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The Central theme in sand mining

Sand mining does not involve risk-taking or elaborate technology. Hence,

there isnt much that a private player brings to the table. The Union
Government can exercise more control.
Illegal sand mining has been going on for quite some time along the rivers in both
northern and southern India, attracting the attention of governmental authorities,
environmentalists and local people.
There have been several attempts by a number of State governments to curtail illegal
sand mining, including the outright ban imposed by the High Court of Maharashtra in
2010, though later lifted in 2011.
Is the ban now being imposed on sand mining -- without an environmental clearance
from either the Ministry of Environment and Forests (MoEF) or State Environment
Impact Assessment Authority (SEIAA) -- intended to quell the uproar after the recent
incident involving the SDM of Greater Noida district? Or is it genuinely felt to be
necessary? The sequence of events to follow in the coming days will make the intention
The governments message of intolerance towards illegal sand mining will be seen to be
strong if the resolve to implement the same is also in evidence. Too often, the inception
and prolonged continuation of illegal activities has been the result of deep-seated
corruption at different levels.
Besides, each time the ban was imposed, the construction industry was seen to be
suffering. Hence, the authorities will need some armoury other than the outright ban on
mining without required clearances. A closer look at the contracts through which mining
rights are given to different parties is called for under the current circumstances.
The norms that apply to iron ore and coal cannot readily be replicated in sand, since risk
and technology involved are low. The arrangements in existence in the case of other
minerals are public private partnership (PPP), joint ventures, and various kinds of mine
developer-cum-operator contracts with the government.
However, sand mining does not need such arrangements, as the private player is not
required to contribute technology or shoulder much risk. The role of the state, rather, the
Central government, can be more direct.
Some governments, such as that of Andhra Pradesh, put in place a New Sand Policy in
October 2012, introducing the public-private-partnership (PPP) mode of award and
delivery of contracts. The policy permits both allotment of feasible sand-bearing areas by
way of draw of lots as well as use of private lands along the river beds by farmers who
own the land.
These farmers are permitted to quarry and sell the sand after paying a seigniorage fee to
the government. The extraction of sand is permitted by manual means only, so as to
protect marine biodiversity along the river beds. Further, the extraction of sand is not
permitted in over-exploited notified areas. Inter-state transfer of sand has not been
allowed under the policy so as to ensure adequate quantities for construction activity
within a State. Under the Policy, the District authority fixes the sand price at pit head a
deviation from the earlier practice of auctioned price.
Punjab has a policy of holding e-auction for a clear three-year contract for quarries with
an area of less than five hectares, that require no environmental clearances, and those
above five hectares that require environmental clearances. Under the policy, the State
receives royalty from crushers based on their electricity bills, and royalties are paid to the
panchayats at a fixed price of Rs. 20 per tonne.
The important feature is that during the lease period, which may initially be 20 or 30
years in some areas, the crusher has the right to sell at a pre-determined price. Besides,
the investment required by way of machinery is minimal.
This is what makes sand mining so attractive and profitable. And unlike PPP projects in
roads, railways and ports, there is no asset to be built, maintained or transferred back to
government fulfilling requisite quality. Sand mining may be the least risky, and least
regulated, of all PPP projects.
The ease of entry in sand mining projects and promise of big money to all stakeholders,
including the State governments in the form of royalty, could be the reason for judicial
activism on this front. The current ban throughout the country has been announced by
the National Green Tribunal. However, a minor tweaking of the policy also has the
potential to curb the menace of corruption in these projects.
If sand is categorised as a Major mineral instead of a Minor mineral, the policy-making
powers will rest in the hands of the Central government. This will ensure that
environmental considerations remain predominant and are evenly balanced with revenue
and construction industry requirements. The Central governments recent attempt at
introducing PPP in coal mining may provide a vital lesson for mining of sand and other
ores, such as iron ore in Karnataka and other places.
A number of leading State Government companies such as Madhya Pradesh State Mining
Corporation (MPSMC), Maharashtra State Mining Corporation (MSMC) and public
sector companies such as Steel Authority of India Ltd (SAIL) have adopted the joint
venture (JV) route for fast tracking development of coal blocks allotted to them.
Similarly, the Chhattisgarh Mineral Development Corporation Ltd has a JV with Moser
Baer Projects Private Ltd for development of the Sondha coal block, with the provincial
government holding 51 per cent of the equity and Moser Baer the balance.
Though successful, the Mines Ministry is contemplating banning the formation of JVs
and restricting private participation to MDO (Mine Developer cum Operator) contracts
for a fixed fee.
Under MDO, the ownership and marketing rights remain with the government, though
the risks of coal handling plant and its construction as also mine infrastructure are
loaded on to the private contractor.
The contractor also bears risks present in the mining stage, including the processing and
delivery of coal to an agreed point of delivery.
As far as sand mining is concerned, since the risks and technology requirements are low,
it can completely come in the hands of the Central government, once declared a major
While private participation in coal or iron ore mining is beneficial due to the potential for
value addition in terms of expertise or risk sharing capabilities, the same is not the case
for sand mining. The creation of a Sand India Ltd does have the potential to take on the
sand mafia.