluded to defraud the government of mining revenues, and uncovered the “zero risk system” — a protection-and- extortion racket allegedly run by the Reddys.
The Rs 15,000 crore scam was not just about the government losing revenue, but also involved serious environmental damage. Every official TEHELKA spoke to agreed that no mining company in Bellary was completely clean — a fact that even Rahul Baldota concedes. Today, MSPL sits on a piece of controversial forestland that could earn the Baldotas Rs 20,000 crore in profits.
SET UP in 1961 by a Marwari businessman from Mumbai, Abheraj H Baldota, today MSPL is one of India’s leading miners of iron ore. Besides iron ore, the Baldota Group has interests in shipping, steel, chemicals, wind energy, and diamond and gold mining. On their website, the Group claims to be “one of India’s leading exporters of high-grade processed iron ore to China”.
“They were there much before the Reddys arrived, but nobody noticed their illegalities as they had ‘managed’ most of the politicians in Karnataka,” says a local anti-mining activist. This view is also shared by officials in the state’s department of mines and geology as well as the Lokayukta’s office.
In fact, one official recalled that one of the survey stones of the Vyasanakere iron ore mine — MSPL’s largest and oldest area of operation — was bizarrely inside the Tungabhadra dam’s reservoir, and so the Lokayukta team had to wait for six months for the water to recede, to see the actual size of the mine. “We could see many violations like this, but frustratingly, there were no records,” the official says. Rahul Baldota shrugged off this allegation, saying the investigating officials did not get the technical issues right.
One of the biggest violations was noted in March 2010 by Karnataka’s Chief Conservator of Forests in a letter to the Union Ministry of Environment and Forests (MoEF): encroachment on 200 acres of reserve forestland in Kallahalli, bordering the Vyasanakere mine. But Rahul Baldota rubbished this allegation too, claiming that some public officials had gone on a witchhunt against the Baldota Group at the behest of Janardhan Reddy or because of “ego-issues”.
IN ANOTHER case that throws light on the ‘Bellary way of mining’, MSPL is today fighting to retain one of its largest mines — Ramgad Minerals and Mining Ltd (RMML) — spread across 331 hectares of forestland. The story of this mine begins with Dalmia Cement — another conglomerate with varied interests — that has been mining in Bellary for decades.
In 1953, Dalmia Cement had obtained a 30-year lease to mine iron ore in the area. The process of renewal of the lease in the 1980s violated the Forest Conservation Act, 1980 (FCA). The state department of mines and geology and the department of commerce had facilitated the renewal without the prior approval of the Central government, which is mandatory as per the FCA rules.
Following the Supreme Court’s judgment in the Samata case, which prohibited mining on forestland until FCA clearance, Dalmia Cement stopped mining operations in 1997. Two years later, it surrendered the lease over 197 acres to the state government, and the rest of the mining area in 2001. Instead of notifying this area for grant of mining lease, as required under rule-59 of the Mineral Concession Rules, 1960, the SM Krishna government transferred the lease to the Baldota Group, by an order dated 16 March 2002, in contravention of the FCA and the Mines and Minerals (Development and Regulation) Act. In effect, the Baldotas had been passed on a legally void mining lease.
Though the lease itself was void, the MoEF granted “in-principle approval (stage- I)” for the diversion of 335.04 hectares of forestland to the Baldota Group on 13 September 2006, and a “final approval” on 9 September 2010, without obtaining the compliance report from the state’s forest department. Strangely, the BJP government in the state kept quiet on the matter until 2010, when it raised an objection over this improper approval. The then environment minister Jairam Ramesh wrote to the state government in March 2011 stating that one of the reasons for giving the approval was that RMMLwas being treated in a discriminatory manner by the state government.
MSPL’s argument is that Dalmia Cement never actually completed the surrender process of the land under the mining lease, and this makes the transfer of the lease legitimate. Rahul Baldota told TEHELKA that MSPL strictly plays by the book and adheres to the law of the land. “We opposed the Reddys, though it could have been vastly profitable to go with them. Look at the work we do for the local communities and you will understand our style of functioning,” he says.
This rhetoric notwithstanding, in October this year, the MoEF issued a showcause notice to MSPL asking it to explain why their lease should not be cancelled. This is what the mining companies in Bellary and the rest of India need to be told repeatedly. Obey the law or perish.