The global demand especially the Chinese demand for iron ore is having it impact on Karnataka politics. And how! There is enough masala happening in the Southern state, a heady mix of politics, money and equal doses of sleaze. At the time of writing this, none of the issues seem near resolution. A conciliatory chief minister does not seem to be a match for the mighty Reddys of Bellary.

At one point Asian iron ore prices went up to $140 per tonne. Iron ore exports from Karnataka rose from Rs 691.56 crore in 2001-02, when it was 3.4% of the state?s total exports, to Rs 10,197 crore in 2007-08, constituting 7.7% of the total exports. Last year, the growth of iron ore exports dropped steeply due to the economic meltdown. While it rose by 54.6% in 2002-03, 27.2% in 2003-04, 53.2% in 2004-05, 24.3% in 2005-06, 32.7% in 2006-07, it fell to 13.8% in 2008-09. It looks like exports are looking up once again, with increasing demand from China. India ranks fourth in the production of iron ore in the world. Now that the demand is picking up, it is going to make some mining barons even wealthier. Particularly, the Bellary brothers.

The three brothers and a family friend ( almost a brother) have risen from nothing and have become king makers in Karnataka by controlling iron ore mining and exports in North Karnataka. Sons of a police constable, they were struggling to become successful businessmen, till they became mining lords. Now they want to be kings. They want their pound of flesh for helping the BJP come to power for the first time in a South Indian state. The chief minister, YS Yeddiyurappa has tried to cut them to size and his attempts have blown up on his face.

Bellary, about 320 km from Bangalore, one of the most backward districts of the state, is also one of India?s richest mining towns. The brothers own Bentleys and BMWs and helicopters ,which they generously lend to BJP leaders. A third of the country?s iron ore exports go from here. With approximately three billion tonnes of iron deposits still in place in Bellary district, Bellary?s domination in iron ore exports and the Reddys?clout in the area seems assured.

For the private sector, there are all kinds of concessions available in mining. For instance, mining in specified backward districts is eligible for a complete tax holiday for a period of five years from commencement of production and a 30% tax holiday for five years thereafter. Environment protection equipment, pollution control equipment, energy saving equipment and certain other equipment and so on are eligible for 100% depreciation. One-tenth of the expenditure on prospecting or extracting or production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income. Minerals in their finished form are exempt from excise duty.

Despite, the mining sector is known for illegal, environmently unfriendly acts. And this is true all over the world. Remember ?Blood Diamond??

The self-proclaimed kings of Bellary apart from mining have also made politics their family business. The Reddy lot unrested Bellary from Congress and handed it over to the BJP. This was quite an achievement considering Bellary was a traditional stronghold of Congress. There were 13 Congress MPs from 1951 to 1999, the last being Sonia Gandhi, till Karunakara Reddy got elected to Lok Sabha on a BJP ticket.

In the Lok Sabha polls earlier this year health minister Sriramulu?s sister J Shantha defeated the Congress to become the lone woman MP from Karnataka. The brothers?Janardhana is tourism minister, elder Karunakara holds the revenue portfolio and the third sibling Somashekara is a legislator. Sriramulu is as good as family. The Reddy brothers and their closeness to Sushma Swaraj have all been well documented. They were also close to the former Andhra Pradesh chief minister, the late YS Rajasekhara Reddy. His son Jaganmohan Reddy (the aspiring chief minister of AP) is a business partner and , with whom they had collaborated to set up a Rs 20,000 crore steel project in YSR?s home district Kadapa.

According to Karnataka political observers one of the reasons the Reddy brothers are erupting is because they feel their position has weakened in Andhra with the death of YSR. Apparently there are 127 registered cases against them in Andhra ranging from financial to criminal misdemeanours. Some of the cases relate to issues like the company?s illegal mining over 6.5 hectares of land, illegal road construction across 68.5 hectares of lease area in reserve forest, uprooting of mining boundary pillars between Siddapura & Obalapuram villages, illegal transportation of ore from Karnataka to Andhra Pradesh and so on. The screws started tightening the moment the Reddys started attacking Yeddiyurappa.

Yeddiyurappa started as an RSS worker in Mandya district of Karnataka, later shifted to Shimoga district according to RSS bidding. He has been holding the Shikaripura constituency and like Deve Gowda also projects himself as the man of the masses and a friend of the farmers. His one ambition in life was to become the chief minister of Karnataka. Ironically he could realise his ambition only due to the money power of the Reddys who control about 60 BJP MLAs. Yeddiyurappa, a widower, is also close to his rural development and panchayati raj minister, Shoba Karandlaje another person from the RSS ranks, who has firmly said that Yeddiyurappa is a father figure. She has been given a free hand in the affairs of North Canara, much to the irritation of the brothers.

The brothers who want a pie of all action in Karnataka want administrative control as well. They cannot tolerate officers being transferred from their strongholds without their concurrence. Which was one of the reasons they have gone on the war path. They disapproved of the chief minister?s attempt to bring private sector participation in flood relief work by appointing a committee under Rajeev Chandrasekhar, now a BJP MP. In retaliation they have launched their own housing scheme for the flood affected, keeping the CM out.

Yeddiyurappa does not relate to the Reddys. He is known to be a loner who does not trust too many people. He has also sidelined some of the BJP loyalists who have worked hard for the party like Jagdish Shettar, the speaker and KB Eashwarappa, the energy minister. He realises that too much identification with the Reddys and dependence on them is not good for the party, but does not seem to be taking the local party members along with him. And he has to deal with senior leaders like Ananth Kumar who it is rumoured wants to come back to Karnataka as BJP in Delhi no longer wields any power.

However this drama plays out, it is a fact that the BJP has lost lot of its sheen in Karnataka, a state it wanted desperately.