#karnataka mining

The Karnataka Government last Friday gave suo motu powers to the Lok Ayukta but kept elected representatives (CM, Ministers, MLAs) outside its purview. The BJP government is not taking decisive action against the mining lobby as some of the alleged accused are a part of its government. As promised, Canary Trap brings you exclusive details of the rise of Bellary Reddy’s (G Karunakara Reddy, G Janardhana Reddy, G Somashekara Reddy).

G Janardhana Reddy (GJR) took over the GRR Mines (G Raghava Reddy Mines) between 2000 and 2001 on sub-lease. He sub-leased these mines to one Anil Lad (then in BJP, now a Congress Rajya Sabha MP). Lad’s earnings, through foreign clients, increased and so GJR conspired with his associates and secured back the possession of these mines. The mining boom that began by the end of 2003 (when the price of iron ore rose from Rs 200 per metric tonne to Rs 2700 per metric tonne) made the Bellary Reddy’s the mining czars. The brothers earned huge money by exporting iron ore to China.

The Bellary Reddys have been defiant in the face of allegations of illegal iron ore mining. After meeting their ‘thayi’ and BJP’s top leadership in the national capital, G Janardhan Reddy declared in Bangalore that they were pure as gold.

C V Nagesh, the lawyer representing the Reddys, has suggested that no mining lease has been issued in their name in Karnataka and there was no question of illegal mining or looting Karnataka’s state wealth as they don’t have any mining activity in the state.

While their lawyer defended the Reddy brothers, Canary Trap brings you exclusive details of how the Bellary Reddys not only have mining interests in the state but also how they control most of the mines through rising contractors, partners and other arrangements.

According to a report of the Central Empowered Committee (CEC) appointed by the Supreme Court of India, there are 90 mining companies in Bellary district of Karnataka, of which 82 are iron ore mines. The names of mining companies having Karnataka license that are situated adjacent to the Andhra Pradesh border are: BMC, Black Gold Mines, Y Mahaballeshwarappa Mines, NMDC, MML, Lakshmi Narayana Mines, HMM, Tumati Mines, Vibuthi Gudda Mines and , MBT Mines.

Karnataka is richly endowed with iron ore and large deposits are found in the districts of Hospet, Bellary, Tumkur and Sandur. Due to low prices of iron ore in both the domestic and international market, a decade back there was not much profit in mining the iron ore.

Mining licenses were given to State owned MML (Mysore Minerals Limited) and private players to mine the ore. MML in turn transferred its mining rights to private mining barons. However, the price of ore which was around Rs 300 per tonne in 2002-03, skyrocketed to over Rs 5000-7000 per tonne in 2005-2006 due to global shortage and  demand.  The entire benefit of higher price went to the private profiteers and not to the State.

The huge profitability in the mining of iron ore since last few years led to growth of a new class of entrepreneurs which indulged in illegal mining without license, mining in reserved forest area, mining far in excess of their licensed capacity.

Karnataka has lost around 10,598 hectares of land to mining and given the scale of depletion of forest cover, the Karnataka Lok Ayukta was given the task to investigate the large-scale illegal mining and transportation of iron ore from forest areas in March 2007. The inquiry was ordered during the coalition government of H D Kumaraswamy-led Janata Dal (Secular) and the BJP.

India’s “party with a difference” is in the dock over the resignation of Karnataka’s Lok Ayukta Justice N Santosh Hegde over the mining racket in the state. Although the Lok Ayukta has withdrawn his resignation, the episode has again displayed that no party in India is free from corruption.

Between November 2009 and February 2010, around 35 lakh tonnes iron ore was illegally transported out of Karnataka, and nobody even knows where it went to. According to Hegde, the iron ore was smuggled through seven check-posts without the knowledge of mining & geology and forests officials. Sound’s strange, and what is more interesting is the fact that both the departments are under the Karnataka Chief Minister B S Yeddyurappa.

One of the important reason behind the Lok Ayukta’s resignation was the attempt by the state government to hush-up the entire matter. A state government minister recommended suspension of a Deputy Conservator of Forests who seized some of the unauthorised iron ore and filed an FIR against 11 exporters and Belekeri port officials. Instead of initiating an inquiry into the entire scam and taking action against the guilty, an honest officer was targeted.