Shocking! Rs 12,228 cr lost in illegal ore exports

Vicky Nanjappa goes through Karnataka Lokayukta Justice Santosh Hegde's explosive report on illegal mining in the state and reveals damning figures of corruption.

A jaw-dropping Rs 12,228 crore worth of iron ore was illegally exported in a a span of four years (2006-2010), says Karnataka Lokayukta Justice Santhosh Hegde in his report released a couple of days back which led to Chief Minister B S Yeddyurappa's exit.

According to the report, which was accessed by rediff.com, the amount that the state has lost is unimaginable and that despite a ban on export, which came into effect on July 2010, about 17,58,336 metric tons of ore was exported illicitly.

Here are some pointers to the illegal trade:

i) During this period (2006-2010) a total of  2,98,60,647 metric tons of illicit iron ore was exported and it has been valued at Rs 12,228 crore.

ii) In 2006-07, 31,84,152 metric tons of illicit ore worth Rs 814 crore was exported.

iii) The following year, 37,14,720 mt tons of ore valued at Rs 1,724 crore.

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iv) In 2008-09, 53,55,660 mt tons worth Rs 2,317 crore was exported while in 2009-10 the report finds that 1,27,99,396 mt tons of ore worth Rs 4,635 crore was exported.

v) Despite the ban, 48,06,719 metric tons of ore valued at Rs 2,736 crore was exported.

Justice Hegde and his team have found that illicit ore transported to ports for exports could have been transported either through vehicles travelling with permits but carrying ore in excess of the quantity permitted per truckload i.e. overloading. 

Ore could have also been transported in vehicles without permits or with forged permits.

The investigating team observed that the quantity thus computed is purely suggestive and is based on the overloading in vehicles carrying iron ore to Belekeri port between October 2009 - May 2010.

During his press conference on July 24, Justice Hegde pointed out that there was export of ore despite the state government's ban on the same on July 28, 2010. According to the investigating team, there were 83 exports of iron ore after the ban on issue of permits for destinations for exports.

It is pertinent to note here that due to large scale of exports of illicit iron ore, the state government had decided on July 28, 2010 to ban issue of permits to destinations for  exports. In that context, exports after this date have been obtained from all the ports and it is found that there were 83 exports with a total quantity of 17,58,336 MT of iron ore.

Out of this quantity, the maximum exports have taken place from Krishnapatnam port,  which is administered and managed by a private company i.e. Krishnapatnam Port Company Limited.

The quantity exported from this port alone was 14,85,076 MT. This specific matter requires further investigation for finding out illegalities and persons responsible for it.

The loss to the tune of Rs 12,228 crore caused to the state government due to illegal iron ore exports for the period should be recovered from the exporters/ suppliers/ traders/ lessees and others after following due process of law, Justice Hegde says.

There were about 252 exporters engaged in export of iron ore of Karnataka origin during the period from all the ports. There are about 228 consignees who have imported iron ore of Karnataka origin.

During the port wise examination with regard to illegal export, it is found illicit iron ore has been proportionately exported more from the Belekeri and Krishnapatnam ports. Both the ports are run by private companies.

Extraction of ore from a lease is as per approved mining plan. Extraction of iron ore in a year has to be within an annual permitted quantity. Any quantity extracted beyond this annual permitted quantity is illicit.

Further any quantity extracted and dispatched without paying royalty is illegal. The quantity of ore transported without transit permits means non-payment of royalty and also theft of state property, hence is illegal.

While investigating this case the team relied on information on exports available for periods prior to 2006 is incomplete for various ports.

Therefore exports prior to 2006-07 have been excluded from this computation. The information of permit details with DMG is also not available for the period 2000 to 2004-2005.

In Goa, the Karnataka-origin iron ore is blended with Goa origin iron ore to improve its Fe content in large quantity. Hence, it is difficult to estimate the quantity of Karnataka origin iron ore exported through Murmagao and Panaji ports.

Due to this reason, exports of Karnataka origin iron ore from Murmagao and Panaji ports have not been included in this chapter of the report.

However, data on transport of iron ore to Goa through Railways has been compiled and analysed in separate chapter.

M/s Obulapuram Mining Company (OMC) of the Reddy brothers and M/s Y  Mahabaleshwara are big exporters of iron ore, who have mining leases in Andhra Pradesh that is adjoining to Karnataka. As per the available Customs data, they have exported iron ore of Karnataka origin.

However, as per the permits database, no permits were issued to M/s OMC and M/s YM as party from Director of Mines & Geology, Karnataka.