Battle over Essar-led project reflects India's new mining pains

Mar 20 2014, 13:18 IST
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Villagers gather on the fringes of the Mahan forest during a protest against a coal mining project in Singrauli district in Madhya Pradesh. (Reuters) Villagers gather on the fringes of the Mahan forest during a protest against a coal mining project in Singrauli district in Madhya Pradesh. (Reuters)
SummaryIndia's mining sector has been at the centre of a multi-crore corruption scandal.

the power plant and smelter.

The final forest clearance for MCL came from environment minister Veerappa Moily, who in less than three months in the job has approved more than 70 big-ticket projects worth over $40 billion, some of which were stalled by his predecessors over green concerns.

Moily, who is also the oil and gas minister, has been criticised by environmentalists who accuse him of acting in haste to mollify industrialists who complain that approval delays are strangling economic growth.

"PAINFUL PARADOX"

Greenpeace says MCL's project will fell hundreds of thousands of trees and affect the livelihoods of 14,000 people who sell products such as mahua seeds and tendu leaves, used to make cheap alcohol and hand-rolled cigarettes respectively.

MCL says only about 4,500 people will be affected and they will be compensated for as long as they live for lost income.

"There are a lot of phantoms over social and environmental concerns that are being created about this project," says MCL's chief executive, Ramakant Tiwari. "I personally believe that sustainable development is possible."

Only one percent of Mahan will be cleared and a massive reforestation programme will be undertaken to regenerate the woodland, he told Thomson Reuters Foundation at a site office.

But there are fears that the MCL project will open the doors to the mining of the entire Mahan forest, a concern raised by environment minister Moily's predecessor when he put it on hold.

Besides MCL, seven other coal mines are proposed across Mahan, including one by Reliance Power. Jaypee group also has an operating coal mine in the area.

India's mining sector has been at the centre of a multi-billion-dollar corruption scandal after the government's opaque and discretionary mining rights allocation system was questioned by the country's top auditor. The furore slowed decision making in the sector and put a brake on mining.

India is desperate for power and coal is expected to remain at the heart of its energy security for decades. Government-controlled Coal India Ltd has not been able to mine fast enough, forcing power producers to import costly coal from Indonesia, Australia and South Africa to bridge the shortfall.

Seventy million households - 35-40 percent of the country's 1.2 billion people - have no access to electricity. In 2012, a blackout left over 600 million people in northern India without power for nearly two days, exposing Asia's third-largest economy and an aspiring global power to international humiliation.

"It's a painful paradox for me," says Tiwari.

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