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Kudremukh mine to get temporary extension

Imran Qureshi in Bangalore

India's largest state-owned export-oriented enterprise, the Kudremukh Iron Ore Company Limited, is expected to get a three-month extension from the ministry of environment and forests.

A formal communication to this effect is to be sent to the Karnataka government by the central ministry either Tuesday -- when the mining lease ends -- or Wednesday, according to a senior official of the company.

"We have been told that the extension is being given as the Supreme Court is scheduled to hear an interlocutory application on environmental issues on July 27," the official, who did not want to be named, told IANS.

The decision, at least for the time being, sets at rest the question of India paying $4.8 million as penalty annually for the next five years to Iran, which imports 1.5 million tons of ore concentrate a year under a contract worth $31 million.

The Karnataka cabinet had informally made up its mind late last week not to extend the "denotification" of the 3,703.55 hectares of mining area in the Kudremukh national park in a bid to protect the Western Ghats, the low range of hills running parallel to India's western coast. The park is part of an evergreen forest that receives annual rainfall of 7,000 mm.

The decision, which was to be formalised after a meeting between Chief Minister S M Krishna and the employees' association, has now been held back following indications from the federal environment and forest ministry about a small-term extension.

Litterateur U.R. Ananthamurthy had led a major campaign urging the government not to extend the lease period any more to protect the Western Ghats, considered one of the 18 biodiversity "hotspots" in the world.

The cabinet had decided not to extend the mining lease after farmers reported productivity of crops falling by nearly two-thirds due to the flow of silt from the rivers Bhadra and Tunga, both of which emanate along with the Nethravathi from the Western Ghats.

But officials of the company say the National Environmental Engineering Research Institute (Neeri), Nagpur, had given a report that there was no serious impact on the environment in the Kudremukh region. "We are certain the court will take a serious look at this report," a company official said.

All parties involved in the dollars versus environment controversy are now waiting for the court decision. The 31-year-old company employs 2,300 people and provides indirect employment to an estimated 10,000 people. It has a turnover of Rs 6.7 billion.

Closure of the company would mean that India would lose $17.25 million from Japan, which is contracted to receive 0.5 million to one million tons of ore concentrate until 2005, $18 million from Taiwan that imports 0.6 million tons of pellets until 2005 and $12 million from China that imports 2.4 million tons of concentrate and 0.6 million tons of pellets.

Indo-Asian News Service

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