Mining Woes

The friction between the environment regulator and the apex court is out in open but does not appear in the news so prominently. Many are not aware of the development out there.

On April 24, 2010, MoEF accorded approval to continue limestone mining in Meghalaya on 31 conditions being fulfilled by Lafarge for its cement plant in Bangladesh. This goes without saying that the damage till date from mining activities on forests and biodiverity are not ascertained. Earlier when in late March 2010 the SC stayed mining operations, MoEF moved affidavit (in response to SC order for re-consideration of forest clearance to the project) subsequent to that eliciting its conditions on which mining shall continue in the Khasi Hills on 116 hectare area. SC has refused to lift the stay on April 27, 2010. That gives a relief to the Shella Committee whose petition against Lafarge brought the issue on surface.

But what is going into the MoEF's conditions may require more analysis - both for its social and economic impact on the communities residing the area of mining operations.

The ministry of forest and environment (MoEF) on Friday (April 23, 2010) gave the green signal to limestone mining in Meghalaya by French multinational Lafarge for its cement plant in Bangladesh but put a series of 31 conditions, to fulfil which the company would have to shell out more than Rs 100 crore. None of these conditions are very stringent. Have a look at some of them.

1. Pay money for afforestation in double the area at five times the normal afforestation cost (Rs. 70 Crores impact).)

2. Pay Rs. 90 per tonne of mined limestone for all the production till date (4 million tonnes) (Rs. 36 Crores impact).

The mining spread over 100 hectares takes limestone across the border on a conveyor belt.

So two questions arise in mind:

1. Why limestone from India for cement in Bangladesh?

2. Is the Rs. 100 Crores compensation enough?

Answers? Limestone is traded with Bangladesh. Bangladesh has no mines for limestone to sustain its cement plants.

Compensation being enough? Annual capacity of the plant is around 1.5 Million tonnes of cement which translates to 30 million cement bags of 50-kg each. Each bag sells at around Tk 300 in Bangladesh which is INR 180. This means a revenue of Rs. 540 Crores to Lafarge every year. Remember Lafarge is asked by MoEF to cough up Rs. 100 Crores (a one time payment) against a annual profit stream to the company at Rs. 65 to 81 Crores (assuming 12% t0 15 % profit margin after taxes, while profit before taxes could have been a better measure as taxes, interest payment are statutory/ mandatory for a business ).

Also keeping in mind that only NPV value of forests with a multiple charged to it is the compensation sought and the ecological value of it not being monetised, the compensation may be much lower than what asked for. Keeping that value aside, even Rs. 100 Crores as one time payment will not be sufficient when one accounts for "cuts" that would go to the administration, local authorities etc. and the cost of cleaning up the muck disposal at mining site.

Are we valuing our environment in the most optimal and scientific way so as to minimize the detrimental effect of industrial operations? This question is haunting us from long but the academia is hardly answering the question and the environmental regulators are not pumping enough money to get the research on.