NAFED major violator in ore export: Report

The Lokayukta investigations have revealed that National Agricultural Co-operative Marketing Federation of India Ltd (NAFED), a co-operative society governed by the provisions of Multi-state Cooperative Society Act, 2002, has also indulged in financial irregularities.

Chapter 25 of the recommendations of Lokayukta Justice Santosh Hegde in the final report, titled ‘Illegal export by NAFED’, highlights that NAFED has been involved in dubious transactions and transport of iron ore to various ports. The report details that NAFED claimed to have purchased iron ore from eight companies, which are not actually leaseholders.

Also, there is no information on the source of procurement of iron ore, nor is there any information about the issue of permits in their favour.

Since most vendors are not lessees, the original source of procurement of iron ore exported by NAFED is not known.

The names of the companies are - Aditya Minerals, Hospet, Shanti Minerals, Hospet; Bellary Minerals, Bellary; Prasiddhi Minerals, Hospet; Rawmet Commodities Pvt Ltd, Kolkata; Y L Sable, Hospet; Sri Srinivas Minerals Trading Company, Hospet; Mincore Resources Pvt Ltd and others.

Financial irregularities
The financial irregularities pertaining to iron ore export between 2004 and 2006 have also come to light.

NAFED took up export of iron ore on public private partnership with Disha Impex Pvt Ltd, New Delhi; Hemani Transport and Trading Corporation, Bangalore; and Swarup Group of Industries, Mumbai, during this period. The Federation claimed to have exported 3.18 lakh metric tonnes (MT) of iron ore in 2004-05 and 2005-06 to China. It has, however, submitted details of procurement for a quantity of 2.02 lakh MT of ore. As per its own statement, there is a difference of 1.15 lakh MT, which is unaccounted for. 

As per the MoU signed between NAFED and Disha Impex, the latter is supposed to have procured 85,000 MT of iron ore fines and 65,000 MT of iron ore mud.

Since some stock was already with the company, it had a total of 1.5 lakh MT ore with it as on March 2004.

As per the statement of Mysore Minerals Ltd (MML), it has supplied 3,271 MT ore to Disha between 2004 and 2006. NAFED claims that it bought 1.5 lakh MT of ore from Disha. Since there is no additional supply from MML to Disha, the source of procurement by Disha is dubious. Also, there is no match of procurement from MML, as per the agreement between NAFED and Disha.

Lokayukta’s investigations revealed that Disha, in its letter dated October 23, 2010, has stated that it has neither purchased nor exported any iron ore. The Lokayukta has recommended that the State government recommend to the Centre to take action against NAFED, and also initiate action those involved in illegal mining.

It also recommends that the State government should take up further investigations for the supply of dumps by MML to Disha and other companies.

Moratorium on mining sought
The Lokayukta has recommended a complete moratorium on grant or renewing of mining leases of iron ore in the State. Justice Hegde states that there are already 134 mining leases in Karnataka, and since there is uncontrolled exploitation of iron ore, he has advised the government to initiate suitable action to have a sustainable policy at the earliest.

He says, 2002 onwards, due to the China boom, there has been tremendous pressure on the grant of mining leases, particularly for iron ore, in the State. There is also political compulsion to grant mining leases.

According to the report, the domestic consumption and the consumption by neighbouring states is approximately 22 million tonnes to 25 million tonnes, coupled with large- scale illegal trade of iron ore.

As per the Mines and Geology Department, 15 mining leases were granted between August 2004 and January 2011; 42 leases between May 28, 2004 and February 4, 2006; 44 leases between February 2, 2006 and October 9, 2007; 22 leases between October 9, 2007 and May 28, 2008; and 61 leases from June 2008 till date.