The Irony of Iron Ore (Part II): The Rs 1,800 Crore Iron Ore Mining Scam

Iron Ore Mining Scam

Iron Ore Mining Scam

Still reeling from the effects of a possible loss in exchequer amounting to Rs. 17,000 crore as a result of the scam in Railway transportation of iron ore scam, the Government had barely the time to catch its breath as another scam worth Rs. 1,800 crore has blown up in its face. It is now an accepted fact that beyond a certain point, mining operations become illegal, violating Government mandates and overstepping the line of environmental ethics involved in mining. But this scam of the Uliburu iron ore mines, Joda mining division, Keonjhar district, Odisha has surpassed other similar cases of illegal mining in Karnataka, Jharkhand and Goa. Owing to the massive nature of the scam, at least three separate investigations had ensued, headed by the district administration officials, the forest authorities and the mining authorities. The investigations have proved beyond any reasonable doubt the atrocious nonobservance of all rules regarding quarrying of minerals in this particular case. Perhaps unsatisfied with the results of the said investigations, the Naveen Patnaik Government in Odisha has called in the vigilance department to enquire into the matter, which according to the cynics is just another effort on part of the authorities to cover up a massive mineral theft.

The iron ore mining scam

Originally an area of 56.94 hectares was leased to a certain M/S B. K. Mohanty & Co., who promptly gave the franchise of the mining rights to one Deepak Kumar Gupta (power of attorney) to pursue the mineral extraction operations in direct infringement of the Rule 37 of the Mineral Concession Rules (MMR), 1960. Following this, Mohanty and Gupta were issued a legal notice to justify their actions. The said show-cause notice was issued to Mohanty and Gupta by the Deputy Director of Mines (DDM) (acting under the direct orders of the Keonjhar Collector) for illegally quarrying 40,24,400 metric tons (MT) of iron ore and 610 MT of manganese, without even bothering to seek approval of the Odisha State Pollution Control Board and completely ignoring the clearance regarding environmental issues from the Ministry of Environment and Forests (MoEF). The show-cause notice also included the infringement of MMR by Mohanty through the subleasing of the mining rights to Gupta and also deep-sixing mining overloads (overburden – OB) outside the lease demarcated area.

This was followed by a collaborative investigation involving the forest, mining, and revenue department in June, 2012, which unraveled the atrocious trespassing activities of the leaseholder. The investigation revealed that the leaseholder had expanded his felonious quarrying activities to an additional area of over 35.51 hectares outside the leased mining area inclusive of 6.18 hectares of the Uliburu Reserve Forest (RF), some of which belonging to a certain Jagadish Mishra and some to the revenue department. And finally on 20th March, 2013, an investigation headed by the State Level Enforcement Squad (SLES) found that the boundaries of the RF, marked off by pillars, had actually been tampered with by the leaseholder to expand illegal mining activities inside the RF area. Such actions of the leaseholder were a direct infringement of the Odisha Forest Act, 1972. The direct orders of the SLES to confiscate a total of 2,73,753 MT of iron ore and subsequent dispersal through a competitive bidding fell on the deaf ears of a well-bribed DDM.

Even the lease renewal process (Renewal of Mining License – RML) for Mohanty and Gupta turned out to be totally dubious. When the MMR specifically mandates that the application for the license renewal should be submitted a year before the expiry of the lease, in actuality the application was filed 10 days before the expiry of the lease, accompanied by an application to excuse the late submission. Interestingly, the mining authorities renewed the lease under a consideration of ‘deemed extension’, in yet another instance of the violation of the MMDR Act. In addition to this, the leaseholder was allowed to pursue quarrying operations without a valid and compulsory Mining Plan, endorsed by the Indian Bureau of Mines.

Actions taken by the legal authorities

It is evident that after the exposure of such a colossal scam, some heads will have to roll even if it is just a face-saving gesture on part of the government. Currently the number of officials under suspension is 14, awaiting penal action for being partners-in-crime with Mohanty and Gupta in the multi-crore mining scam. The suspended officers include forest officials, forest guards, two mining inspectors and of course, DDM Manas Mohanty. The suspended officers were all posted in the disputed mining zone between the periods of 2004 to 2009. The State Government has aborted the mining contract of Mohanty and the controversial mines are now under the control of the Government. The Odisha Mining Corporation (OMC) has been ordered by the Government to deal with the three lakh tons of mined iron ore by dispersing it through an e-auction procedure.

Result of the Vigilance Investigations

The Vigilance department’s probe into the scam continues under direct orders of Chief Minister Naveen Patnaik. The vigilance officials have conducted a number of raids in and around Bhubaneswar, including the residence of the suspended DDM, Manas Mohanty. While further results of the probe are awaited, proceedings are being initiated by the Forest Department and the Department of Mines against the suspended officials.


The Rs. 1,800-crore iron ore mining scam, where the chief perpetrator Deepak Gupta had successfully executed quarrying of iron ore from six hectares of Reserve Forest and 29 hectares of Revenue Forest for almost a decade–while the Mining Department and the Forest Department turned a blind eye to it–is another burning example of the raging corruption that has permeated every strata of our country. The profit accrued by Gupta in his six years of illicit quarrying operations by colluding with the Forest and the Mining officials is estimated to be Rs. 894 crore. It is still uncertain what the vigilance probe will yield. As commented by a skeptical Biswajit Mohanty, Board Member of Transparency International India and a wild life activist, “By handing over the probe to the vigilance, the Naveen Patnaik Government is attempting yet another cover-up, just as it has done in all previous cases of mining theft”. The fact remains that in our judicial system, it is ultimately money that talks; Gupta, fortunately, had made enough of it to bail him out of any uncomfortable situation!

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